Driving growth and innovation with a digital factory approach

Series 1 of 6 on NCS Digital Factory

Most businesses today recognise that the ability to innovate is a vital driver of growth. Yet many also report that their path to innovation success is far from straightforward. A common challenge involves successfully bringing a new product or service to market. All too often, a digital initiative that promises to deliver value can end up failing to scale and ‘graduate,’ leaving behind wasted time, money and unmet expectations.

Take the example of a leading healthcare services provider that wanted to investigate whether using distributed ledger technology would help it reduce fraudulent or duplicate claims more effectively. It designed and tested a blockchain proof of concept (POC), using a limited dataset extracted especially for the project. The initiative delivered exciting results, but then the organisation hit a stumbling-block. Claims data across the organisation’s internal systems was not sufficiently digitised to support the successful uptake of the POC more widely. The project could not carry through to market launch and scale.

What’s keeping organisations from driving innovation successfully? And how best can they ensure their POCs don’t end up as mere ‘innovation theatre’ – ideas that burn brightly but fail to scale, thus staying stuck at the level of a one-off performance?

Embracing innovation: The three biggest challenges

Companies need to decide how close to the core of their business they are willing to anchor their innovation agenda.

Problems often arise when companies set up an agile team or innovation centre to develop a one-off new idea or switch to more agile ways of working, but leave the team siloed, outside the main order of business. As a result, they may struggle to diffuse the required digital capabilities and approaches across existing work structures when it’s time to take the new product or service to scale.

Typically, challenges arise in three areas.

• Technological challenges. Companies seeking to execute a POC within the shortest possible timeframe often choose to run innovation projects on a different solution stack from their ‘business as usual’ (BAU) one. They may take different development approaches as well. This can cause problems beyond the POC phase, as the work may require significant re-development. Companies may also face technical feasibility challenges that weren’t evident when the agile team developed its idea within its ‘innovation silo.’
• Management alignment challenges. Senior leadership commitment and buy-in is critical for any organisation that wishes to innovate effectively. If innovation projects (including POCs) are commissioned as ad-hoc initiatives whose outcome will not change the priorities of the overall business – its strategy, KPIs or investment – there’s a greater chance the initiative will fail.
• Cultural challenges. Companies may lack the supportive culture required to push out new digital capabilities quickly, such as cross-functional teams, agile ways of working, and a willingness to get to grips with new technologies. Such approaches aren’t just about following new processes. Success also requires adopting a new mindset across the broader company, where people feel empowered to embrace self-organising teams, a spirit of experimentation, and a willingness to fail while actively learning from any failure.

Adopting a digital factory approach

Recognising the challenges involved with scaling innovation, many companies are beginning to use a “digital factory” approach. This involves doubling down on the focus to innovate and transform, deepening the adoption of agile ways of working and diffusing these through to the larger organisation.

Like its physical counterpart, a digital factory gives teams space and a supportive environment to build and develop high-quality outputs. As well as enabling the entire chain of POC activities, from ideation through to development, it also builds vital bridges between the innovation agenda and key functions and processes, across the enterprise. Key stakeholders are involved and invested right from the start of any initiative. That way, their expertise can be tapped as valuable input into digital factory projects, helping companies ensure that the product or service they are developing is highly user-desirable.

As more employees are involved in factory projects, more people get to experience first-hand a new way of working. Put another way, the digital factory brings more agile and customer-centric approaches commonly deployed in innovation labs back to the wider organisation.

Enterprises thus gain not just the factory’s outputs, but a powerful set of tools to bring the transformation of their people, culture and processes closer to the core of the business.

Starting-points for scaling success

Drawing on multidisciplinary capabilities and deep experience working with leading organisations across sectors, NCS has a comprehensive digital factory approach to help businesses accelerate innovation. It starts with the following three steps.

• Defining the focus. Innovation agendas can differ widely. Some companies may want to focus on ideation or new product development while for others, there may be a wish to concentrate on application modernisation. Whatever the goal, the starting point is to ensure that a company’s digital factory approach is aligned with its overall business strategy as well as its transformation agenda.
• Building an innovation culture. Companies can learn how to introduce an innovation culture that is not merely confined to the digital factory but adopted right across the organisation
• Implementing scalable digital platforms and technology. Designing a factory that can graduate its output starts with choosing technology and platforms that can bridge applications and services into a company’s core technology environment without losing time to significant redevelopment.

When organisations transform and align their digital capabilities using these approaches, they’re better positioned to find innovative growth opportunities ahead of competitors. That way, they can do much more than simply adapt to the digital age – they can thrive in it.