As Steve Jobs once said, “innovation distinguishes between a leader and a follower” and certainly innovation is the key to being a leader in the digital economy. Companies that can do this are reaping a rich harvest in the digital world, while those who can’t are likely to be condemned to watch the world go by. Necessity is the mother of innovation – it’s why humans aren’t still living in caves and eating berries for lunch ‐ and what companies have to do is figure out how to channel innovative and creative energy to drive economic value.
So what are the drivers of innovation in the digital economy? The opportunity to make vast fortunes is one, but the threat of imminent disaster is perhaps a stronger one and for many communications players, the necessity that drives innovation is to overcome the ‘triple whammy’ of rising demand for network capacity that is no longer synchronized to increases in revenue; the pressure on traditional service revenues and their lack of speed in exploiting new sources of revenue. While the digital revolution has so far been enabled by major communications and computing firms, it is being exploited by innovative new entrants.
The dilemma of innovators
Innovation is a strange phenomenon. Many people talk about it, yet it remains elusive because it’s impossible to predict the shape that a great idea will take, or how or when it will appear. Even when ideas with huge potential do come along and are recognized as such, very often organizational structures and cultures prevent them turning into successes. Clayton Christensen is probably the best known writer on overcoming barriers to innovation and his ideas apply very well to the digital world that is rapidly changing the rules of how the market is structured, how you get access to what you want, and what technology is being used.
This article is the third in a series based on Keith Willetts new book Unzipping the Digital World, available from the TM Forum and Amazon in hardback and Kindle formats. Later articles will explore key competencies in greater detail.