Digital innovation is often associated with entrepreneurs or engineers building cutting-edge technology. But it extends beyond specific roles or backgrounds. Anyone can participate—all it takes is a willingness to embrace new ways of working.
Today, innovation in business is the norm: 92 percent of companies are actively pursuing digital transformation efforts to achieve critical business outcomes, making it a top priority across all industries.
At its core, digital innovation involves leveraging technology to create meaningful change—streamlining processes, improving customer experiences, or building agility to strengthen business models.
This guide defines digital innovation, explains how to build an effective transformation strategy, and demonstrates why it’s vital for long-term brand health.
Breaking Down Digital Innovation
“Leaders define digital innovation as anything new and useful for the organization,” says Harvard Business School Professor Linda Hill, who teaches Leading in the Digital World, one of the online courses in the six-month Credential of Digital Innovation and Strategy program.
This definition opens many possibilities. Digital innovation encompasses rethinking siloed workflows to expedite decision-making, utilizing artificial intelligence (AI) to forecast demand, and introducing new digital channels to meet evolving customer needs.
Sometimes, digital innovation means refining what already works; other times, it requires reimagining the entire buying journey. While some breakthroughs are sweeping, many come from small, steady improvements that create lasting impact.
Pfizer offers a clear example. Michael Wu, vice president of global supply chain, who’s featured in Leading in the Digital World, describes digital innovation in simple terms, helping colleagues see it as part of their daily work rather than an abstract goal.
To deliver a physical and digital supply chain, Wu introduced digital platforms that advanced company goals while supporting organizational growth and team upskilling. By promoting collective innovation, Pfizer streamlined operations and cut delivery times by up to 50 percent.
Pfizer’s experience highlights a central truth: When digital innovation is a shared responsibility, collaboration thrives and the business maintains its competitive edge.
Why Digital Innovation Matters More Than Ever
Digital innovation fuels a transformation that extends far beyond operational efficiency. By adopting digital tools and processes thoughtfully, organizations become more agile, resilient, and better equipped to thrive in uncertain times.
For companies seeking to maintain brand health, a comprehensive digital transformation strategy provides a roadmap for informed decision-making. It can enhance customer perception, accelerate time-to-market, and optimize resource management to boost profitability.
Furniture retailer IKEA, for example, embraced digital innovation with AI-powered tools, including a shopping assistant chatbot, a mobile visualization app, and drones to manage inventory. These additions automated routine tasks, freeing employees to focus on strategic implementation and high-priority goals.
In today’s marketplace, digital innovation isn’t optional—it’s essential, and it starts with a purposeful digital transformation strategy.
How To Craft an Impactful Digital Transformation Strategy
To harness digital capabilities, businesses need a comprehensive transformation plan that positions them for success in a technology-driven future.
In Leading in the Digital World, Hill defines digital transformation as “the evolution of the organization’s processes, systems, or talent to fully leverage the possibilities offered by digital technologies, including big data, analytics, and artificial intelligence.”
When applied thoughtfully, these capabilities strengthen market positioning and enhance customer outcomes.
To elevate your business model, this guide offers five practical steps for turning digital innovation into lasting change that future-proofs your organization.
1. Establish a Digital-First Work Culture
Real digital innovation begins with placing employees at the center of the journey. When teams align around digital initiatives and leaders remove obstacles, the workplace becomes a dynamic space where creativity flourishes.
Hill stresses in Leading in the Digital World that even the most accomplished teams and leaders will continually face new challenges and emerging tools and technologies to learn and integrate.
At Pfizer, Wu recognized that slow decision-making was hindering the global supply chain’s ability to respond effectively, delaying digital transformation. To address this, he introduced a tetrad model that empowered employees at every level of the organization to contribute to critical decisions.
“Tetrads were designed as cross-functional teams to create collective accountability and allow those closest to the problem or opportunity to address it directly without escalating decisions,” Hill explains in the course.
Embedding digital innovation into daily work gave employees the chance to experiment, learn from fast failures, and strengthen the global supply chain through proactive decision-making and problem-solving.
When employees feel secure taking risks, they adopt digital initiatives more confidently, reinforcing workplace culture and boosting employee engagement.
2. Close Performance Gaps to Unlock Opportunities
Before making major adjustments, organizations must identify where things aren’t working: Are outdated workflows slowing teams down? Are customers frustrated by a confusing website? A digital marketing audit could reveal some pain points, helping leaders prioritize initiatives that deliver quick, visible wins.
Proactive leaders don’t just react—they strategically address performance gaps and leverage digital solutions to meet evolving customer demands.
Netflix offers a compelling real-world example. As customer preferences shifted, the company quickly pivoted to a cloud-based streaming service, growing its subscriber base, expanding brand loyalty, and increasing revenue. By anticipating trends and adapting swiftly, Netflix set the industry pace instead of relying on outdated business models.
3. Monitor Willingness to Change
Remember, you can’t force innovation. As Hill emphasizes in Leading in a Digital World, “To build your team’s willingness to innovate, a leader must create a sense of community.”
A digital transformation strategy rooted in shared purpose or clear value proposition can inspire employees to embrace innovation, even when navigating roadblocks, risks, or tight deadlines.
Wu brought this idea to life by inviting his team to co-create a mural celebrating their shared commitment to patient care. Distributed globally, it became a symbol of hope and a daily reminder that everyone’s efforts mattered, uniting the team around a personally meaningful mission.
Over time, the impact was clear. Team members began referencing organizational values in decisions, consistently asking, “What’s best for the patient?” Leaders modeled commitment by proposing solutions that required extra effort, demonstrating dedication rather than choosing easier alternatives.
Building trust, alignment, and involvement—even among the most change-resistant employees—is key to enhancing willingness. When digital innovation is rooted in shared values, it motivates teams and reinforces brand identity—ensuring authenticity across every customer interaction and touchpoint.
Related: Listen to Professor Hill discuss how to lead change in today’s digital era on The Parlor Room podcast, or watch the episode on YouTube.
4. Invest In Tailored Employee Upskilling
The most transformative digital platforms are only as effective as the people using them. Without the right skills, even the best technology falls short. Well-trained teams not only adapt to change—they simplify processes and make the most of digital investments.
In Leading in the Digital World, Hill highlights three capabilities essential for driving organizational innovation:
- Creative abrasion: Generating a marketplace of ideas through debate and discourse
- Creative agility: Testing and refining ideas through rapid experiments, reflection, and adjustment
- Creative resolution: Making decisions that embrace “both/and” thinking rather than “either/or”
After surveying employees, Wu recognized that his team needed to develop creative abrasion. When Pfizer shifted its focus to innovative medicines and vaccines, his team faced the challenge of supplying over one million packages to more than 70 countries.
To meet these demands, the team strengthened its ability to generate innovative solutions. Wu established a team in Manila, Philippines, and promoted Fae Wooding, senior director of global clinical supply strategic hubs, to lead it. This allowed Wooding to build an end-to-end supply chain from the ground up, accelerating efficiency, reducing the workload on the global team, and fostering targeted professional development.
To advance the company’s digital transformation, Wooding and her team expanded their talent pool, enabling work to be transferred seamlessly across time zones. As Wooding notes in the course, “We brought in developers with digital backgrounds, focused on automating workflow processes and building data visualizations to make sense of our big data.”
Leaders are catalysts for this transformation. By modeling these behaviors and guiding teams through tailored corporate cohort learning, they spark curiosity and encourage personal growth, meeting each employee where they are in terms of digital literacy and long-term innovation goals.
5. Continuously Evolve and Adapt Your Strategy
Even after mastering digital innovation, transformation is never complete. Since digital change is grounded in people, strategies must evolve as new behaviors and trends emerge.
Pfizer experienced this firsthand during the COVID-19 pandemic, when preparation and team development were pushed to the limit. “When we embarked on the journey of COVID-19, our global supply organization leveraged all of our cumulative knowledge to try and solve a challenge the world was waiting for,” Wu explains in Leading in the Digital World.
The pandemic presented logistical challenges unlike anything the industry had seen. Worldwide vaccine distribution required not just speed, but precision—especially for vaccines requiring ultra-cold storage. Wu had to rapidly adapt his leadership approach under pressure. The solution lay in their digital infrastructure.
Advanced monitoring devices tracked temperatures and locations, ensuring precise handling across the entire supply chain. Real-time dashboards provided continuous transparency, allowing the organization to monitor every vaccine vial throughout the distribution process.
This level of visibility was crucial for ensuring the safe delivery of life-saving products. By leveraging data from their digital platforms, the team could anticipate challenges, prevent problems, and refine delivery processes—contributing to their overarching goal of crafting a fully digital supply chain.
Lead Your Organization’s Digital Future with HBS Online
Many organizations talk about digital innovation, but few execute it effectively. Even the most advanced technologies are ineffective without leaders who transform people, processes, and culture alongside technology.
Successful organizations need strong leadership, adaptable teams, and seamless integration of technologies into daily operations, not just to tackle today’s challenges, but to be ready for whatever comes next.
The real question isn’t whether your organization needs digital transformation; it’s whether you’re ready to lead it.
Are you ready to spearhead your organization’s digital innovation efforts? Explore our comprehensive six-month Credential of Digital Innovation and Strategy, featuring Leading in the Digital World. To explore all our digital transformation programs, download our free course flowchart to find the right fit.
