Posted: 09 Aug. 2019 05 min. read

Innovation led transformation

Reconnecting transformation with innovation…

MOST INNOVATION AND TRANSFORMATION PROJECTS FAIL TO MEET EXPECTATIONS

All business leaders agree that innovation is risky. But how risky is it really?

According to research by Deloitte’s Doblin practice, only one in 25 innovation projects in most companies delivers a tangible return on investment. That actually means 96% of innovation projects fail. And the level of failure of transformation projects is just as poor.

INNOVATION vs. TRANSFORMATION

It is useful to revisit the definition of innovation and transformation. Deloitte’s Doblin defines three levels of innovation:

  1. Level 1 is to optimise the core business by applying new processes, skills, technologies and other capabilities to existing offerings delivered by an organisation to existing customers
  2. Level 2 is to grow into adjacent products, services, offerings and/or markets, customers, categories, industries
  3. Level 3 is what most people think about innovation: business model transformation. This is the reinvention of the business, the way it services its markets, which markets it’s servicing, and also the way profit and value to the stakeholder is derived

With these definitions in mind, transformation programs should focus on Level 3, business model transformation, and thereby integrate with innovation initiatives.

WHAT DRIVES FAILURE: INNOVATION without TRANSFORMATION; TRANSFORMATION without INNOVATION

However, over the years, organisations have set up innovation programs and transformation programs separately, even building separate, distinct capabilities for each. The consequence of this separation is poorly aligned resources against either innovation or the transformation projects:

  • Innovation projects tend to fail when it comes to delivering tangible commercial and non-commercial outcomes. Especially in Australia, which, while inventive, we know commercialisation is our weakest point
  • Transformation projects tend to fail to deliver real business model change. In fact they tend to just be large projects with incremental improvements to the business

HOW TO RAISE THE CHANCE OF SUCCESS FOR INNOVATION AND TRANSFORMATION PROJECTS?

It is time to realign innovation and transformation agendas and effort through integrating innovation principles, tools and techniques into transformation programs.

‘Innovation-led’ transformation CHECKLIST

The first step is to ensure that the transformation initiatives are truly transformative.

  • Ask yourself to what  extend do our transformation initiatives help us grow into new markets or deliver new offerings, and ultimately design a new way of doing business - i.e. new business models. 
Innovation fig 1
Figure 1 - Innovation Ambition Matrix (Offerings vs. Markets)

The second step is to boost the level of innovation within a transformation program by challenging the types of innovation delivered by the program. Ask if you are

  • only focusing on product innovation, or going beyond product to innovate?
  • rethinking your business configuration and capabilities?
  • rethinking the way the business engages with our customers?  
Innovation fig 2
Figure 2 - Ten types of Innovation

The third step is to ensure that you infuse human-centred design and agile principles in the way you deliver the transformation program. Again ask if you are:

  • always focused on delivering value to your main stakeholders, your customers?
  • truly ‘failing fast and learning fast’? 
Innovation fig 3
Figure 3 - Fast, Slow Innovation-Led Transformation Approach

And finally ask to what extent do you bring your innovation capabilities (infrastructure, approach, talent, processes) into the delivery of your transformation initiatives? 

Innovation fig 4
Figure 4 - 12 Levers of Innovation

INCREASING THE ODDS OF WINNING AND TRANSFORMING

With such a systematic application of the innovation capabilities to transformation projects, the odds of winning increase dramatically.

Innovation-led transformation can help raise the chance of success of a transformation project from a paltry 4-5% to a wholesome 70%. With innovation-led transformation, these successful companies can be the ones to deliver what comes next, now.

Authors: Yann Pastor, Monitor Deloitte Innovation Strategy + Jason Bender, Deloitte Australia Head of Innovation

Meet our authors

Yann Pastor

Yann Pastor

Partner, Monitor Deloitte

Yann is a Partner in Monitor Deloitte's Strategy Practice, in Deloitte Consulting, in Brisbane. He is a specialist in customer strategy and innovation, working in consumer and public sector. With a background in corporate finance and over 20 years’ experience in strategy consulting in Asia-Pacific, North America and Europe, he brings a blend of analytical, creative and facilitation skills required to drive effectively strategy projects. Yann is a leader in Monitor Deloitte Australia's Innovation and Customer Strategy practices. He is also the Lead Client Service Partner for Super Retail Group and Shine Corporate, and a key account team member for RACQ and Transport & Main Roads QLD. Since joining Deloitte, Yann demonstrated his passion for customer-led strategy and design by founding Queensland's Customer Community of Practice (COP) and for training by creating Brisbane Consulting Learning & Development Committee.

Jason Bender

Jason Bender

Head of Innovation

Jason has over 17 years technical and management experience across all areas of online technology related areas including; e-business, payment gateways, security, authentication, web services, user interface, application development, system design, hosting and operations.