2018 framework to understand digital innovation

Digital innovation is being embraced by everyone — from startups to large corporations. New tools, frameworks and service providers seem to pop up every day to help companies turn their analog problems into digital solutions.

And the industry of digitization is just getting started. Many more trends and changes are afoot. To keep up, it’s important to make sense of the process of digital product innovation, anno 2018.

At Slash, we use the following framework.

THE WORKFLOW

Products development can be broken down into 3 steps: definition, design and development.

This assumes that as a company you have answered the broader strategy question of what your business objectives are and how ‘Digital’ fits into it. In other words, as a company you know you have a digital need, even if you can’t quite yet articulate it.

Product Innovation in 3 steps

Problem Definition

This is probably the most critical and strategic step. Here, the product owner or decision-maker identify a need that needs solving and come up with some ideas on what a productized solution may look like.

The key processes are:

• Inspiration & trends (optional): this is a good place to start for organizations and teams that want to understand key trends and how others have setup their innovation function and what services they provide to their users. This is the realm of consultancies like Innovation is Everywhere.
• Problem Framing: identifying your problems, surfacing your assumptions, and defining your needs is the first step in framing what you want to do. A good example of such a ‘problem definition’ consultancy is Innovator.SG.
• Ideation is about generating ideas and solutions through sessions, from brainstorming to rapid sketching and brainwriting. Many people have experienced brainstorming sessions before, though productive ideation sessions are not easy to do. The Interaction Design Foundation wrote a helpful article on it.
• Value proposition captures the high-level customer needs and product solution identified by decision-makers in a way that guides the further design and development. Corporate advisory firms like ASA Advisory work on this.

While startup entrepreneurs usually go through the full cycle themselves (and many times!), corporate teams often involve innovation consultants and experts to facilitate those steps through interactive workshops.

In reality, the processes are not as clearly demarcated or binary. Its common to jump from one activity to the other. Many consultancies blur the lines between solutions or offer the full range.

UX Design

The initial solution here gets turned upside-down and inside-out, through a user-centered design process. This can range from just creating simple wireframes for a digital product, to an elaborate ethnographic research on your users.

Probably the most famous champions of UX Design, and more broadly human-centered design, are the folks at the global design consultancy, IDEO. The origins of Design Thinking date way back though, to the work of Buckminister Fuller at MIT, in 1950s.

At the high level, these are the typical processes:

• Ethnography provides insights into your users through social research. This helps surface your user personas, challenge your key assumptions on your user behaviors and map out your customer touch points. Companies like Frog and He!st have made a name for themselves in this space.
• Frame Solution: the answer to the blanks in, “our [PRODUCT] helps [USERS]who wants to [PROBLEM] by [SOLUTION]”. Typically, you need to gather a wide range of stakeholders on the client side and design team to frame this and ensure (1) it’s a real problem worth solving and (2) that technology plays an important role in solving it.
• Design Prototype: to move from high-level framing to concrete concepts, ideas need to be ranked, visualized with interactive prototypes and evaluated or tested quickly by designers and actual users. The key here is ‘quick’.
• Design Assets are created after the rough prototypes have been tested by users. The assets include detailed structures, workflows, mockups or wireframes, and other visual assets such as logos, branding etc. This is what most people are familiar with when they think of ‘design’. Most startups sadly don’t have the budgets or capabilities to invest in creative research and ideation, hence many UX Design agencies focus primarily on creating assets.

For a detailed yet accessible breakdown of each process, check out the excellent Design Thinking workshop we had at Startup Jungle, the learning community Slash runs in Phnom Penh, with thanks to Elliot Yeung, the head of CX at DMI for the presentation.

Product Development

Here the actual product gets developed. This is the most time consuming, and often most expensive and possibly frustrating, component of the product innovation cycle.

While development can be thought of as a linear process, it is more helpful to see it as an incremental journey where the product iteratively comes to life. Modern software development methods, like Scrum as opposed to Waterfall methodologies, are more ‘agile’ and align the entire delivery process and resourcing to these incremental steps, making the progress literally visible every step on the way. That’s for another post!

At Slash, this is our bread and butter. We typically break down software development into 4 processes:

• Proof of concept (POC): a POC is about quickly validating the technical architecture, by developing and deploying a rough solution that contains the most critical building blocks. For simple projects, this step is often skipped. Complex projects can benefit from a POC to get buy-in from organizational stakeholders, as well as to give the technical team more confidence there solution will hold up as planned. This Wikipedia article is surprisingly good at articulating the value of POCs.
• Minimum viable product (MVP): this is the simplest version of your product that satisfies early adopters. The Lean Startup movement has taken the world of digital innovation by force, and a lot has been written about this. Our learnings from MVPs is the importance of having an engaged Product Owner or client. Ultimately a successful MVP is all about prioritizing a subset of features and testing these with the users.
• Soft Launch: here your solution is deployed in a production (‘live’) environment with all the necessary features so that end-users can start interacting with it and provide feedback. A popular way of doing this is by structuring it as private tests (often referred to as ‘private betas’) with trusted users; or by releasing the soft launch in stages.
• Product Release: this is the long-awaited “launch”. If the new solution replaces an existing solution, this would also entail the migration: cutting over legacy systems to the new one.

Congratulations! By following this workflow, you should have a live product that (hopefully!) solves your needs.

3 WAVES OF PRODUCT INNOVATION

These processes are rapidly evolving. With digitization touching on every industry and area of society, it’s important to consider how these practices will or ought to change further.

To put things into perspective, consider a bit of history. Digital product innovation has gone through 3 waves since the birth of the modern Web (‘89–90).

How product development evolved since the birth of the Web

Wave 1: Monolithic

In the 90s and early 2000s, web and desktop applications were mostly ‘monolithic’ and delivered as integrated units of work. Innovation, design and development were often done by one and the same person. Few development-centric productivity tools existed and practices were more fragmented. When I started to program in ‘98 as a teenager, I had to do everything myself from design and coding, to server deployment.

Wave 2: Specialization

In ‘92, Linux and the Open-Source movement gained in strength, and rudimentary productivity tools started making their entry. Early 2000s those tools became more broadly adopted by the tech community, allowing specialists to emerge. Consider for example that Atlassian was founded in 2002, Heroku in 2007 and GitHub in 2008.

This coincided with the emergence of APIs in mainstream products such as Salesforce & eBay(2000), Amazon (2002), Flickr (2004) and Facebook (2006). APIs offer far more flexibility in designing application architecture, by breaking down the core application and user services into standalone modules. For a good introduction on the history of APIs and their impact, see the API Evangelist.

Wave 2 of product innovation was born, Specialization. The open source movement and the modern API economy gave rise to specialization across the entire innovation process with specialist teams, frameworks and tools, with fancy sounding names like “Business Model Canvas”, “Lean Startup”, “DevOps” etc.

Wave 3: Distributed

Since then, globalization and connectivity has helped level the playing field. Somewhere in early 2010s, companies realized that talent and entrepreneurial service providers can be found and accessed anywhere. Now, cross-functional product teams are distributed across the globe and assembled almost on-demand.

On-Demand Innovation

THE FUTURE OF ON-DEMAND INNOVATION

The challenge with distributed teams and tools, and with architectures that rely on distributed solutions more broadly, is managing the complexity of having so many moving parts. There is a hidden cost to such flexibility: it requires a lot of organizational coordination and integration.

This can be confusing and costly for organizations and teams that lack the experience or commitment to put the right process in place. This is especially through for companies that start their digital transformation journey.

New techniques will be developed in the near future, to ‘orchestrate’ the entire innovation process, from idea to shippable product, across all the different stakeholders. We’re already starting to see 2 types of orchestration capabilities emerge.

New orchestration capabilities will help streamline on-demand innovation

#1 Human Facilitators

If you monitored your LinkedIn recently, you may have noticed more exotic job titles prop up. Lean Coach, Entrepreneur-in-Residence, Chief Digital Officer etc. At the most basic level, those roles are in charge of ensuring an organization can turn analog ideas into successful digital products.

We expect to see a larger role to be played especially by in-house entrepreneurs, or intrapreneurs, who are assigned portfolios of innovation projects by companies. They deploy their entrepreneurial instincts to navigate the complexity of building something from scratch, within the constraints given to them by the parent company.

Of course, companies are not alone in trying to solve this problem. In the last decade, the original startup accelerators — Y Combinator and Techstars — have spawned a cottage industry of accelerators, with estimates ranging from 300 to more than 2,000 worldwide (for a list of 400 solid accelerators, check out “the MBA is Dead”). Those accelerators have tried to fill in some of the vacuum by offering their innovation services to large organizations, with mixed success. There are just too many incubators and accelerators and some of them will merge or disappear. Few accelerators succeed in achieving sustainable ROIs and many of their models are evolving towards providing glorified corporate consulting services. But that’s for another post!

The general trend we see now is for many companies to take control of their digital innovation functions, in-house.

#2 Full Stack Innovation Tools

In his book Lean vs Agile vs Design Thinking, Jeff Gothelf, articulates how “a rash of processes and methodologies” are vying for their product teams’ attention as companies try to evolve, adopt and embrace Digital into their business models.

New ‘full stack’ innovation tools will emerge to bridge the conceptual divides between the different methodologies and teams, and more closely align and integrate workflows. This will happen real-time and on-demand.

A good early-stage example of such a tool, is a recent investment and venture we co-founded at Slash, called “Augmented Tribe” (to be launched soon). It is an enterprise innovation app, that gives company’s PMO / Innovation department the platform to unleash the creative potential of their innovation teams with the support of on-demand experts.

We expect to see many more such new tools in the near future!

How orchestration helps to manage the complexity of having distributed teams and methods