Innovation in the digital age

Authored by: Michael Dowling , Elisabeth Noll , Kristina Zisler

The Routledge Companion to Innovation Management

Print publication date:  February  2019
Online publication date:  February  2019

Print ISBN: 9781138244719
eBook ISBN: 9781315276670
Adobe ISBN:


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Today’s industrial environment is marked by the increasing use of digital technologies (Yoo et al., 2012) such as artificial intelligence, automation, robotics, additive manufacturing, and human–machine interaction (McKinsey and Company, 2015). Embedded software and sensors are altering classical product characteristics, resulting in “smart products” capable of interacting through the Internet of Things (IoT). The interconnectedness of smart products allows data aggregation (Yoo et al., 2012; Nylén and Holmström, 2015; Porter and Heppelmann, 2014), thereby promoting the importance of “big data” analysis as well as cloud computing technologies (McKinsey and Company, 2015; Nylén and Holmström, 2015; MGI, 2013). In addition to their impact on products, digital technologies are helping to facilitate processes, for example, by accelerating innovation processes through digital simulation (Yoo et al., 2012; Nylén and Holmström, 2015). Integrating digital technologies into products influences competitive structures, blurs industry boundaries, and revolutionizes product as well as service innovation (Yoo et al., 2012; Nylén and Holmström, 2015; Porter and Heppelmann, 2014). New products require expertise from numerous knowledge fields (e.g. IT and manufacturing) that are potentially new to existing firms, which stresses the importance of collaboration across company as well as industry borders. Furthermore, customer focus and agile development methods determine success in today’s dynamic industry environment (MIT Technology Review, 2014; Porter and Heppelmann, 2014; Bharadwaj et al., 2013; BMWi, 2016a).

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