Today, while many traditional enterprises have taken the digital route, they struggle to keep up with the digital natives. The need for sustainable innovation and value realization is paramount as enterprises compete and adapt to rapidly changing market and consumer demands. Enterprises must be agile and nimble in execution and innovate at the required pace. However, sustainable innovation is hard to achieve. Traditional enterprises struggle to bring in the environment, ecosystem, and agility that digital natives have right from the beginning.
What’s hampering sustainable innovation
The existence of fragmented value chains, functional siloes, and limited alignment between business and technology can result in organizations that are not attuned to customer needs, making their operating models ineffective. Digital transformation efforts may not yield value as expected without nurturing new ideas through collaboration.
Teams often think and work in terms of ‘projects’ with little consideration for including user feedback, market views, or technology viewpoints on possible improvements. There is no culture of continuous evaluation or ideation on what can be improved. The lack of a robust partner ecosystem also inhibits innovation. As speed is of the essence, using what’s already available rather than reinventing the wheel is essential to driving rapid innovation.
The need for operating model transformation
Sustaining innovation at scale requires a new way of thinking and doing. It requires that enterprises embrace ‘product thinking’ and have systems and processes for faster product releases with sufficient mechanisms to respond to regular customer or market inputs with new products, features, or enhancements. This signifies its ability to bring out a single product, capability, or service to the market and constantly improve, enhance, and even sunset them when they no longer meet customer needs or can be replaced by better, more disruptive products. Teams must have access to all available customer data and analyze via multiple vantage points and constantly focus on improvement with customer centricity at the core.
Many traditional enterprises have adopted Agile and DevOps and feedback loops to ensure faster releases and encourage innovation. But adoption is limited to the technology organization. Business is rarely on-board as a partner in driving it nor the functions such as HR, legal, compliance, which play critical role in business agility. Even within IT, adoption is in pockets, leading to a lack of synergy between teams for successful product releases in the market. Therefore, while there is considerable improvement in engineering’s ability to produce faster releases, many organizations admit their businesses do not benefit from that agility.
Slowed by the dead weight of legacy systems and practices, traditional enterprises are transforming their operating model and shifting to a customer-centric, product-led organization with a platform ecosystem.
Shifting to products and platform-oriented model
The main objective is to clear bottlenecks and turn the product journey into a growth engine for the entire enterprise. The organization structure is pivotal in this shift, and it requires rearchitecting to move away from isolated functions to customer journeys and value streams that orchestrate these journeys. It needs unified teams with an enterprise-wide focus on customer experience and continuous enhancement. Together, the team develops a product strategy and roadmap. A mindset shift from project to product thinking is equally important and depends on these structural changes taking root.
Establishing a platform ecosystem helps quickly expand service and product offerings and define new and effective business models. Platform-based product development takes care of the business-as-usual aspects while eliminating a significant portion of the busy work in their systems with greater efficiency. It allows the product team to focus more on designing and developing new offerings and possible enhancements. With this kind of operating model transformation, barriers to innovation come down, helping enterprises unlock value from digital faster.
Making sustainable innovation a reality
Most enterprises invest in digital architecture that pivots around micro-services, API-first, cloud-native and headless principles, and a technology stack most relevant to their needs. This technology framework and the adoption of Agile and DevOps are foundational to making digital happen.
However, tech transformation alone will not yield business outcomes. Enterprises must ensure their operating model transformation also runs in parallel and mirrors it so that they have an environment of sustainable innovation leading to faster and consistent value realization.
The article has been written by Alok Uniyal, Vice President and Head of IT Process Consulting Practice, Infosys