Driving innovation through data

There are ever-greater demands on organizations to innovate faster and at scale. In response, data and analytics are being used to create radical new business models and disrupt traditional industry structures. How are data and analytics driving new ideas and new innovation, and what can executives do to incorporate data-driven innovation more directly into their strategies and initiatives?

In many ways, demand for innovation has become insatiable. Examples of radical innovation abound.

Innovation is becoming ever more disruptive, and big data and analytics has become intrinsic to the way innovation is happening. The recent IBM Institute for Business Value study, “Insatiable innovation,” concluded that while innovation of products, services and operations is becoming less sustainably differentiating, innovation of business models continues to be strongly correlated with outperformance: “It’s apparent that outperformers are not only engaging in more business model innovation, they are engaging in the more disruptive forms of business model innovation – moving into or creating entirely new industries”.

Outperforming organizations will be those that make data and analytics central to their innovation processes, as well as to the innovation itself. Data promises to provide the input for creative endeavors and new ideas. But the importance of data and analytics will transcend ideation and inspiration. This powerful pairing will become a central part of innovation itself, including dynamic and potentially highly disruptive new business models.

But innovation, and the value that it can bring, does not occur in a vacuum. Technology is key to motivating and driving innovation. Emerging technologies that both generate and use data – such as social, mobile, analytics, cloud, 3D printing, nanotechnology, sensors, wearable and biomedical devices, and 4G, among others – promise to have a massive impact on business economics, organizational structures and processes, as well as individual customer demands and expectations.

CEOs recognize the importance, and potentially disruptive influence of new technologies. For the second time in two years, CEOs identify technology as the most important force impacting their organizations, dramatically more so than in the past, even compared to the dot-com boom of the late nineties and early 2000s. (See Figure 2.)