How does an appetite for innovation correlate with digital maturity? One might expect digitally mature organizations to be more experimental than others, but surprisingly the gap between the most and least mature companies is not nearly as large as one might expect. Our data shows that companies across maturity levels experiment in digital business. A far bigger differentiator, however, is what companies do with the results of those experiments. Mature companies are far more likely to scale them to drive change across the enterprise.
The process of scaling digital innovation — a change effort — isn’t easy. For large, established organizations, it may require a fundamental transformation. These businesses need to find a balance between exploiting current business models and exploring new opportunities, an often strategically and culturally complex task. Dr. John Halamka, CIO of Beth Israel Deaconess Medical Center, equates this work with trying to change a plane in midflight, as leaders balance the need to experiment while still keeping the core business running.
Many companies try to emulate startups to accomplish this goal. Yet, many also mistakenly think that the value of startups lies in their ability to generate new ideas. The key factor is actually the discipline to balance both discovery and execution in a disciplined and rigorous way.
To get better insight on how large, established organizations scale experiments, I spoke with Greg Baxter, chief digital officer of MetLife, who has considerable experience using experimentation to drive innovative change across the enterprise.
A Three-Stage Approach to Scaling
Baxter views scaling as a three-stage process. Although the criteria for moving ideas to subsequent development phases may differ across stages, the process involves continually asking three critical questions:
- Is there a fundamental need for this idea in the market?
- Can we make this idea work economically?
- Are we the right company to do it, and does it involve our core competency?
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Only ideas that continue to meet these three standards continue in the process, as outlined below:
- Ideation. Consistent with the idea that “those with the best ideas win,” the first stage involves generating new ideas in a changing digital environment. To develop these ideas, MetLife relies on internal innovation as well as external partnerships or relationships with venture capital firms and research universities.