For many business leaders, the allure of new technology is undeniable. Being a modern business with all sorts of tools at your fingertips, including the latest and greatest in AI advancements, is certainly appealing! But just chasing the trends in the technology space won’t guarantee business success.
In fact, while jumping on the latest technology is a hobby for some, a fixation on the new and novel can be counterproductive and lead to being stuck in a cycle of short-lived fads. If you think about what was considered cutting edge technology in1990, it’s not really comparable to what we consider to be the same in 2024.
True innovation isn’t about adopting technology for its own sake; it’s about leveraging it strategically to create meaningful change. In other words, instead of starting with technology, start with establishing exactly where you want to innovate in your business and figuring out your innovation ambition, and then move on to exploring how technology can help you to achieve that goal.
Understanding innovation: More than just new technology
Also, what is innovation, exactly? Because we often throw the word around without really thinking about it, and that can lead us to mistake it for being something intangible and unachievable. But the definition of the word is quite clear: it’s the creation of something new that changes something established and transforms the status quo.
According to research conducted by a team led by Larry Keeley (who literally wrote the book on innovation), innovations can be classified into ten different types. ‘Doblin’s 10 Types of Innovation’ was written after examining over a century of innovations that have changed the world, and it includes innovation types like Profit Model, Channel, Product Performance and Product System. Their research also showed that combining types of innovation in different ways leads to a more impactful and successful result.
What’s interesting, given our modern fascination with technology, is that none of the ten types are technologies. I believe that, rather than being the 11th type of innovation, technology actually acts like a ‘catalyst’ in an innovation process: if applied correctly, technology can accelerate the ‘reactions’ between multiple types or ‘elements’ of innovation.
The key here is to view technology through a capability lens: what capabilities does the particular technology bring to the fore? What problems can it help us solve? How does it enable us to overcome existing limitations? Do those capabilities allow us to unlock or reach or tackle problems that we haven’t been able to tackle before?
The importance of customer orientation
Using generative AI and large language models as an example, the developments in this space have unlocked natural language comprehension and understanding. Conversational interfaces have moved from their starting point of being something out of science fiction, to being usable but really clunky, to the state we’re seeing emerge where they promise to be actually viable and even useful!
Since the popularity of the likes of ChatGPT, Google Gemini and other conversational AI platforms has exploded, we’re seeing more and more of these tools being used in various products and websites. But it’s important to consider what customer problem you’re actually trying to solve by implementing one of these. Adopting a tool to keep up with your competitors or simply because you see everyone else doing it won’t necessarily add value to your users; the real value lies in solving a problem for them in a way that makes a positive difference.
For example, Just Ask Xero (JAX), Xero’s new GenAI-powered business companion is a conversational interface that has actually unlocked a new capability for our customers – it can be used outside of the Xero platform. So, if a small business is interacting with their customers in their email app, or conducting business in WhatsApp, or sending a text message for example, they can use any of those outside apps to complete tasks such as generating an invoice or editing a quote. In this instance, the technology is a true catalyst for us in combining Process, Channel and Customer Engagement innovation.
JAX is an example of where we’re at right now, but if we look to the future, what capabilities could be unlocked by advances in other emerging technologies, like robotics or quantum computing? What problems are we staring into that affect businesses day-to-day around forecasting and simulation and prediction, for example, that capabilities unlocked by more widely available quantum computing could in theory help solve?
That question (and answer) is still on the horizon, and until quantum computing, in this example, provides ready access to some capability that is of practical use to businesses to solve a problem that their customers care about and will exchange value for, it’s actually not yet relevant. It might be shiny. It might be sparkly. It might be interesting. But it’s not a catalyst for innovation in your business today.
Aligning technology with your business goals
In our company, being purpose-driven is important. Our purpose is to make life better for people in small business, their advisors, and communities around the world. Keeping that purpose top of mind guides our vision and strategy and helps us to figure out what kind of innovation we’re driving for – which is our version of Keeley’s “know your ambition”. In the example of JAX above, we took the approach of considering how we could leverage GenAI capabilities in a way that would be really useful for small businesses: how could we build something that would really make life better for them? By developing a tool that can be used outside of our own platform – via email, text message or WhatsApp – users can simply send an instruction and get on with the job they’re doing.
If you’re truly purpose-led, your purpose should also drive your innovation and help you figure out what problems to tackle next. True innovation is not about the tech by itself, but rather how it can be leveraged strategically to create meaningful change. Businesses should focus on identifying their innovation ambition and exploring how technology can help them achieve that goal, rather than simply chasing the latest trends. By keeping their purpose at the forefront, understanding the problems they aim to solve for their customers and the types of innovation they can leverage, businesses are then better positioned to effectively harness technology as a catalyst for their own innovation.