Seventy-five percent of respondents that participated in an anonymous client report ranked innovation as a top-three priority for their company; 22 percent said it was their company’s top priority. More than 60 percent said their company planned to increase investments in innovation in the coming year.
Many innovation managers express frustration that their teams are not developing the successful new products and services or the compelling product or service extensions that they seek. As customer expectations grow and markets evolve more quickly, companies can’t expect to innovate in the ways they used to. On the basis of our experience working with hundreds of companies to reinvigorate their innovation strategies and processes, we suggest that executives seeking to sharpen their innovation edge follow a few organizing principles.
This system has three major components: a strategy comprising choices on where and how to create growth and value through innovation, a supporting set of processes for research and product development, and an enabling set of systems, tools, and capabilities. When combined with a willingness to fail, using these three components, below organizing potential for speed may be the highest-impact step that companies can take to rejuvenate innovation.
Reckitt Benckiser, a global consumer-products company that has significantly outperformed its peers in both revenue growth and total shareholder return (TSR) over the past 15 years, has built a culture that values idea generation, quick decision-making, and above all, speed. The systems, and the executives overseeing them, also help product-development and innovation teams learn how to limit risk by cutting losses sooner than a standard innovation playbook might; these teams then make the lessons learned from the experiment available to subsequent projects and teams.
Ninety percent of the most disruptive innovators in a 2014 Global Innovators Survey from an anonymous company said that developing “new to the world” products is important to their future success, compared with 63 percent of non-disruptive innovators. Almost 60 percent of strong innovators in our 2014 survey said that their companies mine big data for new-product ideas, compared with only 19 percent of weak innovators. They are also twice as likely to credit big data with making them more innovative (81 percent compared with 41 percent) than their peers.
Rather than considering investments solely on the basis of financial returns, the new generation of incubators concentrate their investments in ideas that can enhance the sponsoring company’s competitive advantage. Our analysis of the top 30 companies (as measured by market value) in each of six innovation-intensive industries (telecommunications, technology, media and publishing, consumer goods, automotive, and chemicals) found that in 2013 alone, 19 of the 180 companies had established incubators or their close relatives, accelerators. Smart companies across all industries increasingly use IP as both an offensive and a defensive competitive weapon and disruptive innovators take it even more seriously. For companies whose lifeblood is new products and services, the same can be said of innovation. And when necessary, they don’t hesitate to innovate their innovation systems to keep the lifeblood flowing.