Digital transformation involves a great deal of uncertainty, which companies are starting to mitigate by increasing how much they learn during the process of innovating.[foot]See N. O. Fonstad, “Innovating Greater Value Faster by Taking Time to Learn,” MIT Sloan CISR Research Briefing, Vol. XX, No. 2, February 2020, https://cisr.mit.edu/publication/2020_0201_InnovatingGreaterValueFaster_Fonstad.[/foot] Companies are investing in approaches such as A/B testing, sponsoring hackathons, partnering with start-ups, generating minimum viable products, and co-creating with customers.
However, in many companies, only one stakeholder group is enhancing what it learns from its efforts: innovation teams. These teams monitor how three attributes—what is possible with digital technologies, the needs of end users, and what is valuable for the company—interact and evolve to inform further iteration and produce a successful innovation.
But two other stakeholder groups also need to learn from digital innovation initiatives[foot]A digital innovation is a new (from your company’s standpoint) or significantly improved offering or capability that relies on digital technologies; for more, see N. O. Fonstad, “Designing a Competitive Innovation Portfolio,” MIT Sloan CISR Research Briefing Vol. XVII, No. 7, July 2017, https://cisr.mit.edu/publication/2017_0701_CompetitiveInnovationPortfolios_Fonstad. An innovation initiative is an investment of resources over time intended to generate value through innovation; for more, see N. O. Fonstad, “Conversations with CISR: Innovating Greater Value Faster,” MIT Sloan CISR, video recording, July 10, 2020, https://cisr.mit.edu/publication/conversations-cisr-innovating-greater-value-faster.[/foot]: senior executives and experts from corporate functions. Senior executives need to learn how to identify the most strategically valuable initiatives, with the aim of better allocating resources—most notably, scarce talent—to a portfolio of initiatives that addresses immediate opportunities and threats and advances on longer-term strategic objectives. Experts from corporate functions such as legal, risk and compliance, human resources, and IT need to learn from initiatives to identify challenges that are common across multiple initiatives and to build resources that help multiple initiatives make better innovations faster and cheaper.
We have defined three learning imperatives that address a company’s needs to learn continually about building (1) a successful innovation, (2) a portfolio of initiatives that realizes strategic objectives faster, and (3) shared resources that propel multiple initiatives. Each learning imperative represents the aim of a specific stakeholder group and the group’s approach to learning that best achieves that aim. All three learning imperatives are pursued by collecting data regularly from digital innovation initiatives. The companies we’ve studied that have successfully tackled these learning imperatives have reported creating more valuable digital innovations for their customers, delivering a higher number of digital innovations without increasing overall effort, reducing time to market through the utilization of shared resources, and reacting more swiftly to changing threats and opportunities while also achieving strategic objectives.
In this research briefing we outline the three learning imperatives and provide examples of how three companies from our research—Posten Norge, BBVA, and Munich Re—are pursuing them to achieve strategic objectives more effectively and efficiently.