By Kumar Parakala | Forbes | Published January 4, 2023

Over the past few years, a wave of digital innovation—accelerated by the pandemic, climate change, disrupted supply chains, rising costs and more—has pushed digital transformation ahead by an average of six to seven years. No longer is digital innovation just a nice-to-have; in fact, I believe it has become a must-have for business survival.

Change starts at the top.

New research, conducted by analyst firm Source Global on behalf of my company, highlights the importance and necessity of digital transformation in order for businesses to truly thrive. The Innovation Imperative is based on surveys and interviews with 777 senior executives worldwide from infrastructure, construction, transportation, energy and natural resources industries, many of which have not been traditional leaders in digital transformation.

Among the study’s key findings, “94% [of executives] regard digital innovation as an opportunity rather than a threat,” “89% believe disruption and uncertainty in their industry are creating greater pressure to innovate” and “86% believe they are ahead of their competitors in digital innovation.” It’s positive to see that so many executives are talking about embracing the challenge of digital innovation, but whether they succeed will come down to their business mindset and ability to adapt to change.

It is important to understand why leaders in the post-Covid-19 world need a digital innovation mindset. Over the last two years of the pandemic, organizations have embraced new technologies and have accelerated their digital maturity by several years in a relatively short period of time. The new forces of post-pandemic “new norm,” digital acceleration, climate change, geo-political tensions and challenging economic outlook are making it necessary for many businesses to reimagine and reinvent their future in order to survive and thrive in this fast-paced world.

I believe that embracing digital innovation is the path forward and requires new ways of conducting business. We need to be asking questions such as, “Does my business plan fit into the digital age?” and, “Am I creating new ways of doing things for the future?”

What are the best steps for executing a digital strategy?

Once a digital strategy is determined, it must be executed properly. Leaders from the CEO down should be on board with the digital transformation process and help ensure its success by adopting enabling capabilities that will help set the stage for a more innovative future. Here are the five enabling capabilities that, in my experience, are the most critical for leaders to adopt.

1. Create an inspiring leadership narrative: Innovative leadership shapes the culture, mindset and behaviors within a business that are critical to transformational journeys. An inspiring leadership narrative requires a diversity of thought in establishing your company’s vision and communicating it through strong storytelling skills.
2. Foster an innovation mindset: There is a need for leaders to be curious, willing to challenge how things are done, and open to new ideas and risk-driven, experimental approaches. A digital innovation mindset enables the reimagination and reinvention of businesses to meet the changing demands of their clients and people.
3. Track technology and market trajectories: Leverage insight and intelligence capabilities to assess how different market and technology trajectories are developing. Organizations are rapidly developing advanced analytics and artificial intelligence solutions to gain these insights from large and diverse data sources.
4. Pursue more radical forms of collaboration: Going forward, organizations will need to pursue even more progressive and radical forms of collaboration to keep pace and embrace more open innovation models that draw on new thinking, capabilities, and technologies from external sources. Focus on building a collaborative culture and rewarding behaviors that support the culture.
5. Drive innovation both top-down and bottom-up: A culture of innovation should empower everyone in the organization to pursue their ideas and opportunities for continuous improvement. A shared innovation mindset across an organization not only helps keep employees and leaders stay in sync but also allows innovative ideas to come from any area of the company.

In the Innovation Imperative study, one concern was the large number of leaders who think they are ahead of their competition in digital innovation. If everyone is ahead, no one is ahead. Embracing digital tools does not necessarily mean a competitive advantage, and leaders need to be honest with themselves and avoid overconfidence. The goal should always be to continue to innovate business models and stay ahead of the curve.

To stay competitive means being prepared for costs. Incorporating digital innovation into business plans can involve significant upfront investments, but for digitally savvy leaders, this can pay dividends in the long run—for example, through reduced operating costs, increased efficiencies and significantly enhanced customer experience.

Remember the human element.

Business leaders must keep people top of mind when working to unlock innovation. Beyond artificial intelligence, robots and the metaverse, the future of work will be about what truly makes us human: our ability to connect and improve communities.

The higher purpose of innovation should always be to improve the outcomes for people, organizations, communities and society at large. History has proved that innovations disconnected from human benefit (registration required) often do more harm to society than good. In the post-Covid world, we need innovations that address challenges like water scarcity, climate change, supply-chain resilience and talent shortages.

There is no going back to a pre-pandemic world. Business leaders and governments need to meet the challenges of these seismic shifts in society. I believe the CEOs who will thrive in the coming decade are those who understand change is here to stay; companies must not only tolerate this change but fully embrace it.