HELP-TEXTS FOR THE IMP ROVE DIGITAL INNOVATION QUOTIENT DIQ

HELP-TEXTS FOR THE IMP³ROVE DIGITAL INNOVATION QUOTIENT (DIQ)

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Contents Digital Innovation Strategy ...................................................................................................... 4

General Objectives for Digital Innovation ................................................................................ 4

Functional Scope for Digital Innovation................................................................................... 5

Digital Innovation Trends Affecting the Firm ........................................................................... 7

Characteristics of Digital Innovation Strategy.........................................................................11

Revenue Growth Expectation ................................................................................................12

Digital Business Model ...........................................................................................................13

Characteristics of Customer Interaction .................................................................................13

Data Capturing ......................................................................................................................14

Data Analytics .......................................................................................................................17

Revenue ................................................................................................................................20

Growth in Revenue ................................................................................................................21

Operational Profit ..................................................................................................................22

Growth in Operational Profit ..................................................................................................23

Growth in Employees ............................................................................................................25

Digital Revenue .....................................................................................................................26

Digital Innovation ...................................................................................................................28

Digital Processes ....................................................................................................................30

Development Process ...........................................................................................................30

Time-to-Market ......................................................................................................................32

Process Automation for Delivery of Digital Innovation ............................................................34

Utilisation and Business Impact of Digital Marketing ..............................................................37

Size of Social Media Network ................................................................................................39

Revenue Generated via Digital Sales Channels ....................................................................40

Digital Ecosystem and Culture ..............................................................................................41

Organisation of Digital Innovation ..........................................................................................41

Governance of Digital Innovation ...........................................................................................42

Contribution to Digital Innovation ...........................................................................................43

Business Partner Connection ................................................................................................44

Development of Digital Partner Ecosystem ............................................................................45

General Digital Capabilities ...................................................................................................46

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Incentives for Digital Innovation .............................................................................................47

Enablers for Digital Innovation ..............................................................................................48

Development of Digital Capabilities .......................................................................................48

Financial Resources for Digital Innovation .............................................................................49

Specialised Expertise in IT, Risk Management, Legal and Tax Affairs ...................................51

IT Process Efficiency .............................................................................................................52

IT Resilience..........................................................................................................................53

Cyber Security Awareness and Measures .............................................................................54

Impact Measurement of Digital Innovation .............................................................................55

Contact the IMP³ROVE Academy Team .................................................................................56

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Digital Innovation Strategy General Objectives for Digital Innovation

What are your general objectives for digital innovation? For which do you allocate resources to drive digital innovation? Please tick all the items that are fully applicable. You may specify more than one answer. If none of the items is applicable or if you do not have the relevant information to provide an answer, please select N/A).

Why is this question important? • This question assesses and compares your firm’s general digital innovation objectives

with benchmarks.

• The objectives for digital innovation shed light on a firm’s digital innovation motifs and help to guide the digital innovation strategy and implementation measures.

How to answer this question? Important terminology

• Digital innovation denotes the successful commercialisation of a new or enhanced digital and / or connected offering (product, service or business model) or process. An app is an example for a digital offering. A smart meter is an example for a connected offering – it is a physical product with connection to the internet or to other devices.

Technical guidance

• Please select all relevant answer options.

• If you have chosen the answer option “We do not have specific objectives for digital innovation”, all previously provided entries are de-selected and hence become invalid.

• Once you deselect the same answer option again, the initial entries will reappear.

https://www.improve-innovation.eu/improve/qe/ShowQuestion.do?manualId=assess.sdim.question.sdim01_strategy_relevance&dimensionId=842201&qt=SDIM

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Functional Scope for Digital Innovation

In which of the following functions do you have objectives for digital innovation? For which do you allocate resources to drive digital innovation? Please tick all the items that are fully applicable. You may specify more than one answer. If none of the items is applicable or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s functional scope for digital innovation

with benchmarks.

• The functional scope provides information about the value chain stages where a firm seeks to drive digital innovation, e.g. in operations and marketing. The number of selected focus areas reflect the spectrum of a firm’s future ambition for digital innovation.

How to answer this question? Technical guidance

• The value chain in this question consists of 9 functions, which are grouped into three overarching categories:

• Customer contact points

• Value generation and delivery

• Administration

• Please note, that the function “operations” gives a broad definition, including logistics.

• In the first answer column, please select all functional areas in which your firm has objectives for digital innovation – you may specify none of the options if your firm does not yet have objectives for digital innovation.

• In the second answer column, please select all functions for which resources have been allocated in order to meet the objectives.

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Explanation of the functions Category Function Explanation

Customer contact points

After-sales services

After-sales service is the service after the customer purchased the product. After-sales services include support, repair services, and product replacements.

Sales Besides the sale of goods and services, “sales” includes the contact maintenance to customers.

Marketing Marketing includes all those activities that make customers and potential customers aware of a firm’s offerings.

Value generation and delivery

Operations

Generally, operations is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. In this case operations also includes logistics, meaning the integration of information flow, material handling, packaging, inventory, transportation and warehousing.

Procurement and partner management

Procurement is the act of finding, acquiring and buying goods from an external source. It often involves purchase planning, standards determination, supplier research and selection, value analysis, price negotiation, supply contract administration and inventory control and stores.

Development Development is the process to turn new ideas into successfully commercialised offerings (products, services or business models).

Administration

Finance Finance is dealing with the sources of funding and the capital structure of a corporation.

HR

The Human Resources department engages with the determination of needs of the staff,

recruitment and training of employees, preparing employees records and personal policies and managing employees’ payrolls.

IT An IT department is charged with establishing, monitoring and maintaining information technology systems and services.

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Digital Innovation Trends Affecting the Firm

To what extent are the following digital innovation trends relevant to your firm? And to what extent have you already addressed each trend by dedicating resources? On a scale from 0-4, please specify the answer by selecting from the drop-down menu based on the following logic:

Why is this question important? • This question allows you to compare your perception of which digital trends affect your

firm and your decisions on which of these trends to address by dedicating resources to the profile provided by other companies.


• Zero marginal cost describes a situation where one additional unit of a physical good (service) can be produced (delivered) without any increase in the total cost of production (delivery).

Technical guidance • The question contains 15 digital innovation trends, which are a simplified version of A.T.

Kearney’s digital business shifts framework. The trends are grouped into four overarching categories:

1. Consumer behaviour

2. Data and information

3. Connectivity

4. Value network

• Please consider trend by trend and assess to what degree the trend is relevant for you and to what degree the trend has readily been addressed by dedicating resources.

• For each digital innovation trend, an overview with practical examples from the service and manufacturing industry is provided in the table below.

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How would it be answered in a case example? Focus Type Service industry

example Manufacturing industry example

Consumer behaviour

Growing customer (buying) power

Travel booking sites provide condensed views on hotel room offers and ensure that users receive the lowest prices offered on the platform.

Independent product review platforms give customers the opportunity to publicly communicate (dis-)satisfaction with a product.

Anything, anywhere and anytime expectations

Increasing numbers of customers expect that certain services are available online at any time, e.g. online banking.

The internet offers plenty of opportunities for customers to buy any kind of product from wherever in the world, at any time.

From physical to digital offerings

While videos have previously been offered via physical media (e.g. DVDs), they are increasingly being offered as data files via online channels.

Instead of showcasing actual furniture, designs are displayed and can then be 3D printed on demand – reducing the amount of actual physical offerings and stock.

From ownership to usage of products and services

Companies sell monthly access to streamed music instead of traditional MP3s and CDs.

Car sharing enables people to use a car for a short period of time, without the need to own a car.

Data and information

Data-driven process optimisation

Many online platforms identify IP addresses of visitors and display websites in local language.

Fast-moving consumer goods retailers are able to optimise pricing based on inventory levels or supplier relations.

Data-driven forecasting to support decision-making

Airlines adjust flight tariffs based on expected demands for specific routes.

Bakeries adjust their production schedule based on weather forecasts (model is based on finding that “more lighter food is requested, if temperatures are higher”).

From human judgement to machine judgement

Insurance companies let algorithms take care of risk assessment and policy evaluation – leaving a shrinking

Automated ePassport gates screen faces of passengers at airport border controls and automatically provide or prevent access to gates.

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number of policy assessments to people.

Growing cyber security concerns

Crowdfunding platforms pool the investment risk for uncertain start-ups among very large funding communities, thus creating new risk / reward paradigms highly suited to high risk investments.

Risk of autonomous vehicles being “hacked”.

Connectivity

Customisation

Premium hotel chains track preferences of frequent clients and adapt hotel experience accordingly.

Car manufacturers offer sophisticated (online) car configurators allowing customers to put together the exact car that they want.

Collaboration with external networks for value generation

Companies offering transport in collaboration with a network of drivers; companies offering food delivery with a network of cyclists; companies offering unused private rooms to travellers.

Distributed energy generation, e.g. using photovoltaic modules.

Augmented or virtual reality for enhanced productivity

Estate agents use virtual reality technologies to provide property viewings at any location.

Virtual reality hardware - such as glasses or headsets for personal use.

Growth of communities and shared interest groups

Online encyclopaedias are fuelled by communities of enthusiasts and contributors.

Modular cell phones have been conceptualised by building on a community of enthusiasts and developers.

Value network

Business development in partnerships

Despite making superior margins with own mobile applications, technology companies offer platforms and let third parties co-develop and sell own applications.

Networks of companies across industries have been built to develop joint smart home appliances.

Digitalisation of processes

Automated service delivery, e.g. using voice

Digitalisation of processes enables to deliver

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recognition and algorithms to respond to requests.

processes with zero marginal cost, i.e., one additional unit does not change the cost of production or delivery; digitalisation of processes is an important enabler for higher level of automation.

Process integration with partners

Online retailers hardly hold any inventory themselves – everything from marketing, assortment, online sales, and shipping is managed as an integral virtual process.

Smart shelves are able to communicate consumption and automatically reach out to partners.

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Characteristics of Digital Innovation Strategy Which of the following attributes apply regarding your digital innovation strategy? Please tick all the items that are fully applicable. You may specify more than one answer. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s digital innovation strategy

characteristics with benchmarks.

• The digital innovation strategy is an integral part of a firm’s innovation strategy and is pivotal to focus your firm’s activities on areas that matter most in order to enable sustainable and profitable growth.


• The digital innovation strategy refers to the mid to long-term plan of how your firm seeks to generate revenues, decrease cost or build assets with digital innovation.

Technical guidance • Please select all relevant answer options. We suggest you think about specific examples

before ticking the answer options, such as:

Which are your firm’s specific digital innovation objectives?

Would employees be able to tell your firm’s digital innovation objectives?

• If you have chosen the answer option “We do not have a digital innovation strategy”, all previously provided entries are deselected and hence become invalid.


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Revenue Growth Expectation

What is your firm's expected compound annual growth rate (CAGR) of revenue over the next three years? Please use a number with one decimal place greater or equal -100, whereby positive values indicate a revenue increase and negative values indicate a revenue decrease. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and contrasts your firm’s growth expectation in revenue over the

next three years to the benchmarks.

• The revenue growth ambition indicates a firm’s speed and aggressiveness with which it plans to expand its business, hence allows to derive conclusions about its future economic prospects and general market conditions.

• Linked to the following questions on your firm’s recent development, the question will be useful in analysing the degree to which new initiatives are required to realize the ambition.


• The compound annual growth rate (CAGR) is the year-on-year growth rate over a specified period of time longer than one year. If you have an ambition measured in absolute numbers, then you may use the following formula to calculate the CAGR:

CAGR (%) = [� ending valuebeginning value

�� 1number of years� − 1] x 100

Technical guidance • Below, you can find an example of how to calculate the expected CAGR of revenue over

the next three years. Suppose the revenue of a firm today is 50 million Euros and the expected revenue in three years is 80 million Euros:

CAGR (%) = [�80,000,00050,000,000

��13�

− 1] x 100 = +16.96%

• If a decimal number is required, then please use the formatting “x.x”

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Digital Business Model

Characteristics of Customer Interaction

Which of the following attributes apply to your interaction with customers? On a scale from 0-4, please specify the answer based on the following logic:

Why is this question important? • This question helps you to gain a deeper understanding of your firm’s interaction with

customers.

• Generally, customer interaction refers to the way in which a firm engages and connects with its customers. In today’s business world, connected customers expect a seamless interaction across multiple communication channels and devices (e.g. computer, tablets, mobile devices, etc.) wherever they are located.

• Seamlessly, cross-channel interaction enables firms to engage with their customers on a deeper level, so that they become a part of the customer’s daily routine and provide a fully integrated customer experience – anytime and anywhere.

• This is the basis for firms to develop better offerings and improve processes based on an enhanced understanding of their customers’ needs.


• Please provide your evaluation for any of the specified items. If available, we invite you to use customer surveys or related evidence to derive your responses from. This method helps to capture the customer point-of-view adequately.

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Data Capturing

To what extent do you capture data in the following functions?

For your answer, please consider data capturing related to the offering with the highest contribution to earnings before interest and taxes (EBIT) in the last three years. On a scale from 0-4, please specify the answer by selecting from the drop-down menu based on the following logic:

Why is this question important? • This question assesses and compares your firm’s ability to capture data from a variety of

different sources with benchmarks.

• Growing amounts of data are generated internally (e.g. documents, e-mail messages) and externally (e.g. internet, social media).

• Data capturing provides valuable information – e.g. about competitors, the customers’ emotions for a firm’s offerings as well as recent trends and their inherent potential for innovation – and enables a better understanding of what works and what does not work across a firm’s functions. Therefore, it is a key enabler to enhance a firm’s offerings and processes.


• The value chain in this question consists of 10 functions which are grouped into four overarching categories:

1. Customer experience

2. Customer contact points

3. Value generation and delivery

4. Administration

• Please note, that a broad definition for “operations” is used, including logistics.

• For any of the functions listed, please consider how regularly data are being captured by your firm and to what degree the data capturing process is automated. As a reference, please consider data capturing related to the offering with the highest contribution to your firm’s earnings before interest and taxes (EBIT) in the last three years where

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adequate. Data captured by your firm may have been generated by your firm or by external sources.

• You may want to answer differently for different segments of your business. For instance, you may capture data on product usage by customers continuously and automatically for some products, regularly but manually for others. In this case, please chose the most conservative option that applies across the different segments.


Customer experience

Product or service usage by customer

Customer experience is the product of an interaction between your firm and a customer over the duration of their relationship. In particular, we focus on customer experience related to product or service usage.







Operations

Generally operations is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. In this case operations also includes logistics, meaning the integration of information flow, material handling, packaging, inventory, transportation and warehousing.




Administration


HR


recruitment and training of employees, preparing employees records and personal policies and managing employees payrolls.


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How would it be answered in a case example? Degree of analysis Example Manufacturing Example Service

1 – occasionally

• E.g., in customer experience occasional data capture may include selectively documented customer feedback.

• E.g., in after sales service occasional data capture may include the development of “frequently asked questions.”

2 – regularly, but manually

• E.g., in procurement regular, but manual data capture may include lists of required materials, volumes, and prices.

• E.g., in sales regular, but manual data capture may include manual bookings related to orders (including volumes, prices, and customers).

3 – regularly and automated

• E.g., in operations regular and automated data capture may include standardised product quality tests with automated measurements on a regular basis

• E.g., in sales regular and automated data capture may include a report on online payments in a web-shop.

4 – continuously and automated

• E.g., in customer experience continuous and automated data capture may be driven by a product which is linked to the internet and continuously submits data on its usage - for instance a mobile phone.

• E.g., in digital marketing continuous and automated data capture may include the use of software tools – for instance to track the number of website visitors and how they reached the website.

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Data Analytics

To what extent do you systematically analyse data in-house across the following functions? For your answer, please consider data analytics related to the offering with the highest contribution to earnings before interest and taxes (EBIT) in the last three years.

Why is this question important? • This question assesses and compares your firm’s ability to systematically analyse data

with benchmarks.

• Firms need to make sense of the increasing volume and variety of data and the velocity of data processing. Harnessing data and deriving data-driven insights can help to increase efficiency and generate cost savings, enhance existing offerings or develop new revenue streams.


• The value chain in this question consists of 10 functions, which are grouped into four overarching categories:

1. Customer experience



4. Administration


• For any of the functions listed, please consider how systematically you analyse data in-house. As a reference, please select the offering with the highest contribution to your firm’s earnings before interest and taxes (EBIT) in the last three years.

• Also, we invite you to consider analyses which have been done in your firm in order to have concrete examples as a reference to your answers.

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Customer experience

Product or service usage by customer

Customer experience is the product of an interaction between your firm and a customer over the duration of their relationship. In particular, we focus on customer experience related to product or service usage.







Operations

Generally operations is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. In this case operations also includes logistics, meaning the integration of information flow, material handling, packaging, inventory, transportation and warehousing.




Administration


HR


recruitment and training of employees, preparing employees records and personal policies and managing employees payrolls.


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How would it be answered in a case example? Category Function Explanation

1 – descriptive analysis to summarise data

• E.g., in operations, descriptive analysis can serve to assess the inventory at a certain date.

• E.g., in product usage and customer experience related to an app, descriptive analysis can provide data on usage of the app: frequency of use, key functions used, etc.

2 – diagnostic analysis to investigate data

• E.g., in operations, diagnostic analysis can serve to determine the cause for overall machine breakdown hours.

• E.g., in digital marketing, diagnostic analysis can be utilised to assess how many social media users read or shared a post.

3 – predictive analysis to forecast data

• E.g., in sales, the predictive analysis can serve to forecast the demand at the store level – potentially considering the temperature forecast and large-scale events when determining food production schedules.

• E.g., in development, predictive analysis can serve to extrapolate market trends.

4 – prescriptive analysis to derive recommended actions

• E.g., in operations, the prescriptive analysis can serve to determine optimal delivery routes.

• E.g., in after-sales-services, remote monitoring can be utilised to derive recommended actions in case of failures of, e.g., heating devices.

5 – artificial intelligence to derive and exercise recommended actions which are dynamically adapted to environmental circumstances

• E.g., in operations, artificial intelligence analysis can serve to run an automated troubleshooting process in the production line.

• E.g., in sales, artificial intelligence can deliver and refine answers to customer requests regarding best suited products.

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Revenue In the last year, what has been the revenue of your firm (in euros)? Please tick the right answer option. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • The question mainly serves to provide further context on the relative size of your firm

compared to the benchmarking segment.


• Please select the adequate revenue range of your firm. Please provide your input in euros in order to ensure comparability within the benchmarking database.

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Growth in Revenue

What has been your firm's growth rate of revenue in the last year compared to the previous year? Please use a number with one decimal place greater or equal -100, whereby positive values indicate a revenue increase and negative values indicate a revenue decrease. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses your firm’s sales performance. You will receive concrete

information on revenue growth rates of competitors and peers within the selected benchmarking group.

• This information will serve to evaluate to what extent a specific level of activity in digital innovation translates into business impact.


• The growth rate of revenue is used to express the annual change in revenue as a percentage – that is, the rate of change at which your firm’s revenue increases or decreases from one year to another. The growth rate of revenue between two consecutive years is calculated as follows:

• Growth rate of revenue (%) = � ending valuebeginning value

− 1� x 100

Technical guidance • Below, you can find an example of how to calculate the growth rate of revenue between

two consecutive years. Suppose a firm’s revenue was 100 million Euros in 2014 and 120 million Euros in 2015:

• Growth rate of revenue (%) = �120,000,000100,000,000

− 1� x 100 = +20.00%


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Operational Profit

In the last year, what have been your firm's earnings before interest and taxes (EBIT)? Please use a number with one decimal place, whereby positive values indicate a profit and negative values indicate a loss. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s EBIT margin (EBIT relative to

revenue) in the last year with benchmarks.

• Generally, the EBIT margin provides indications about a firm’s competitive position. Typically, the stronger a firm’s unique selling proposition in the market, the higher the attainable EBIT margin. A low EBIT margin, however, suggests a highly competitive market environment.


• Earnings before interest and taxes (EBIT) is an indicator of a firm’s profitability and measures the profit a firm generates from its operations within a specific period of time, however, excluding interest and income tax expenses. There are two options to calculate the EBIT for a given year:

Option 1: EBIT = Operating revenue – operating expenses + non-operating income (non-operating income denotes gains or losses from sources not related to the typical activities of the business, such as gains or losses from investments, property or asset sales, currency exchange and other atypical gains or losses)

Option 2: EBIT = Net income + net interest expense / - net interest income + income taxes


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Growth in Operational Profit

What has been your firm's growth rate of earnings before interest and taxes (EBIT) in the last year compared to the previous year? Please use a number with one decimal place, whereby positive values indicate an EBIT increase and negative values indicate an EBIT decrease. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s growth in profitability with competitors

and peers.

• The recent EBIT growth rates provide an overview of a firm’s EBIT development and hence reflect a firm’s ability to continuously generate solid financial results in terms of profits.

How to answer this question?

Important terminology • Earnings before interest and taxes (EBIT) is an indicator of a firm’s profitability and

measures the profit a firm generates from its operations within a specific period of time, however, excluding interest and income tax expenses. The EBIT for a given year can be calculated in two different ways:

Example 1:

• EBIT = Operating revenue – operating expenses + non-operating income (non-operating income denotes gains or losses from sources not related to the typical activities of the business, such as gains or losses from investments, property or asset sales, currency exchange and other atypical gains or losses)

Example 2:

• EBIT = Net income + net interest expense / - net interest income + income taxes

• The growth rate of EBIT is used to express the annual change in EBIT as a percentage – that is, the rate of change at which your firm’s EBIT increases or decreases from one year to another. The growth rate of EBIT between two consecutive years is calculated as follows:

• Growth rate of EBIT (%) = � ending valuebeginning value

− 1� x 100

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Technical guidance • Below, you can find an example of how to calculate the growth rate of EBIT between two

consecutive years. Suppose a firm’s EBIT was 10 million euros in 2014 and 15 million euros in 2015:

• Growth rate of revenue (%) = �15,000,00010,000,000

− 1� x 100 = +50.00%


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Growth in Employees

What has been your firm's growth rate of full-time equivalent (FTE) employees in the last year compared to the previous year? Please use a number with one decimal place greater or equal -100, whereby positive values indicate a FTE increase and negative values indicate a FTE decrease. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s growth in the number of employees

over the last three years with competitors and peers.

• The recent FTE growth rates provide an overview of a firm’s historic FTE development and hence reflect a firm’s ability to create long-term jobs by recruiting, retaining and developing talented employees.


• Full-time equivalent (FTE) measures the number of full-time employees in your firm. For instance, a FTE of 1.0 is equivalent to a full-time employee, whereas an FTE of 0.5 signals a part-time employee, who covers half of a full work load.

• The growth rate of FTE is used to express the annual change in FTE as a percentage – that is, the rate of change at which your firm’s FTE increases or decreases from one year to another. The growth rate of FTE between two consecutive years is calculated as follows:

• Growth rate of EBIT (%) = � ending valuebeginning value

− 1� x 100

Technical guidance • Below, you can find an example of how to calculate the growth rate of FTE between two

consecutive years. Suppose a firm’s FTE was 4,200 in 2014 and 4,450 in 2015:

• Growth rate of FTE (%) = �4,4504,200

− 1� x 100 = +5.95%


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Digital Revenue

In the last year, what share of your revenue has been generated by the following categories of offerings? For each cell, please use numbers with one decimal place between 0 and 100 and make sure that the sum of all entered values adds up to 100%. Please simply insert 0 for any category, which is not part of your product or service portfolio. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s digital performance impact with

competitors and peers.

• The share of revenue generated by digital and other offerings in the last year serves to evaluate the degree to which your firm is creating financial business impact in these categories.


• Digital offerings can be delivered with zero marginal cost. Zero marginal cost describes a situation where one additional unit of a physical good (service) can be produced (delivered) without any increase in the total cost of production (delivery).

• Connected to internet or internet-of-things refers to (digital) offerings which utilise the internet to communicate and interact with humans or things – that is, other products, services or assets.

Technical guidance • Please start by considering which of the shown categories of offerings apply to your firm.

• Then – for all relevant categories – please split your firm’s revenue in the last year across all applicable types of offerings. Make sure that the sum of all entered values adds up to 100%. For each cell, please use numbers between 0 and 100. If a decimal number is required, then please use the formatting “x.x”. A cell value of 100 corresponds to a situation, in which your firm generated 100% of the revenue in this specific category. If you do not have the relevant information to provide an answer, please select N/A.

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How would it be answered in a case example? Please consider:

• Online shops are not to be taken into account for evaluating the digitalization level of offerings

• The digitalization of you service processes e.g. customer interaction

Offerings Category Product Example

Share of revenue generated by digital offerings

Connected to internet or internet-of-things (in %)

• health apps with connection to the internet to send data to a monitoring centre

• social networks

• mobility service provider without own vehicles

Without connection to internet or internet-of-things (in %)

• e-books

• music

• offline software

Share of revenue generated by other offerings


• smart TVs

• app controlled washing machines

• car & e-scooter sharing services, providing own vehicles


• food products

• clothing

• plumber service

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Digital Innovation

In the last year – and considering the same categories of offerings – what share of your revenue per category has been generated from innovation, i.e. offerings which are not more than three years old? For each cell, please use numbers with one decimal place between 0 and 100. If all of your revenue is generated from innovation, please insert 100% for any category of offerings covered by your firm. If a category is not part of your product or service portfolio or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s digital innovation performance with

competitors and peers.

• The share of revenue per category generated only by (digital) innovation in the last year serves to evaluate the degree of innovation in your firm’s current portfolio of offerings and reflects your firm’s ability to constantly renew the portfolio.



• Digital innovation denotes the successful commercialisation of a new or enhanced digital product, service or business model.


Technical guidance

• Please start by considering which of the shown categories of offerings apply to your firm.

• Then, please estimate the share of innovation contributing to the overall revenue generated per category. For each cell, please use numbers between 0 and 100. If a decimal number is required, then please use the formatting “x.x”. A cell value of 100 corresponds to a situation, in which your firm generated 100% of the revenue in this

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specific category by innovations. If you do not have the relevant information to provide an answer, please select N/A.

How would it be answered in a case example?





• social networks



• e-books

• music




• smart TVs




• food products

• clothing

• plumber service

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Digital Processes Development Process

How do you describe the development process for digital innovation in your firm? On a scale from 0-4, please specify the answer based on the following logic:

Why is this question important? • This question assesses and compares your firm’s development process for digital

innovation with benchmarks.

• A firm’s development process for digital innovation provides important information about its ability to generate a number of high-quality ideas for digital innovation and to successfully transform them into impactful projects – always against the background of a firm’s digital innovation strategy and in close alignment with the IT environment to support the process.


• Digital innovation denotes the successful commercialisation of a new or enhanced digital and / or connected offering (product, service or business model) or process.

• Design Thinking can be described as a discipline that uses the designer’s sensibility and methods to match people’s needs with what is technologically feasible and what a viable business strategy can convert into customer value and market opportunity.

• Rapid prototyping is the speedy creation of a full-scale model. In manufacturing, rapid prototyping is used to create a three-dimensional model of a part or product. In addition to providing 3-D visualization for digitally rendered items, rapid prototyping can be used to test the efficiency of a part or product design before it is manufactured in larger quantities.

• Scrum is an iterative and incremental agile software development framework for managing product development. It defines a flexible, holistic product development strategy where a development team works as a unit to reach a common goal.

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Technical guidance • The question contains 11 development process items which are grouped into four

overarching categories:

1. Process type

2. Process activity

3. Process success

4. IT support

• Please provide your evaluation for each of the aforementioned items

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Time-to-Market

How many months does it take for your most profitable offering in each of the following categories from the beginning of the development (i.e. project authorization) to getting the new or significantly improved offering on sale? For each cell, please use numbers with one decimal place greater or equal 0. If several offerings exist per category, please select the offering with the highest contribution to earnings before interest and taxes (EBIT) in the last three years. If a category is not part of your product or service portfolio or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares the time-to-market for the most profitable (digital)

offerings with competitors and peers.

• The time-to-market for (digital) offerings provides valuable information about your firm’s speed in successfully commercializing new offerings.

• Thus, it is an important indicator of a firm’s ability to gain competitive advantages and develop an industry-wide reputation of being a leader rather than a follower.




• Time-to-market (for offerings) is the time period from the beginning of the development (i.e. project authorization) to getting a new or significantly improved (digital) offering on sale.

Technical guidance • Please start by considering which of the shown categories of offerings apply to your firm.

• Then – per category – please identify which offering generated the highest contribution to earnings before interest and taxes (EBIT) in the last three years.

• Finally, please estimate the time-to-market for the selected offerings.

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How would it be answered in a case example? . Please consider:

• Online shops are not to be taken into account for evaluating the digitalization level of offerings

• The digitalization of you service processes e.g. customer interaction





• social networks



• e-books

• music




• smart TVs




• food products

• clothing

• plumber service

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Process Automation for Delivery of Digital Innovation

What degree of process automation does your firm experience today across the following functions? For your answer, please focus on automation related to your offering with the highest contribution to earnings before interest and taxes (EBIT) in the last three years.

Why is this question important?

• This question assesses and compares the level of process automation within your firm across different stages of the value chain with benchmarks.

• Process automation is very quickly becoming a strategic enabler as the demand for firms to perform more complex and labour intensive tasks increases.


• The degree of process automation reflects a firm’s ability to improve operational efficiency by realizing time savings, reducing costs and minimising manual errors – particularly in administration as well as value generation and delivery – and to consistently address customers as they will experience the same level of service and attention.

Technical guidance

• The value chain in this question consists of 9 functions which are grouped into three overarching categories:



3. Administration


• For any of the functions listed, please consider the degree of process automation that your firm experiences today. As a reference, please select the offering with the highest contribution to your firm’s earnings before interest and taxes (EBIT) in the last three years.

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Operations

Generally, operations is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. In this case operations also includes logistics, meaning the integration of information flow, material handling, packaging, inventory, transportation and warehousing.




Administration


HR


recruitment and training of employees, preparing employees records and personal policies and managing employees’ payrolls.


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How would it be answered in a case example? Degree of process automation

Example Manufacturing Example Service

1 – some automation, high degree of unused potential to increase process speed or quality

E.g., in finance some automation may include automated invoices sent from a webshop.

E.g., in marketing, some process automation may include standardized advertising mails.

2 – mass processing steps are automated,

potential remains to increase process speed or quality

E.g., in operations, automated mass processing steps may include the partly automated packaging of products using sensors to assess the required size – which may leave further potential to enhance process speed.

E.g., automated mass processing steps may include after-sales service which build on algorithms to respond to a set of key questions.

3 – mass processing steps are automated,

good process speed and quality

E.g., automated mass processing steps may include after-sales service using sensor devices to check the functionality of an appliance – in particular for remote servicing where a technician can be sent automatedly if a failure occurs .

E.g., in operations, automated mass processing steps may include the generation of a travel itinerary by a service company based on selections made by the client.

4 – full process automation, systematic evaluation of further improvement potential

A fully automated operations process is in place, e.g., if a photo book is printed based on data sent by the customer.

A fully automated sales process is, e.g., offered in app stores.

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Utilisation and Business Impact of Digital Marketing

In the last year, to what degree have you utilised the following digital marketing options? And to what degree have you achieved measurable business impact with these options in the same period? On a scale from 0-4, please specify the answer by selecting from the drop-down menu based on the following logic:

Why is this question important? • This question assesses and compares your firm’s utilisation and business impact of

selected digital marketing initiatives with competitors and peers.

• It is essential for firms to capture the consumer’s attention by managing the complex customer relationships across a variety of channels, initiate and respond to dynamic customer interactions and extract value from relevant data to make better decisions faster.


• Digital marketing denotes the process of promoting a firm’s offerings (products, services or business models) using digital technologies and differs from traditional marketing approaches in that it involves the use of channels and methods that enable firms to analyze and quickly understand what is working and what is not – typically in real time. Media that might be used as part of digital marketing include promotional efforts made via the internet, social media, mobile phones (e.g. SMS, MMS, apps, instant messaging), electronic billboards, digital television radio channels and any other form of digital media.

• E-Mail and newsletter marketing occurs when a firm sends a commercial message, typically to a group of people, by the use of electronic e-mail, for instance, through advertisements, requests for business and direct sales invitations.

• Social media marketing refers to a firm’s use of social media platforms such as Facebook, Twitter, Google+, LinkedIn, YouTube, Pinterest, tumblr, Instagram, reddit, VK, Flickr, Vine, Meetup, ASKfm, etc. to promote its offerings and spread its catchy marketing messages.

• Affiliate marketing denotes performance-based marketing in which a firm (merchant) pays a commission fee to its sales partners (affiliates) for every “click”, “lead” or “sale”

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they generate for the firm using the affiliate’s own marketing efforts. Typically, affiliates are supported by the merchant with advertising material.

• Search engine marketing is a type of internet marketing and includes both search engine advertising and optimisation. Search engine advertising (e.g. Google AdWords, Google AdSense) denotes the method of posting online advertisements in the form of text or images on search engine results pages. Search engine optimisation (e.g. onsite and offsite optimisation) denotes all measures aimed at increasing the amount of visitors to a website by obtaining a high-ranking placement in the search result pages of a search engine such as Google, Bing, Yahoo, etc.

• Own (mobile) app marketing denotes any marketing activity conducted through a ubiquitous network to which consumers are constantly connected using a personal mobile device application.

Technical guidance • Please estimate the extent to which your firm uses the aforementioned digital marketing

options.

• Furthermore, please indicate the business impact for the respective marketing initiatives in the last year. Business impact may have various facets such as an increase in revenue, a higher number of customer requests for products or an extension of your firm’s access to customers.

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Size of Social Media Network

What is the current size of your social media network? For each cell, please use integral numbers greater or equal 0. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s social media network size with

benchmarks.

• The size of a firm’s social media network provides information about its ability to create a considerable footprint in social media in order to enhance brand recognition, increase conversion rates, gain customer insights and improve brand loyalty.


• The social media network denotes any public electronic communication network in which registered users can interact, collaborate or share information and content with each other. Current examples include Facebook, Twitter, Google+, LinkedIn, YouTube, Pinterest, tumblr, Instagram, reddit, VK, Flickr, Vine, Meetup, ASKfm, etc.

Technical guidance • Please indicate the current size of your social media network by entering the respective

numbers into the requested fields.

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Revenue Generated via Digital Sales Channels

In the last year, what share of revenue has been generated via digital sales channels? Please use a numbers with one decimal place between 0 and 100. If you do not have a digital sales channel or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s digital sales performance with

benchmarks.

• The share of revenue that was generated via own and third party digital sales channels provides information about a firm’s performance in attracting and serving customers online and hence reflects its ability to expand beyond traditional sales channels.


• Please indicate the revenue generated by digital sales channels by entering the adequate shares into the requested fields.


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Digital Ecosystem and Culture

Organisation of Digital Innovation

How do you describe the organisation of digital innovation in your firm? On a scale from 0-4, please specify the answer based on the following logic:

Why is this question important? • This question assesses and compares how your firm organises digital innovation with

benchmarks.

• The organisation of digital innovation indicates whether a firm has clearly defined roles and responsibilities for digital innovation, encourages the staff to contribute or to take part in digital innovation and defines project-specific, cross-functional teams to address digital innovation challenges.


• For each of the items listed, please provide a view on your firm’s organisation of digital innovation.

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Governance of Digital Innovation

Who is leading the digital innovation agenda in your firm? Please tick the right answer option. If you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses if your firm has a clearly defined leader of the digital innovation

agenda ready and, if so, who takes the lead. Moreover, it serves to compare your firm’s governance of digital innovation with competitors.


• Please select the adequate approach towards leading the digital innovation agenda in your firm.

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Contribution to Digital Innovation

In the last year, how many full-time equivalent (FTE) employees and how many external partners have contributed to idea generation, development and implementation of digital innovation initiatives in your firm? For each cell, please use numbers with one decimal place greater or equal 0. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question quantifies and compares the extent to which your firm’s employees and

external partners contribute to digital innovation with benchmarks.

• The degree of internal and external contribution to digital innovation gives indications about a firm’s ability to actively engage employees and business partners in the process of digital innovation, make them adopt a digital innovation mindset and execute on it. This enables firms to develop digital innovation into a competitive advantage being difficult for competitors to copy.


• Full-time equivalent (FTE) measures the number of full-time employees in your firm. For instance, a FTE of 1.0 is equivalent to a full-time employee, whereas an FTE of 0.5 signals a part-time employee, which covers half of a full work load.

Technical guidance • Please provide the number of FTEs and external partners which contribute to digital

innovation by entering the adequate values into the requested fields.

• As an example, a company might have successfully implemented a new online shop, which was brought forward and developed by two full-time employees. For the implementation and set up of the new online shop an IT provider was consulted. The implementation process was carried out by one specialist of the IT provider workforce. In this case the company would enter “2” for FTEs in idea generation, as well as “2” for FTEs in development. For implementation the company would enter “1” for external partners. All other input fields are to be denoted as “0”.

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Business Partner Connection

When considering the last year, how do you characterise the interaction with your most important supplier and route-to-market partner (i.e. the partner distributing or selling your offerings)? Please tick all the items that are fully applicable. You may specify more than one answer. If none of the items is applicable or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares the connection of your firm with its most

important supplier and route-to-market partner with benchmarks.

• The level of sophistication in connecting with key business partners provides indication of a firm’s ability to establish a fast and easy communication flow and ensure the seamless exchange of relevant data between business partners.


• Route-to-market partners are distributing or selling your firms‘ offerings (e.g. wholesalers, distributors).

Technical guidance • For each business partner, please select as many answer options as apply to your firm –

you may specify none of the options if your firm’s connection with its business partners is not characterized by any of the aforementioned features. In this case please chose N/A.

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Development of Digital Partner Ecosystem

How do you rate your firm's capabilities to develop an ecosystem of partners which drive digital innovation? On a scale from 0-4, please specify the answer based on the following logic:

Why is this question important? • This question assesses and compares your firm’s ability to develop an ecosystem of

partners who help to drive digital innovation with benchmarks.

• The quality of a digital innovation ecosystem indicates whether a firm already has access to the right partners within its existing network and whether it is able to continuously leverage its know-how to identify and finally set up the best digital innovation partnerships that expand beyond existing ecosystem boundaries.


• Please select all relevant answer options.

• If you have chosen the answer option “We do not have incentives for employees to contribute to digital innovation”, all previously provided entries are deselected and hence become invalid.


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General Digital Capabilities

What share of employees in your firm demonstrates the following digital capabilities? For each cell, please use numbers with one decimal place between 0 and 100. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares the spectrum and depth of the digital capabilities

of your firm’s employees with benchmarks.

• The digital capabilities of a firm’s employees provide information on their ability to effective live, learn and work with digital technologies and hence serves as an important basis for the successful generation, development and implementation of digital innovation initiatives.


• The question contains 6 general digital capabilities which are grouped into four overarching categories:

1. Use

2. Develop

3. Participate

4. Learn

• For each general digital capability listed, please indicate the employee share having the respective type of capability.


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Incentives for Digital Innovation

Which of the following monetary and non-monetary incentives for employees to contribute to digital innovation do you have in place? Please tick all the items that are fully applicable. You may specify more than one answer. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s incentives for employees to contribute

to digital innovation with the incentives of the benchmarks.

• Monetary and non-monetary incentives for employees to contribute to digital innovation provide information about a firm’s readiness to implement measures that encourage staff to actively participate in the creation of ideas for digital innovation and the implementation of digital innovation projects.


• The employees’ contribution to digital innovation denotes, for instance, the creation of ideas for digital innovation, the implementation of digital innovation projects, etc.

Technical guidance • Please provide a view on your firm’s implementation of monetary and non-monetary

incentives for digital innovation by selecting all relevant items – you may choose none of the options if your firm does not have in place any of the aforementioned incentives.

• If you have chosen the answer option “We do not have incentives for employees to contribute to digital innovation”, all previously provided entries are deselected and hence become invalid.


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Enablers for Digital Innovation

Development of Digital Capabilities

How important are the digital capabilities of your current or future employees in the following dimensions across your firm? On a scale from 0-4, please specify the answer based on the following logic:

Why is this question important? • This question assesses and compares the role of digital capabilities in the HR

management of your firm with benchmarks and sheds light on current HR policies and practices.


• Non-IT functions include, for instance, R&D, operations, marketing, sales (including e-commerce), HR, finance and other areas of administration.

• In contrast, common IT functions include, for instance, IT architecture (e.g. designing, managing and implementing server storage and network infrastructure solutions), IT operations (e.g. diagnosing and resolving / escalating technical issues and administering helpdesk software) and IT security (e.g. ensuring disaster recovery, business continuity and integrity of organisational business processes, electronic data, data systems and networks).

Technical guidance • For each of the items listed, please provide a view on the importance of digital

capabilities of your firm’s current and future employees.

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Financial Resources for Digital Innovation

Over the last three years, what average share of revenue has been spent on digital innovation projects? Please use a number with one decimal place greater or equal 0. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A.

Why is this question important? • This question assesses and compares your firm’s financial commitment to digital

innovation with benchmarks.

• The average share of revenue spent on digital projects provides indications about a firm’s aggressiveness with which it implements the digital innovation strategy in order to achieve the defined digital innovation objectives.


• The average share of revenue spent on digital innovation projects includes all operating expenditures and all capital expenditures in as far as required to deliver digital offerings and implement digital processes in a given year (using the approximate annual depreciation).

Technical guidance • Please provide the details about your firm’s financial commitment to digital innovation by

entering the invested revenue share into the requested field.

• As an example, the successful set up of an online shop is a digital innovation project, since it offers an additional service for the customers and generates measurable revenue. The update of the internal ERP software in contrast might be a digital project, too. Nevertheless it does not fall under the category of digital innovation, since it does not fulfil the criteria of the successful market placement.

• Below, you can find an example of how to calculate the revenue spent on digital innovation projects, over the last three years.


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How would it be answered in a case example?

Investment on digital innovation projects Revenue Share

2014 70.000€ 1.2 mil. 5.8%

2015 95.000€ 1.4 mil. 6.8%

2016 17.000€ 1.7 mil. 1%

Average 4.5%

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Specialised Expertise in IT, Risk Management, Legal and Tax Affairs To what degree are the following areas of expertise relevant to you and to what extent are they covered by your firm or by external partners today? On a scale from 0-4, please specify the answer by selecting from the drop-down menu based on the following logic:

Why is this question important? • This question assesses and compares your firm’s expertise across important fields –

such as IT, risk management, legal and tax affairs – with benchmarks and hence provides important information about their relevance and coverage.


• The question contains 11 areas of expertise which are grouped into four overarching categories:

1. IT

2. Risk

3. Legal

4. Tax

• For each of the areas of expertise, please provide a view on their relevance for your firm. In addition – for each area – please consider to what degree they are already covered by your firm.

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IT Process Efficiency

Do you support the whole process – from order intake to delivering the product or service to your direct customer – with IT applications? If so, how many non-integrated IT applications are involved? Please use an integral number greater or equal 1. If the question does not apply or if you do not have the relevant information to provide an answer, please select N/A. Note: Non-integrated IT applications are defined as software programs that do not share a common database or user interface and are therefore not tightly interconnected.

Why is this question important? • This question assesses and compares your firm’s IT process efficiency with

benchmarks.

• The number of non-integrated IT applications involved in a firm’s process from order intake to delivering the product or service to the direct customer provides important information about the current efficiency level of a firm’s core functions in order to identify speed and cost saving potentials.


• Non-integrated IT applications are defined as software programs that do not share a common database or user interface and are therefore not tightly interconnected. If, e.g., a company uses an enterprise resource planning system with five interconnected modules plus a completely independent application to manage an online shop then the number of non-integrated IT applications would be two – the ERP system with its modules plus the online shop application.

Technical guidance • Please indicate the IT process efficiency by entering the adequate number of non-

integrated IT applications into the requested field.

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IT Resilience

In the last year, what has been the downtime of your IT system or parts of the system in hours? And – as a result – what has been the sum of non-productive work hours of all employees that were affected by the downtime?

Why is this question important? • This question assesses and compares your firm’s IT resilience with benchmarks.

• The downtime of the IT system and the underlying non-productive work hours of employees being affected by the downtime provide indications about a firm’s ability to plan, design, implement, operate and support a reliable IT infrastructure that is easy to handle, creates greater value and enables competitive advantages for the core business.


• Please indicate the IT resilience by entering the IT system downtime and the underlying non-productive work hours of employees into the requested fields.

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Cyber Security Awareness and Measures

To what degree do the following statements describe your firm's cyber security awareness and measures? On a scale from 0-4, please specify the answer based on the following logic:

Why is this question important? • This question assesses and compares your firm’s approach towards cyber security with

benchmarks.

• The cyber security approach indicates whether a firm is aware of potential threats and training needs and whether a firm addresses these issues with the right strategy in order to effectively cope with increasing cyber security challenges.


• Cyber resilience standards are standards which aim to protect data, such as the PCI DSS (Payment Card Industry Data Security Standard).

Technical guidance • Please provide a view on your firm’s awareness and measures regarding cyber security

by selecting the relevant answer options.

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Impact Measurement of Digital Innovation

Do you use key performance indicators (KPIs) to measure the impact of digital innovation in the following areas? If yes and considering only the course of the last year: How would you describe the dynamics of your performance in the respective areas? If you use KPIs, please specify the dynamics of your performance based on the following logic:

Why is this question important? • This question assesses and compares your firm’s use of key performance indicators

(KPIs) in order to measure the impact of digital innovation with benchmarks.

• The impact measurement of digital innovation provides information about a firm’s readiness to actively track KPIs and how they can help a firm in enhancing its performance in selected areas such as revenue, cost, process speed, adaptability, etc.


• Key performance indicators (KPIs) are a set of quantifiable measures that a firm uses to gauge its performance over time. These metrics are used to determine a firm’s effectiveness in achieving defined strategic and operational goals and also serve to compare a firm’s performance against other businesses.

For instance, the average revenue per customer ordering via digital sales channels may serve as a KPI for gauging changes in a firm’s revenue driven by digital innovation.

Similarly, the number of unique firm website visitors may be used as a KPI for measuring changes in a firm’s brand recognition driven by digital innovation.

Technical guidance • Please provide a view on your firm’s active use of selected KPIs and how they help to

improve your performance across the aforementioned areas.

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Contact the IMP³ROVE Academy Team For any further information, please don’t hesitate to contact the IMP³ROVE Academy Team:

IMP³ROVE – European Innovation Management Academy EWIV Dreischeibenhaus 1 D- 40211 Duesseldorf Germany Tel.: +49 211 13 77 2305

Email: [email protected]

mailto:[email protected]

Documents

HELP-TEXTS FOR THE IMP ROVE DIGITAL INNOVATION QUOTIENT DIQ