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How organisations can improve digital innovation: A new framework


Digitisation is disrupting the way of working in every industry by enabling innovations in the form of more rapid business functions, and more agile business models.


In today’s competitive market, organisations must embrace digital technologies to stay relevant. But digitisation often fails to deliver positive outcomes. Are there patterns of interaction between humans and technologies that are more likely to deliver the goals of innovation? Understanding these patterns will enable CIOs and CTOs to minimise the risk of organisational failures when implementing digital innovation.




Five patterns of positive digital innovation

Using case studies, our research identified five distinct patterns of interaction between humans and digital technologies that leads to successful innovation outcomes. We use a simple acronym AACCT.


  1. Action. The use of digital technologies to enact the intended goals of the innovation. Let the technology be your workhorse.

  2. Amplification. The use of digital technologies to reinforce or enhance the positive outcomes of the innovation. Use technology to do more of what is already positive.

  3. Counteraction. The use of digital technologies to counteract negative outcomes. Use technology to prevent the occurrence of what is currently negative.

  4. Compensation. The use of digital technologies to compensate for negative outcomes by adding something positive. Use technology to deliver something positive to offset what is currently negative.

  5. Transformation. The use of digital technologies to transform negative outcomes into something more positive. Use technology at a more fundamental level to change what is currently negative.

In my work in financial services, which extends more than a decade, I have found numerous cases where adoption of these five patterns in digital innovation have led to improved outcomes for organisations. Below I highlight two cases where embedding these patterns from the ground up led to successful innovations.



Case studies

Innovating for more effective financial inclusion

While leading a financial inclusion project that involved sending robocalls to underserved bank customers, I was able to put these research findings into practice by embedding the patterns (AACCT) as principles of a framework. As the project encountered various challenges and opportunities, I led the team in executing strategies that aligned with the AACCT principles.


The project’s innovation objective was to develop the e-banking system for an underserved customer segment. Following the project plan, we designed and developed the system according to this objective (Action). We accounted for the requirements and preferences of the customers and involved them in the design and testing.


During the development and delivery stages, we identified and acted upon emergent opportunities. We recognised these positive elements, which were typically unexpected, and made decisions that would reinforce or enhance this positivity (Amplification). For example, if a certain segment of users responded particularly well to the engagement, then we would decide to finetune the innovation to develop more of the same for that particular market segment.


As challenges arose, our team made decisions on how to counter such challenges. At times, we considered the use of digital technologies to counteract a challenge directly (Counteraction). For example, we eliminated negative outcomes, such a bug found in the code, by fixing these errors.


If the errors were more difficult to fix, we looked to other solutions which often involved transforming the error or compensating for it. For example, midway through the project we discovered that customers were relatively unfamiliar with e-banking. We decided to revise the planned communications to include explicit instructions in each message (Transformation).


In another instance, we learned that some customers were especially busy at certain times so we decided to add new features that would enable these customers to engage at a more preferred time. We added a limited number of automated call-retries and a tollfree call-back option for customers (Compensation).


Implementing these patterns improved the team’s innovation capability and helped lead to successful innovation outcomes.



Innovating for greater Environmental, Social and Governance (ESG) alignment in investments

As a senior strategist in an innovative start-up company called ESG Base, my role was to productise and embed the AACCT principles into the company’s solutions. ESG Base provides ground-breaking technology solutions in the real asset investment sector. Due to my contributions, a client innovating by using the ESG Base solutions can thereby seamlessly inherit the AACCT attributes in their projects.


ESG Base’s principal clients are investors and policy makers looking for innovative solutions to objectively determine the ESG (environmental, social, and governance) credentials of their current and planned real asset investments. To satisfy the clients’ innovation objectives, the company provides a cloud-based AI platform that provides rich datasets and objective science-based analysis (Action).


The type of datasets needed to evaluate the ESG credentials of a real asset investment can be myriad and multifaceted. Users of ESG Base can drive more positive outcomes through the enhancement of data sources. To satisfy this clients’ need, we designed the ESG Base platform to incorporate many plug-and-play datasets, with the option to customise and integrate more datasets (Amplification).


Investors and policy makers are faced with the possibility of inadvertently investing in assets that contain a risk they may not have evaluated during their decision-making process. To help counteract this challenge, the ESG Base solution provides a quick-to-evaluate asset risk and asset impact dashboard, that provides a predictive and holistic view of various ESG and financial risks of the planned investments (Counteraction).


In some instances, the overall outcome of a project can be currently negative but a compensation mechanism can be established to improve the outcome. For example, an infrastructure project located in a high-poverty and low tech-skilled area that requires high tech-skilled workers to operate may not immediately create employment for the local community, but the incorporation of a community education and training program within the scope of the project can help develop the relevant skills and create future employment for the community. The ESG Base platform allows incorporating and evaluating the effects of such enhancements in scope of a project (Compensation).


If yielding a positive outcome from a real asset project is inherently challenging, an investor may want to explore fundamentally different projects. As an example, instead of a coal-fired power plant project, an investor may seek a fundamentally different project, such as a wind farm with battery. The ESG Base platform is equipped with an asset builder dashboard, that allows exploring the effects of radical changes in projects (Transformation).


Implementing the AACCT principles into the ESG Base products is enabling its users to better streamline their innovation journey of closer ESG alignment. Since its incorporation in 2020, ESG Base has won several awards as an agent of positive innovation. It is recognised by the G20 as a global Top-10 technology company enabling sustainable and resilient infrastructure.


Conclusion


As shown in these case studies, the findings from my research have significant implications for how organisations can optimise innovation practices. These patterns – action, amplification, counteraction, compensation, and transformation – offer a useful framework for innovation managers who are employing digital technologies. In following the AACCT principles, organisations can be better prepared for responding to, as well as leveraging, change.


[Article reposted from LSE’s Management with Impact blog:

https://blogs.lse.ac.uk/management/2021/11/02/how-organisations-can-improve-digital-innovation-a-new-framework/

]


Author


Dr. Dana Lunberry


Dana is a Senior Strategy Advisor at ESG Base. Dana has a PhD in Information Systems and Innovation from the Department of Management at the London School of Economics and Political Science. She has extensive experience in financial services through various roles including organisation leadership, project management, technology innovation, digital strategy, and R and D. Among other publications, she co-authored The PayTech Book.


Who we are

ESG Base is a global premium provider of technology and data solutions enabling ESG investments in real assets. We are “making ESG alignment easy” by offering scalable technology solutions for fund managers, investors, policy makers, and corporate strategists to discover, analyze and monitor the best ESG aligned investments.

ESG Base is supported by London Business School, The University of Cambridge, Santander Bank, European Regional Development Fund, and is part of the G20 InfraChallenge building better, innovative and resilient infrastructure.


Get in touch with us to find out more about our ESG Base platform capabilities.


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