The era of digital transformation: How to apply Worksheet 2 and the Attractiveness Map for internal innovation projects
- Case studies
- Drill down
While the Market Opportunity Navigator focuses on customer-facing opportunities, internal innovations play a key role in the survival and growth of companies. In this article we present few adaptations to help managers evaluate and compare internal innovation projects and demonstrate the process with one example.
The case of internal innovation
The Market Opportunity Navigator focuses on customer-facing opportunities: it helps managers discover where else they can play by identifying, evaluating and prioritizing new offerings and target markets.
Yet, innovative companies also need to continually improve their business and operational processes – an ongoing challenge which requires the evaluation and prioritization of different internal innovation projects.
To help innovation managers fulfil this task, we adapted Worksheet 2 to evaluate the attractiveness of different internal innovation projects and understand their upsides and downsides. Mapping various projects on the Attractiveness Map also allows managers to compare and focus on the most valuable ones.
Why internal innovation matters
Simply put, internal innovation means change within the organization, in attempt to make established ways of working simpler and more efficient. It covers approaches that focus on the resources and processes within the company, such as HR, R&D, logistics, customer service and more.
This internal change is done primarily within the organization – to improve efficiencies, increase productivity or reduce costs for example, although the impacts may be visible both within the organization and outside of it.
Data availability and technological advancements are key enablers of internal innovation. Digital technologies such as artificial intelligence, machine learning and virtual reality play a major role in modifying or creating new business processes – a change that is often termed digital transformation.
While this transformation is critical for firms’ survival and growth, it is also immensely challenging to execute. Resistance to change, low levels of expertise and a lack of overall strategy are few key barriers to successful implementation of internal innovation projects. To overcome these obstacles, innovation managers must be transparent and clear on the overall potential of the change as well as the key challenges it bears.
The revised Worksheet 2 of the Market Opportunity Navigator helps managers assess the potential and the challenge of each project, focus on the most valuable ones, and communicate this reasoning to increase employees’ engagement.
Evaluating the attractiveness of internal innovation projects
Just like market opportunities, internal innovation projects differ on their level of potential to generate value, and the challenge in capturing this value.
The three key factors that shape the potential of internal innovations are:
- The compelling reason to adopt the project
- The extent of its impact
- The economic viability that it bears
The three key factors that shape the challenge of internal innovations are:
- The obstacles in implementing the project
- The overall time until goals are fulfilled
- The external risks that may hinder its success
The below Worksheet 2 was revised to present these key factors, and the main questions that managers need to consider in order to assess them. Once you feel confident with your assessment, you can map different projects on the Attractiveness Map, compare their value and prioritize your investments.
Click here to download this worksheet
Example: AI solutions for HR
A traditional 200 years old family-owned company in Austria invested recently in the expansion of its machinery park and increased its production volume tremendously.
One consequence of this investment was the expansion of employees, both in production and administration, leading to major adaptations in the HR department: New staffers were hired, new work processes were defined, and many of them were digitalized to lower the team’s workload.
Dr. Matthias Walter, the Director of Personnel and Human Resources of the company is now considering the implementation of Artificial Intelligence (AI) solutions in different HR processes, in order to cope with the increasing amount of work more efficiently. To evaluate the attractiveness of this innovation project and check how meaningful it would be for the company, he applied Worksheet 2 and positioned this opportunity on the Attractiveness Map.
After discussing the listed criteria with HR staffers and employees from other departments, Mattias rated the overall potential of implementing AI in HR as super high, and the overall challenge as medium. Here are the main considerations for this assessment:
- Compelling reason to adopt
- Clear unmet need for HR staffers (more efficient work through the use of AI), for job appliers (easier access to application information and application steps through support of AI), and for employees (easier access to corporate information and easier handling of organizational tasks through AI)
- Impact extent
- 17 employees in the HR department
- 500 job appliers per year
- 1000 employees of the company
- Economic viability
- Decrease of costs by working more efficiently with the help of AI
- More efficient (faster) application management
- Saving time to access corporate information and perform organizational tasks
- Employer branding benefit: First industry company in the local area using AI
Summary of potential: The opportunity bears a super high potential due to more efficient work, faster application management, easier access to corporate information and simpler handling of organizational tasks.
- Implementation obstacle
- Unfamiliarity of the board members with AI and therefore not a clear vision of the advantages of AI
- Uncertainty of the staffers about the new technology of AI (not tech-savvy enough)
- Difficulties to hire AI experts on the local labor market
- Implementation time
- Long project for implementation of the AI technique;
- Long training for all staffers on using AI
- External risks
- IT: Data security; external cyber attack
- Lack of experience of local AI suppliers due to still low demand of industry companies
Summary of challenge: The big challenge is convincing the staffers of the benefits of AI technique by getting them familiar with it and to find professional AI suppliers and AI experts in the local region of the company.
When transferring the results of this evaluation to the Attractiveness Map, the implementation of AI in Human Resources seems to be a Gold Mine opportunity for the company. It will thus be pursued in the near future.
We invite you to apply the logic of the Market Opportunity Navigator to different innovation projects, including those that are internally focused. Feel free to adapt it to your own needs and situation 😊