The latest edition of the Innovation Spend & Trends Report has been released onsite at this year’s FEI: Front End of Innovation conference. Brought to you by FEI and All Things Innovation, this benchmarking report showcases how innovation leaders are changing mindsets, shifting priorities and spending allocations as they balance their innovation efforts with the current economic environment.
In identifying the biggest strengths, weaknesses, opportunities and threats to their businesses, executives in the field also looked back and ahead as they set the stage for the second half of 2023 and beyond. In terms of technology, digital transformation is clearly a key hot topic in this year’s Innovation Spend & Trends Report, as innovation executives weigh in on the issue of advancing technology in their data capture, analysis and visualization needs.
In the survey, just under two-thirds of the community list digital transformation as the biggest opportunity for the innovation discipline. About 65% of respondents listed digital transformation as the biggest opportunity in the field. Only creating new or next generation products and services ranked higher in the survey, with 78% of respondents selecting that as their top opportunity.
These digital initiatives have existed in primarily finance and IT over the past few years. Efficiencies have been gained and now it seems that the innovation discipline is being tasked—at least in part—with taking those digital technology plans forward.
As for what part of the budget is being forecasted for and focused on digital transformation efforts, respondents were optimistic, if a little more cautious in their anticipated spending habits. In the survey, about 11% of respondents said their budget would be greater than 50% for digital transformation; 16% of respondents said their allocation would be 26% to 50% of their budgets. And 37% and 37% of respondents said their budget allocation would be between 11% to 25% or 1% to 10%, respectively. This signals that while there is some optimism to accomplish digital transformation tasks, the budget is still likely to fall short of targeted projections to complete all major tasks in the category.
Still, it’s unclear from the survey just what exactly digital transformation means to some respondents. There is no one right answer. It can mean a variety of different things, from simply technological advances in data capture, research and analysis and more advanced data visualization, to perhaps a company undertaking a full-scale initiative to establish digital operations. One thing is certain, artificial intelligence developments are not far from survey respondents’ minds, as the AI topic looms over the innovation and insights communities.
This year’s report contributors also weighed in on the topic of digital transformation. Many see the opportunities as well as threats to the status quo that digital transformation entails. Some point to the need for a strong internal culture to support digital transformation efforts while others see the need for finding a “champion” in the company to support their future projects in this regard.
“Digital transformation is so interesting. From an insights perspective, AI is powerful for the speed of products, formats and testing. We also worked on large scale digital twinning. Do you have to physically make the product? Can you make a digital twin out of it? How do I build the widget right? Being able to accelerate that is a really big deal,” says Brigette Wolf, Chief Marketing Officer, My/Mochi.
Susan Penta, Co-Founder, Managing Partner, MIDIOR Consulting, adds, “The fact that this data indicates digital transformation is finally taking root is a big takeaway. If a significant portion of a company’s budget for innovation is focused on digital transformation then it is a good indication that digital transformation as the focus of innovation is finally crossing the chasm. Innovation is often tightly correlated with tech startups and entrepreneurial ventures but today, everybody needs to embrace innovation.”
The pace of change in the current digital landscape is accelerating, and many industries, including innovation, are trying to keep up with the rapid changes taking place.
“Organizations are grappling with fundamental questions about the meaning of digital transformation and whether it is different from what they envisioned 12 months ago,” says Gail Martino, Senior Program Manager, Unilever. “Digital transformation is the place where all the action is currently happening, and companies must come to grips with it.”
AI is certainly a subset of this conversation, and a subject that is rapidly coming to the forefront when it comes to budgeting, hiring needs, training and other research factors. Martino adds, “The advent of technologies like AI has made digital transformation even more pressing. Respondents recognize the importance of digital upskilling and acknowledge that they do not have the right people or skills on hand. Upskilling is crucial for success in the current digital landscape.”
“Digital transformation is one of the biggest challenges and opportunities,” agrees Leslie Shannon, Head of Trend & Innovation Scouting, Nokia. “Changing the processes, thinking and the management styles around that is challenging. Many industries face this as we move from the physical to the virtual and the virtualized. It takes rethinking.”
Still, to others, true digital transformation should be held to a higher standard. Change is difficult if not challenging to some companies and industries that have been slow to react and adapt.
“The innovation budget is now partly focused on digital transformation,” says Harsh Wardhan, Innovation Program Lead, Google. “However, some companies also have this burden of legacy, this baggage that they carry on in regards to the existing systems that they have. Due to which it is a difficult position to take to go all in, they always have to move slowly and test a little bit, make changes based on results and then evolve with time. And it’s important because they have to manage change.”
But, asks Wardhan, “Are they doing digital transformation? Some companies do, but many are only focused on digitizing how they used to work before and that happens because they are not focusing on real transformation. They are focusing on putting band aids on the current scenario, which is using technology for the sake of it, because everyone is doing so and you have to conform to the status quo.”
The FEI and All Things Innovation community completed the comprehensive Innovation Spend & Trends Report covering what innovation executives are thinking, how they’re spending and the issues they face. Per the results, this is a senior-level, experienced, cross-industry group that signals a broad range of business-oriented preferences and strategic insights focused on the innovation industry as a whole.