Today, a software house, together with its business, services, know-how and its investment in research and development cannot stand as an ordinary provider of technological services, but must support the customer and become a real business innovation partner.
Now that we have clarified the reason why we deal with the topic described so explicitly by the title, let’s try to explain what it means to do business innovation, because it is important to do it and then indicate how to innovate, or the best practices.
What is business innovation
Business innovation represents the search for a new business model, new practices regarding product, process and procedures, focused on achieving a general and continuous improvement.
Therefore innovation can concern different moments in the production flow: we can innovate by improving an existing product/service, making it for example more powerful, more reliable, or “smarter”; we can innovate by creating a totally new product/service (e.g. the first i-pad); we can innovate the process, make it faster, sustainable, eliminating waste; we can innovate by applying new technologies, such as augmented reality or artificial intelligence.
To explain why it is important to start a business innovation process, it is sufficient to remember that we live in a revolutionary era, a revolution not dated 2013, as it is customary when talking about industry 4.0, but it started several years before, since the advent of the Internet, in the 90s, that is when the world has suddenly become small.
Globalization has determined us to deal with topics we didn’t even know before: our competitors are no longer our neighbors: competition has become more intense in every sector. Today, the task of management is strenuous because the objectives have become more ambitious and demanding.
In this context, doing business innovation means overcoming the natural tensions between the defense of current positions (the core business) and the impulse towards new developments and scenarios.
Making innovation is first of all cultural, but also strategic: this is why it is important for management to be “knowledgeable” and promote the innovation culture in the company. Being innovative will allow you to be one step ahead of your competitors and keep your products/services permanently up to date and in line with the always new needs of your customers.
Input for innovation
Therefore, innovation can have different triggers.
The input can come from internal resources (R&D team) or from an external source, for example its customers.
In the first case, innovation assumes a clearer and more structured outline. Providing for a team that deals with research and development is part of that previously described culture: trying to anticipate customer needs is a strategic activity, analyzing what are the current and future megatrends to be able to develop a new, up-to-date and therefore useful product/service.
Right now, when we talk about megatrends, we obviously refer to artificial intelligence, machine learning, deep modeling, big data and everything that has to do with connectivity and the Internet of Things.
In the second case, innovation takes on features that are apparently more episodic and less connected to a corporate culture focused on innovation, but we must not underestimate the effectiveness of a drive towards the new that arrives directly from the customer. In fact, this activity will certainly endorse the needs of our reference target; it is an innovation that could have a general impact for the benefit of all other customers; finally, it could be the Trojan horse for the inclusion of a modus operandi focused on innovation, thus leading to the founding of that previously mentioned R&D team.
A business model for innovation: best practices
There are some good aspects that should occur so that we can talk about a business model focused on innovation.
- A business model that wants to start the innovation flywheel, as already mentioned, must be diffused by the leadership, or by the so-called “C level managers“. Not because this process must absolutely be imposed from the top-down level, but because it obviously involves final decisions that imply a sharing of intent. The first concern of these managers is to disseminate the innovation culture, by sharing the vision, values and training activities.
- This model should not be applied to the entire existing process. The two business models, the traditional and the innovative, must remain separate. It is necessary to collect data from the new model, before considering it a positive change, or an improvement. The change must be the result of what we can call “evidence based decision“.
For example, at the beginning it is appropriate to proceed with pilot projects. If we are talking about a project focused on the product or process, it would be appropriate to apply it to a single production line. After a few work cycles, while acquiring and analyzing the relevant KPI for the company, it will be possible to decide whether that innovation can acquire maturity in order to exit the experiment and enter definitively a regime for the entire production process.
- Today, in order to be considered innovative, the business model must be completely human centered. Everything that is thought, designed, and created must be done by focusing on the user’s experience. This is why we talked a lot about applications designed with mobile first logic and today we even raise the topic of mobile only … If the project provides an interface with the operator, we must consider that the person cannot waste time understanding the function of a button, it won’t be necessary to click several times to reach an information, and that there is useful information for a line operator and others interested parties, and for the plant manager and each must access only what they need in relation to their task. Everything that is designed without thinking about the user is destined to have a short life, therefore, to become waste.
- The approach of an innovative business model must be the design: it means that it must have an objective, an operation, and an increase in knowledge that leads to a final decision. For example, a design approach consists of the Deming cycle (or PDCA cycle). In this cycle, the process is divided into phases:
First phase: “plan”, analysis and planning of activities;
Second phase: “do”, operational phase;
Third phase: “check”, analysis of data received from the “do” phase;
Fourth phase: “act“: correction, development or improvement actions, based on the data emerging from the “check” phase.
Certainly this is just an example, it does not represent the only possible approach.
- Innovation must be focused on the customer. We are not talking about a market research in which the customer is questioned about his own needs, but of a real integration of the customer in the development process. In practice, the customer must be continuously involved, from the initial project, during development and, of course, during the final implementation.
- A business innovation model must be based on specific metrics (KPI), probably different from those taken into consideration by the traditional business model. Today the competitive environment is totally different from the industrial environment in which the metrics of traditional innovation were born. Metrics in general are the lifeblood for any innovative business model, because they are the tool that keeps the model up-to-date. It is also crucial to measure KPI both in real time and on long term, in order to have a continuous picture of what happens and what happened and to be able to predict what will happen.
But of course, first it is necessary to accurately decide what and how to measure it.
The role of a software house in a business innovation model
A software house is invested with a particular role in full industrial revolution 4.0. Even more, a responsibility.
The supplier of a type of service represents the fulcrum around which everything seems to be spinning: planning, production, design, marketing, sales, after-sales…
Today a software house must be able to be more than just a software service provider: it must be a business innovation partner (technological), actually it must be the main player that allows the customer to start an innovation process.
Not only a code, but a 360° know-how, which can range from industry 4.0 consultancy, planning, proposing the right solution to reach the customer’s goals, implementing solutions, supporting data analysis, updating and continuously improving the process.
Therefore, the relationship does not end with after-sales (that is, the classic assistance if something goes wrong …), but becomes a true partnership and shared growth intended to last over time if there is mutual satisfaction, and in a continuous tension between consolidated results and new challenges.
A relationship that recently has undoubtedly been encouraged by tax reliefs, such as those provided for in the Industry 4.0 National Plan. In this context, while enjoying various facilities, it is possible to renew one’s “smart” machines, or by making the existing ones smart by equipping them with sensors and software from an industry 4.0 perspective.
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