Blog: ICT — The Next Catalyst of Innovation and Growth for European Firms

Vinci-researcher John Dong

Europe has experienced the benefits from tremendous innovation opportunities with information and communication technology (ICT), but it is still operating below its digital potential. Accelerating the transition to a digital society could add 2.5 trillions of Euros to economic growth in less than a decade. European firms demonstrate large variations in their ability to innovate with ICT. The question then is: why do some firms succeed in ICT-driven innovation whereas others fail to do so?

Using ICT to innovate is more than investing in computers and software. In the literature this is called the paradox of ICT investment. Notably, 40% of ICT projects budgeted at 12 million Euros or more fail to support strategic purposes such as innovation. To successfully innovate with ICT, systematic strategies must be developed to ensure that ICT investments lead to value creation. My research based on a series of projects has shown three strategies for firms to successfully innovate with ICT:

1. Using ICT as an integrative part of innovative design. Today’s products and services are increasingly digitized. This entails the need of recombining the product/service features with the knowledge about digital technologies. For example, Xilloc — a Dutch medical device company (http://www.xilloc.com), combines implant engineering techniques and 3D printing technologies. This recombinant capability allows it to provide personalized solutions that better fit patients’ needs, such as 3D printed implants for specific patients.

2.  Using ICT to better collaborate for innovation. ICT infrastructure extends the breadth and depth of a firm’s access to external knowledge from suppliers, customers, competitors, universities and other researchers. This enables firms and their partners to collaboratively filter and jointly interpret market-facing information. With the help of ICT, a firm can better collaborate with alliance partners to co-create new knowledge. It can also assimilate more digitized knowledge from other firms in its industry network. For example, Unilever has used its Open Innovation Portal (https://oiportal.yet2.com) to co-develop new products with a variety of partners, such as established suppliers, start-ups, academics, designers, and inventors. Digitally-enabled collaboration enables Unilever to shorten the innovation cycle time to a half, saving up to one third of the resources invested in innovation projects.

3.  Using ICT to crowdsource innovative ideas. Social media platforms allow a firm to collect new ideas from end users which it otherwise would not have access to. If the firm can then identify the most valuable ones and transform them into new products or services, it can constantly innovate with user-generated ideas. For example, Phillips has launched SimplyInnovate platform (http://www.simplyinnovate.philips.com) to seek new product ideas and bring consumers’ ideas to life, including innovations for clothing care, shaving and grooming, oral and other healthcare, and kitchen appliances.

Hence, to seize the still remaining innovation opportunities of ICT, European firms need to implement an ICT innovation strategy by integrating digital components into product design, opening up innovation activities through digital connections with various partners, and/or gathering new ideas from end users globally. By doing so, they can take a lead in the next wave of digital innovation age and constantly build world-class competitive advantage.

Want to know more? Don’t hesitate to contact the author of this post: John Dong