The term “unprecedented disruption” has been so overused it has almost lost its meaning. However, as the pandemic continues to turn business models on their heads, it is increasingly clear that the future of business is being rewritten before our eyes.
While there are other key factors that make digital disruption a reality, technology innovation is a critical enabler of the transformations that will allow businesses to survive and thrive in the unfolding reality. There is a wide spectrum of emerging technologies, capabilities, and clever solutions of varying maturity to explore in this massive and growing space: cloud, AI/ML, IoT, 5G, AR/VR, edge computing, drones, low-orbit satellite, and quantum computing, to name just a few.
However, cutting through the noise and hype is a challenge. Further, business transformation does not happen overnight, nor is it stumbled upon by accident—and many companies are disappointed by the timeline for realizing returns from disruptive technology investments.
Despite the uncertainty, you can be sure that many of your competitors are already evaluating, experimenting, and fine-tuning how they leverage emerging technologies in an effort to propel their business reinvention. That rapid pace of change is raising the stakes on innovation. Companies that let emerging technologies pass them by risk falling behind or not surviving.
Business transformation does not happen overnight, nor is it stumbled upon by accident — and many companies are disappointed by the timeline for realizing returns from disruptive technology investments.
Based on our vast experience helping companies drive business innovation powered by emerging technologies, we offer five tips for making the right bets on emerging technologies—today. These guidelines will help ensure digital disruption is deliberate and strategic and establish a strong foundation for a lasting culture of innovation.
1. Create an innovation ecosystem
Leading organizations are establishing emerging technology innovation functions, or Centers of Excellence (CoEs), to explore emerging technologies and their impact on business strategy, services, and products. They experiment with disruptive technologies, uncover relevant use cases, pilot solutions, and roll out prototype products and services when there is clear business value. Having such a function in place propels faster prototyping, investment, and go-to-market activities, as well as more agile pivoting if an idea fails early market validation.
Often headed by an emerging technology executive—a new position in many organizations—the members of the CoE may report to the Chief Digital Officer, lead innovation functions, or be embedded into product teams. Depending on industry and company size, the CoE could oversee a multitude of cross-functional team members bringing a diverse combination of technology, functional, and industry expertise.
Emerging technology innovation functions collaborate with strategic decision-makers across the business to ensure that transformation projects align with desired business outcomes and generate value. The organization is typically responsible for defining guiding principles and an operating model for innovation; measuring and reporting on success across the business; and establishing incentives to reward behaviors that fuel an innovative and collaborative culture. Further, the group taps into ideas from external partners, such as leading universities, industry alliances, and startups, so that outside-in thinking is reflected in organizational innovations and ideas are validated from a variety of perspectives.
2. Listen to customers and markets
There is no doubt that emerging technologies will be central to new business models. However, enterprises are challenged by fluctuating trends when it comes to where to invest and divest. Many organizations evaluate analyst and consultant market research reports; internal and external consumer data; and industry publications, forums, and trade shows. And, as organizations keep their eye on these channels, there are a variety of lenses through which they can view evolving market dynamics: customers, investments, and competitors, certainly, but also employees, business partners and front, middle, and back office.
Tracking the activity of venture capital and private equity firms with strong track records of creating successful disruption in the market can give companies quantitative insights on what is up-and-coming in the emerging technology space.
For example, looking at trends through the lens of the customer will help organizations understand how consumer preferences are shifting, both within and outside of their industry, and what types of technologies can help them meet customers where they are.
Or, enterprises can follow the money. Tracking the activity of venture capital and private equity firms with strong track records of creating successful disruption in the market can give companies quantitative insights on what is up-and-coming in the emerging technology space. It can also help identify potential partners to accelerate their innovation agendas.
Finally, assessing whether there are direct or adjacent competitors buying up certain kinds of emerging technologies can uncover high-potential areas as well as future avenues for competitive differentiation.
3. Lead with desired business outcomes
Some technology leaders tend to innovate based on the tools they have at hand or based on the last supplier they spoke with. That approach is backward, and it can cost the business a great deal. Innovation needs to be intentional and rooted in the outcomes that business leaders are looking to realize.
Enterprise innovators should think holistically about the specific challenges and opportunities their businesses face, both today and in the future. This approach will help identify desired outcomes before solving for which tool in the vast emerging technology toolbox can help their business meet its objectives. Importantly, this mindset also helps innovation teams combine emerging technologies—e.g., edge computing, cloud, computer vision, and AI/ML—to enable wholly new capabilities and spark greater transformation than a single technology would allow.
4. Enable agile innovation
Aligning emerging technology investments with business strategy requires a balance of cross-functional know-how as well as key capabilities and resources. For innovation to result in tangible outcomes and value, the emerging technology innovation team needs access to emerging and modern technologies, assets, accelerators, and tools. This can be accomplished directly through procurement and/or by working within the ecosystem of academia, business partners, and technology providers.
Having ready access to such technologies, reference architectures, technology workbenches, data models, development platforms, templates, and success stories will help accelerate a path to market disruption and organizational transformation and help the enterprise adapt to the new norm.
Another critical aspect of this journey is a modern delivery/operating model that is based on experience centricity, human-centered design, and agility. It is important for organizations to utilize lean, fail-fast development approaches to be nimble and keep up with the pace of change.
5. Look beyond short-term feasibility concerns
Even when a company has matched a set of technologies to a business problem, there are often concerns about jumping in before the technology has a chance to mature and scale. So how does an enterprise effectively prioritize its emerging technology spend?
In many organizations, potential innovation investments are evaluated according to four criteria: desirability, viability, feasibility, and sustainability.
It is critical to remember that there is a danger of being left behind when organizations get too hung up on evaluating the current feasibility or sustainability of a given technology solution. Sustainability often develops over time as technologies move into mass production. And, given the rapid pace of technological change, today’s feasibility challenges will likely be irrelevant in a few years. Further, overemphasizing current feasibility risks missing out on the potential of emerging technology convergence to deliver greater business value.
In contrast, since desirability and viability often translate into customer satisfaction, meeting these criteria could be enough to warrant an initial investment. For example, a traditional consumer products company looking to make its first smart, connected product should start by considering if the technology will differentiate its products (desirability) and solve customer challenges or create better experiences (viability). If both answers are yes, the technology is likely worth piloting.
Although it may sometimes seem like a leap of faith, early investments in the right emerging technologies can help companies rise above the pack as market leaders. So, start experimenting, prototyping, and market testing. Failing fast should not discourage your progress to successful transformation and market disruption. In today’s rapidly changing environment, it is simply not an option to sit on the sidelines.
Martin Sokalski is a Principal of Emerging Technologies at KPMG LLP. Throughout his 20+ year career, Martin has helped organizations overcome a variety of business and technology challenges with a focus on digital, innovation, and emerging technologies. As digital strategy and solutions leader and a global leader for emerging technologies, he brings differentiated capabilities and solutions in today’s demanding and challenging market.
Greg Corlis is a Principal of Emerging Technologies at KPMG LLP. With more than 20 years of experience in business and technology solution design, implementation, and advisory services, he helps companies transform their business operations, launch new technology products, and expand operations into strategic markets to drive growth and performance.
Michael Krajecki is a Managing Director of Emerging Technologies at KPMG LLP. He serves as a trusted advisor across industries to help analyze complex business challenges through designing modern digital solutions. He has diverse experiences across disruptive technologies and digital platforms, including connected medical devices, autonomous vehicles, smart facilities, cryptocurrency, consumer IoT products, and computer vision.
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