How could traditional industry capitalize on digital?

Enterprise value of the largest digital technology companies have passed trillion US dollar mark and the enterprise value per revenue varies from 5 to 10+. These companies can scale and renew business. Results of these (and many others) digital companies show that continuous business transformation and innovation can provide commercially viable growth.

Tuukka Ihalainen

19.9.2020

Why is this important?

We have many Finnish flagship companies in manufacturing, technology and forest industry beating the market growth and increasing the market share and creating profitable growth. All these companies have several digital components, products and services integrated into their offering however few, if any, have been able to capitalize on digital. Enterprise value per revenue stays on the level from 1 to 3.

Why are there still so many failing attempts to build the new profitable digital feature or product that lives long enough to damage the whole team financially and reputationally? And more importantly, why so many of these failures are noticed way too late? Could companies have better approaches to identify these failures earlier? The answer is yes, and there are many easy to adopt practices how to do that.

What to do?

During the past 5 years we at Melkki have been developing innovation framework ideation to delivery (“I2D”) to enable companies to trust that their teams are extremely motivated and working autonomously towards the set objective (“dream”) and at the same time fighting the market forces as the idea would be independent company without any excuse to not keeping the promises or explain their way to the next finance round.

Trust is required for the owners and managers to allow teams to spend the money and trust is required for the teams to do the outmost everything for their dream without the fear of project being cancelled unless there is a good reason.

Melkki I2D provides transparency and tools to set high objectives, build the digital feature or product on scalable operating model including the right sized teams, partnerships and sub-contractors. I2D iterative process ensures focus on commercially profitable progress and growth. I2D forces success criteria and frequent decision gates allow companies to shoot down bad ideas before they create too much harm.

In our opinion, I2D is required to build the digital component, feature or product that will be the next major revenue stream for any company creating digital profitable revenue that makes a difference.