Does more data represent more value? How can you generate revenue streams from data? What about privacy issues of collecting and using data? Many companies are struggling with such challenges when exploring digital innovations.
These and other questions were addressed during the Ambassadors of Innovation event, September 24, 2015.
Four speakers from four very different industries, all leaders that have successfully led digital innovation, shared their most important lessons learned.
1. More data represents more value
Vincent Kwaks, CTO of Vanderlande, posed this thesis. In general, this is true. When creating new solutions and value propositions, more data ensures better results. However, it is particularly context specific; where for one context limited data is sufficient, in other circumstances billions of data points are needed.
Vincent Kwaks – Chief Technology Officer of Vanderlande, the global market leader in airport baggage handling systems, sorting systems for parcel and postal services as well as leading supplier of warehouse automation solutions.
2. Domain knowledge is an enabler for transforming data into value
Domain knowledge – i.e. application, business and context knowledge – is key to understand the data and know what you are looking for. A majority of 91% percent of the attendants agreed that this is applicable also for their situation. At the same time, it is an important lesson as 83% states that they should put more focus on this area of improvement.
3. Challenge assumptions and ‘implicit’ rules – explosion of data allows fact-based decision making
While on the one hand domain knowledge is key to understand data, on the other hand you run the risk of getting stuck in old patterns, habits and industry dogmas. Reason why fresh thinking that challenges established ways of doing business whilst creating new values is important. Real data provides an opportunity to challenge fixed assumptions and small-scale market research. 81% of the attendants stated they would need to start applying this or apply it more effectively.
4. When setting up a new service involving multiple types of stakeholders you should not try to seek commitment from all of them beforehand.
Paul Smits – Chief Financial Officer, Port of Rotterdam; Mr. Smits is also responsible for innovation in the organization. Rotterdam is the sea-bound entrance to Northwest Europe and the largest port in Europe. Over water and over land, goods find their way to some 500 million end-users in Europe.
Paul Smits shared a lesson that may sound surprising, especially when all management theory points towards customer centricity and co-creation. But it is a true one for many digital innovations that deal with multiple stakeholder groups. In his case while the digital innovation at hand would indeed improve the efficiency of the entire chain, it would also ask for data that some players in the ecosystem would hesitate to give. So rather than getting commitment beforehand the route is to identify the potential barriers of the various players and pilot it with those that have the most to gain, thereby showing how it can be valuable for all.
5. Different aggregation levels let companies join a digital innovation
Another lesson from the Port of Rotterdam is that companies may not want to share data at the individual level, fearing security issues or sharing of sensitive information. By matching data use and audience to different levels of aggregation the Port of Rotterdam managed to get all parties to share their data. By doing this Port of Rotterdam created a unique series of sensors: ‘the we-nose network’. Using many private e-noses that register changes in air composition. The network allows businesses, municipalities and the environmental protection agency to respond faster to escaping irritating or dangerous gases.
6. Use start-ups and Open Innovation to speed up
Open Innovation is just as much a truism in digital innovation as in other types of innovation. Asking the question ‘who can solve this’ often provides better and cheaper answers faster than ‘how can I solve this’. If it is an issue that is very much countering the way things are done, or capabilities are not existing in the company, it may be better to use eco-systems of external start-ups. Port of Rotterdam is doing this with investment funds, Yes!Delft, Philips Innovation Award and Port Innovation Lab.
7. Deal with privacy in a fully transparent way
“Privacy is a big issue when collecting data, especially when it concerns information of individuals. A good rule on this aspect is to make sure your business model will work even if you are absolutely open about what you collect and how you will use the data. People need to be confident about your intentions to be willing to share. In TomTom’s case a large majority of customers agree for their data to be used as they are confident the data is sufficiently anonymized to guarantee their privacy. 73% of the Innovation leaders agreed and concluded that they need to apply it even better in their own business. Another lesson in this field is to proactively address privacy issues in forthcoming innovations. This requires highly competent privacy officers who understand where legislation, often lagging behind, will evolve to. Furthermore it is adamant having very strict legal / privacy checks and balances.”
Rijn Buve – Director of Technology and Architecture, TomTom. The company core technology assets are maps, traffic and navigation. These assets underlie many of TomTom’s products, and are used in PNDs, embedded or integrated automotive systems, sports watches and action cameras, smartphone applications, and web-based applications.
8. Pro-actively think about the ‘next step’ in your business, even when your current business is still fine
Some lessons don’t change whether you are doing digital innovation or other types of innovation. However, it is key to underline this in the digital era. Whilst Lean start-up approaches point to ‘pivots’ and move your innovation through learning cycles, that does not take you off the hook to think ahead and be ready for the next step.
9. Invest early in a ‘hard-to-copy’ competitive edge
Reinforcing your competitive edge, means quickly creating a substantial gap with the next in. Once you have economies of scale advantage in the digital world, competition will find it hard to catch up. As an alternative they can change the game, reason why you need to stay alert and well prepared.
10. Digital Transformation needs to be driven from the top and engage all levels
It is fundamental to have a clearly articulated vision of what the company wants to become, taking advantage of existing assets/capabilities. Complete this with a clear map on how the company intends to get there and a set of KPIs that allows the company to track transformation progress. Vision needs to be driven from the top in a credible way for it to be internalized across all organizational layers, as the impact will touch everyone. It is a substantial ongoing change program that requires everyone to contribute and share ownership and make it happen.
Alberto Prado – Vice President, Head of Digital Accelerator at Philips. The Digital Accelerator at Philips is defining the next generation of breakthrough connected propositions across our HealthCare and Consumer businesses. In doing so it also is transforming the way we innovate and deliver value.
Read more on the lessons for Digital Transformation from Alberto Prado in the article ‘What are your key priorities for your Digital Transformation’.
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Iason Onassis, Managing Consultant, Industry Consulting, Philips Innovation Services
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