Beyond Digital Transformation: Innovation in Experience as the Key to Growth.

Digital transformation has been a recurring theme for companies around the world for several years. However, despite significant investments in technology, many organizations have reached a plateau. According to industry analyst reports, IT departments often allocate a large portion of their budgets to maintaining existing systems and operations rather than innovating. Specifically, around 66% of IT budgets are used for maintenance, leaving only 34% for innovation, and not all of that amount is directed towards growth-focused initiatives.

This focus arises because digital transformation is often viewed as a means to optimize processes and reduce costs, rather than being seen as a growth engine. But what would happen if we shifted our perspective and considered digital assets not only as efficiency tools but also as creators of new value? This is where experience innovation comes into play.

Experience innovation is positioned as the next step, moving beyond mere optimization to value creation, using digital technological tools to develop new products, services, and experiences for customers. Instead of merely refining existing processes, it seeks to deliver exceptional experiences that foster loyalty and revenue growth.

An example of experience innovation could be an augmented reality feature for a retailer that allows customers to try on clothes virtually and receive personalized recommendations. Another case might be converting in-store experiences into digital hybrids that create a more engaging and personalized shopping journey. Furthermore, experience innovation can redesign the organization from within; an example is IKEA, which used artificial intelligence to significantly reduce the workload of customer support, allowing some staff to retrain as interior design consultants.

Despite the great potential offered by experience innovation, several challenges often prevent organizations from reaping its benefits. Among these obstacles are budget constraints and misaligned priorities, which make it difficult for teams to connect innovative ideas with concrete business strategies. Additionally, organizational fragmentation can hinder the collaboration necessary to design engaging experiences. There is also the risk that innovation becomes little more than empty rhetoric, where innovation labs are established without a clear plan to bring ideas to market, leading to disappointment among top management.

Finally, the lack of skilled talent presents another challenge. Many companies lack digital leadership and the expertise required to drive experience innovation. Not all organizations have digital product managers who can bridge technology with business strategy.

To address these issues, it is crucial for companies to act decisively to evolve from digital transformation to experience innovation. A first step is to adopt a growth mindset, recognizing revenue-generating opportunities and valuing digital assets as tools to create new value. Establishing clear value cases for innovation initiatives is also essential.

At the same time, a customer-centric culture should be fostered, and digital leaders with the ability to drive innovation should be recruited. These leaders must help define the strategy and ensure that innovation initiatives align with overall business goals and have a clear path to market. By breaking down organizational silos and prioritizing customer experience, organizations can execute experience innovation projects that have an immediate impact.

The sectors most likely to benefit from experience innovation are varied, ranging from automotive and financial services to retail and healthcare. Each industry faces unique challenges and opportunities, but the underlying principle is the same: adopting a customer-centric approach through digital technologies and fostering a culture of innovation will help organizations avoid stagnation and open new avenues for growth and customer loyalty.

In an environment where customer expectations are constantly evolving, innovation is no longer a luxury but an unavoidable necessity for companies that wish to remain relevant and competitive. By linking digital transformation with business strategy, they can leverage the momentum that only experience innovation can provide.