The way that corporations innovate has changed substantially in the last five years. Many of these changes are structural in nature, arising as firms shift their investments towards more digital technology. Such shifts are not new. Since the internet went public in the 1990s, we have seen the convergence of technologies that have opened up digital transformation. What has changed, in the last five years or so, is that we are seeing the emergence of a new class of digital technologies that have a much wider potential application. These generalpurpose technologies, such as IoT (internet of things), artificial intelligence (AI), 5G, and others, are opening up myriad business opportunities. But, in relation to corporate innovation, this is a good news/bad news story. The good news is that executives now have powerful new tools to innovate and find new sources of value creation. The bad news is that these emerging technologies rely on advanced technical and analytical skills that are new, rare, and expensive. Because of this, many large firms have struggled, or are still struggling, with their first foray into digital transformation. Some firms have managed to successfully navigate this new disruptive and volatile environment, but many have not. Why are firms struggling? For many, the challenge is how to graduate from the first wave of digital transformation – digitizing operations by streamlining processes or connecting to customers and suppliers in more digital ways – to the second – creating new sources of value using these new general-purpose digital technologies. To succeed in this second wave will require a profound transformation of corporate innovation systems – processes, capabilities, organization. So, have firms transformed their innovation systems? Are they sourcing innovation differently? Have they leveraged these new general-purpose digital technologies successfully to create new business opportunities? And have they effectively developed their capabilities to succeed?1
