How do you help your company become a relentless innovator?
Recruiting or promoting talent, increasing budgets, and sponsoring hackathons are important to injecting new ideas into a business. But there’s an additional X factor that is blowing up the rules of innovation. That is to reach well beyond the bounds of the enterprise into areas not thought possible — or even rational — before the onset of digital technologies.
We’re seeing it all around us — logistics providers teaming with insurance companies. Automakers becoming software companies — and visa-versa. Or retailers becoming healthcare providers.
Looking behind simply sinking more dollars, euros, pounds, or rupees into innovation initiatives, 42% of organizations are expanding their innovation networks in new directions, a recent survey of 248 executives, conducted and released by Deloitte and Fast Company in January 2024, suggests. They are “collaborating with partners that provide diversity of thought and break down silos, such as cross-industry coalitions, venture capital, private equity firms, industry associations, and consultants — well beyond their immediate organizational boundaries,” the report’s authors assert.
This means expanding well beyond traditional boundaries and into new industry areas. Today, innovation depends on “tapping into the potential of a partner ecosystem to build on expertise, folding in resources including assets, ideas, and the skills that can accelerate and support transformation,” says Nitesh Banga, president and CEO for GlobalLogic.
Such examples are seen across a range of industry types. “A bank’s mortgage department undergoing a digital transformation determined to partner with a real estate company and a technology platform to help first-time homebuyers better understand their mortgage qualifications during the search phase,” says Jim Bailey, CEO for the Americas at Capgemini. “The modularization of these services allows businesses to mix and match specific ingredients of their offerings to create a new business recipe.”
In another example of such hybridization, “logistics companies that have significant data on their drivers and trucks have monetized that data for insurance companies to create better statistical models for risk,” says Banga.
Look at the example of a large electronics retailer that “bundles services like tech support and installations along with electronics,” Bailey also illustrates. “This drives significant business impact because not only did the retailer make a sale, but they now have an ongoing relationship with the customer throughout the life of that product.”
In another example, “car companies are working on new offerings to sell as a service inside the car — similar to in-app purchases in mobile apps, content, entertainment and other services can be purchased through the vehicle,” says Banga. “Imagine a future where car companies become streaming companies with their own music and podcast content.”
Hence, a change in mindset — “most companies have come to consider themselves as technology or software companies, even if their core business historically had little to do with tech,” Bailey points out. “We see a mindset shift with products becoming services and services becoming platform plays, allowing for seamless crossovers and experiences with adjacent but related industries and players.”
Thanks to technology, such industry hybridization is more pervasive than it was even a decade ago, Banga says. “Digital technologies have enabled a completely new wave of specialization that was never available to businesses in the past.”
Data, in particular, is behind this trend. “Much of the enabler for hybridization is access to large amounts of real-time data and advanced data analytics,” says Banga. “Previously, cars or other types of physical products never generated the data exhaust that products create today. Organizations were never able to harness data in the way they do today.”
New developments with data and digital technologies are only going to continue accelerating such hybridization, says Bailey. “Artificial intelligence, blockchain, and mobile devices are themselves breaking down traditional industry barriers. Just look at how the average person organizes and bundles apps on their phone, often expecting seamless experiences across industry segments.”
Of course, there are risks or downsides of hybridization, especially with moves into adjacent industries. “This new model may not be in your core DNA, which opens multiple options of partnership, ventures or consolidations to mitigate that risk,” says Bailey. “It’s essential to consider how that shift is made, including the competition, the unique DNA required, and the talent you need to succeed.”
“Consider the pharmacy retailer that now offers healthcare services,” says Bailey. “Not only does this retailer have your purchase history, but it also has a record of your prescribed medications and providers, thus offering a seamless, end-to-end healthcare experience. Industry hybridization indeed has the potential to add significant value for consumers and businesses alike.”
A broad range of industry experience is essential, Banga says. “You need to be well-versed in various industries and have a consistent track record of collaborating with partners across different verticals.”
