Innovation Updates in February

Our monthly innovation updates provide you with an overview of the most relevant insights, best practices & tools from the innovation cosmos.

1. Gartner®: 6 practices to help you drive effective portfolio management

Portfolio management allows businesses to align their suite of trends, technologies and start-up activities with internal capabilities alongside strategic objectives. Gartner® research projects that “by 2025, 70% of digital investments will fail to deliver the expected business outcomes, due to the absence of a strategic portfolio management (SPM) approach." 

However, Gartner insights show that even organizations with some type of portfolio management tool may not achieve the desired results for several reasons.  

According to Gartner:

 "[s]iloed portfolios cannot work in isolation to provide the organization with a true picture of performance. You need to optimize the value of all major organizational initiatives, which requires integrated portfolio management."

Gartner's 6 Practices for Effective Innovation Management aim to help you optimize your portfolio management to create tangible value for your organization in general and your digitalization strategies in particular.

1. Visibility to Work and Constraints: Have a clear view of what needs to be done, who owns the work and by when the work needs to be completed.

2. Customer-Driven Prioritization: Ensure that the undertaken initiatives meet the needs of customers as well as the internal capabilities of your organization.

3. Adaptive Resource Allocation: Constantly monitor needs to deploy resources where needed in the organization and foster an environment where resources move between initiatives and address priorities.   

4. Continuous Execution of Value: Develop a process to clearly define and track the value of the initiative, and ensure that all relevant stakeholders in your organization are kept apprised of developments and outcomes.  

5. Change Enabled Culture: Create a systemic and cultural processes to ensure that employees buy into the initiatives and have appropriate feedback channels to optimize execution.

6. Continuous Value Realization: Use customer expectation as the benchmark for the value being created by initiatives in a steady, consistent, measurable fashion.

Get your exclusive copy!

Download the full Gartner report and get an action plan to increase the effectiveness of your organization’s portfolio management and how you can assess your organizational readiness to apply the practices highlighted above.

Also read: Ways to Prioritize Innovation Projects That Support Strategic Objectives

2. How to navigate through uncertainty with innovation

"When the times get tough, the tough get innovative and create paths to future growth."

A recent article by McKinsey addresses the importance of innovation in current times of uncertainty and disruption. Protecting what they have and waiting for a return to “normal” is a high-risk strategy for most organizations. This is because they are facing new conditions such as structural supply-chain issues, rising interest rates, and sustainability challenges, which will have significant implications for their business models. Companies need to find pockets of growth that will ensure long-term success, and this requires innovation.

According to the 2021 New Business Building Survey by McKinsey, respondents expect half of their revenues in the next five years to come from entirely new products, services, and businesses. The article states that big innovation bets may now be safer than investing in incremental changes.

Five practices that are particularly important today for driving innovation success:

Companies with business models optimized for specific global conditions are more vulnerable to the ongoing sea change, and investing in innovation is an important hedge against uncertainty. Amidst the energy crisis, businesses must embrace innovation to adapt to disruptions. The risks associated with business as usual versus bold innovation have been inverted, and shifting resources toward big innovation bets is crucial to opening new paths of viability.

In times of uncertainty, companies must balance short-term innovations for cost reductions with long-term investments in breakthrough innovations for profitable growth. Small product tweaks may not boost long-term performance, but "renovations" to designs and processes can produce savings to fund longer-term investments. 

Companies should look for diversification opportunities outside their core businesses. Economic shocks such as the COVID-19 pandemic have led numerous organizations to tap innovation opportunities in adjacent markets. Top-performing companies innovated nearly twice as fast as their low-performing peers in generating new products and services during the pandemic. Adjacencies closer to the core business and current competencies can represent significant new sources of growth.

Business model changes can boost a company's resilience and generate new growth opportunities. Examples of such changes include new value propositions, economic models, production models, or routes to market. Adopting these changes can enable companies to put more core competencies into play and make them more adaptable to changing business conditions. For instance, pivoting to renewable energy or providing products to health-conscious consumers can insulate operations from near-term price swings while diversifying supply bases.

Large companies increasingly invest in partnerships and joint ventures to quickly scale new business models or offerings. The current market volatility provides opportunities for incumbents to extend their networks of partners or acquire them, especially with many start-ups struggling and lower availability of venture capital. For instance, a European energy management company joined forces with a private equity firm to build and operate clients' energy infrastructure, helping organizations transition to renewable energy sources.

3. Our tech of the month: Creative AI

We are in the midst of a Cambrian explosion of artificial intelligence (AI). Working alongside, augmenting, and, for some, challenging human creativity, generative AI is evolving at an unparalleled pace. And while ChatGPT's meteoric rise and Bing AI chatbot’s captivating headlines appear to have ignited this current fervor around the rapid proliferation of AI, these are but some of the countless emerging applications in this game-changing field. 

There is a growing list of compelling, creative AI models capable of turning out unique artwork, photorealistic images, music compositions in different genres, architectural designs, videos, and more. All of these different developments collectively mark an exciting point in the history of AI. Compared to AI and ML models of the past, what is unique about these models is how we interact with them in the so-called "application layer"—representing ease of use, accessibility, and practicality. It is these attributes that can account for some of ChatGPT's viral popularity when OpenAI released it to the public.

Creative AI (CAI) today would not be possible without the availability of huge amounts of data, computing power, and the foundation of deep neural networks that learn from data to generate outputs, i.e., machine learning. Two major breakthroughs that enabled AI's current capabilities then came in the mid-2010s: generative adversarial networks (GANs) and Variational autoencoders (VAEs). GANs generate new data by training two neural networks to compete, while VAEs generate new data by encoding the original data into a lower-dimensional representation and decoding it to generate new data similar to the original data. 

The result of these advancements is a branch of AI that can learn, understand, and interpret datasets, patterns, and trends to deliver original solutions, increasingly indistinguishable from what humans can devise. Indeed, as CAI progresses, several debates are arising around the technology's use, misuse, opportunities, and threats. The ramifications for politics and media could be extreme, and CAI policy could soon be imperative to prevent abuse and the spread of mis/disinformation. Policy will likewise need to keep pace with the technical and functional acceleration of CAI as more organizations invest in its development and embed its capabilities into everyday use and business models. 

CAI has unbound potential across industries. It could heavily influence how organizations adapt and align with Digital Transformation and the Future of Work. There are also implications for the Sustainability Imperative—delivering automated, energy-optimized solutions, but also creating a potential fivefold increase in computing power with a huge carbon footprint that will need to be addressed.

Open the Digital Transformation Technology Radar to view additional insights related to Creative AI and other technologies propelling us forward productively, industrially, and creatively. 

4. Fact of the month: The 5 biggest tech trends in 2023

Forbes yearly highlights the key tech trends businesses must address today to remain competitive. In 2023, you should have these technologies on your radar:

• AI Everywhere

The AI hype has been around for a while, but if you’re not someone who is actively involved with working on technology, you may not appreciate how ubiquitous AI has become.

• The Future Internet (Metaverse)

In 2023, the metaverse will become steadily more popular among smaller organizations, while for the global brands already involved, everything will start to come together to create cohesive products and services. These will be intended for mainstream consumption rather than simply to excite technophiles and early adopters.

• A Digitally Editable World

Our ever-evolving ability to digitally recreate anything in the physical world is what makes the metaverse viable (or inevitable even) in the first place. But this idea goes beyond simply creating immersive online experiences; today, we can edit things in the digital world to influence the real world.

• Re-architecting Trust With Blockchain

The questions asked about trust in 2023 will revolve around the principle of decentralization. This means removing ultimate control of an organization, company, or process from any one central point of ownership, using decentralized networking built around consensus and encryption.

• The Hyper-Connected, Intelligent World

This trend quite literally ties all of the others together. The network of connected sensors, devices, and infrastructure gathers the data we need to build the metaverse, create digital twins, train intelligent machines, and design new ways of enabling digital trust. This is what is known as the Internet of Things (IoT), and its impact on our lives will continue to be felt strongly in 2023.

5. Your monthly dose of innovation

Meet us at COPETRI CONVENTION on May 23 -24, 2023!

The CoCon23 is the only event in Germany that combines the topics of people, transformation and innovation. Learn from each other - exchange ideas - adopt new perspectives. Join our workshop session, and don't miss the joint keynote with Bosch! Register here