Innovation and transformation are often used synonymously, but they are different in the digital world. In some instances, transformation can lead to innovation. In others, innovation can lead to transformation, but this mutually causal relationship is often overlooked since they are thought to mean the same thing. While indeed related, it is crucial for modern business leaders to know the difference between the two terms.
One of the major differentiating factors between transformation and innovation is speed—or lack thereof. Transformations take time—moving from one state to another is a process. Innovation, on the other hand, usually refers to a sudden spark or creativity, and the incipient actions that lead to implementing that spark into a company’s strategy.
Innovation requires encouragement, collaboration, and communication, but it typically implies clear steps that must be taken—it’s the start of something great. What happens after is transformation—the implementation process following that first spark of innovation. It also suggests an eventual end once the transformation has been completed.
Digital transformation is a clear example of the difference between innovation and transformation. Essentially, digital transformation describes the process by which a company forms a strategy to implement technology to improve business and meet the ever changing demands of the consumer. The goals of a digital transformation can include broadening the company’s reach, improving operational efficiency, transmuting the company’s culture and image, or all the above. Traditional business practices are consistently put to the test in the face of evolving technology, and it’s important for modern companies to recognize technology’s potential and accept when the time for change has come.
Innovations drive changes and make them a reality. For example, the dawn of social media disrupted the marketing realm forever. People can now communicate regardless of physical location, and information changes hands faster than ever. As new technology like smartphones and internet-connected devices emerged, society underwent transformations to accommodate those innovations.
Innovation is the rethinking or reimagining of a business process that already exists. Essentially, once a transformation is realized and the new reality is established, innovation describes when those norms are again challenged. For example, after social media reshaped social communication dynamics, various other accepted norms such as news, entertainment, recreation, content, and business had to change. Now, social media is being reimagined for countless purposes, including business.
Once social media became part of everyday life, it became easier for brands to connect with their audiences and customers. For years, a typical customer’s interaction with a brand usually only included the point of sale and occasional exposure to marketing materials.
Social media platforms allow brands to constantly provide audiences with valuable content and have a more meaningful relationship with them. Many customers like to feel connected to the brands they like and relish the opportunity to make a difference. Social media was the innovation, and it led to a transformation in how businesses reach their customers.
Apple probably comes to mind for most people when they think of innovative companies. Every announcement from Apple is awaited with bated breath from countless users who enjoy their products. From the iMac to the iPhone, every Apple product has been repeatedly improved for better customer satisfaction. New iterations of Apple devices encapsulate the idea of product innovation: assessing the success of an established product and challenging its capabilities to deliver something even better.
When a new product enters the market or a new service generates a great deal of sudden demand, an entire industry can shift seemingly overnight as competitors race to create something on par or better. Third-party developers scramble to provide the best content and services possible to accompany the newcomer. Consumers benefit the most, because this disruption generates competition, which in turn leads to better products and services for the end customer.
Transformation describes those ongoing processes that happen in the world after innovation enters the scene. Google is a great example of a transformative company. Today, the search engine is highly recognizable and easy to use, but since its inception, Google has undergone constant revision, optimization, and reconfiguration to deliver more accurate and relevant search results for users. Google has allowed users to reliably search for what they need, and, in doing so, has provided businesses with the tools needed to reach their audiences. Surely Google is often used as an example along with Apple and Amazon. However, other global leaders like Microsoft, Cisco, IBM, Dell, HP and non-technology companies like Procter and Gamble, Nike, BMW are all great examples of companies that are constantly transforming to meet changing market demands.
Having said that, I believe it’s wise for business leaders to encourage their teams to constantly look for ways to innovate. I give talks around the world about how the rules of modern business change on a seemingly daily basis, and to remain competitive, you need to remain relevant. Make sure your organization stays current on new tech, new trends, and new concepts. Empower your employees to collaborate and encourage innovation—that creative energy will drive transformation in countless ways.
Neil ran his first SAP transformation programme in his early twenties. He spent the next 18 years working both client side and for various consultancies running numerous SAP programmes. After successfully completing over 15 full lifecycles he took a senior leadership/board position and his work moved onto creating the same success for others.