Combine, Cluster, Complement: 3 Fundamentals of Combinatorial Digital Innovation

February 02, 2021

Contributor: Robert Snow

Organizations must seize the technological advantage of combinatorial digital innovation to fully benefit from technology investments.

The digital industrial revolution has changed the world in profound ways — and it’s far from over. A global digital society infrastructure continues to expand, fueled by increasing digitalization of data, ubiquitous connectivity, decreasing computing costs and readily available storage.

In this environment of ever-evolving technology, innovation gives rise to more innovation, providing more and more component parts that can lead to the development of even more digital innovation. The result is a continual creation of new markets, new services and even new industries. 

Combinatorial digital innovation is the practice of using components of different digital technologies and trends together to uncover new or better value

For the most part, it’s startups that embrace multistack innovation combining multiple emerging technologies. Larger enterprises, however, tend to invest in emerging technologies in isolation. As a result, they’re missing the opportunity to seize the technological advantage of combinatorial digital innovation that startups enjoy.

“Combinatorial digital innovation is the practice of using components of different digital technologies and trends together to uncover new or better value. To do it effectively, three actions must be taken: Combine, cluster and complement,” says Rajesh Kandaswamy, Gartner VP Analyst. 

“First, combine suitable technologies and trends. At the same time, cluster emerging technologies and trends that fit naturally together. And finally, complement initiatives with emerging technologies that can have an impact on secondary areas."

Although each of these three actions is distinct, all need to be applied together to create a greater ability for cross-pollination and, ultimately, greater innovation. Here’s a quick breakdown of each.

Read more: Gartner Top Strategic Technology Trends for 2021

Combine: Find suitable combinations of technologies and trends for a business domain

In this scenario, rather than trying to look at one technology to solve a given business issue, look for combinations of technologies and trends that are suitable in a domain. The fundamental question for CIOs to ask themselves is “What are the top combinations of technologies that can create the most value in my business area?”

This determines where to allocate resources for innovation and experimentation, and leads to testing the best way to exploit emerging technologies, rather than only seeing how an emerging technology can support an existing process.

An example is supply chain modernization, for which companies often look to blockchain. However, a key supply chain need is also to get accurate data as quickly as possible, and the Internet of Things (IoT) is a viable technology to explore.

CIOs investing in supply chain improvements are likely to benefit more by investing in experiments that combine blockchain and IoT together, rather than conducting isolated proofs of concept for each technology.

Cluster: Identify which emerging technologies and trends naturally fit together for the most value at a feature level

This is about identifying the features of different emerging technologies, including operational technologies, that work together well to create new or greater value.

The conventional approach is to use some or all of the features within an emerging technology together and only connect to other technologies and systems for data integration needs. Clustering, however, goes a step beyond by also exploring and identifying features across different technologies that can be combined into new features or that strengthen each other.

CIOs need to encourage such exploration and facilitate unique value creation activity across technologists who specialize in individual emerging technologies.

Read more: 5 Emerging Technologies Explained by Gartner Experts

One example is blockchain and AI technology in medical devices. Machine learning can extract intelligence from them, but often, their owners want their records to remain private and are reluctant to share them with others.

Blockchain technology enables each owner to encrypt their data with their own key and still allow for common computation on top. This provides an assurance mechanism for data storage, while simultaneously enabling machine learning algorithms to learn from the data. 

Complement: Identify secondary effects of adoption of emerging technologies

As technologies and trends are adopted, they will have impact on areas beyond their primary use. These secondary effects provide complementary opportunities for combinatorial digital innovation. 

For example, the adoption of smartphones kickstarted the ability to create ride-sharing services such as Uber and DiDi Chuxing. And the adoption of peer-to-peer (P2P) online commerce, using auction sites such as eBay, created the need for secure payment systems such as PayPal.

It is vital that CIOs consider the whole picture of the impact of emerging technologies, including the main usage scenarios and complementary areas. They should plan for a broader view to identify complementary opportunities, even if they choose to move ahead with specific projects in today’s business context.

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