Innovation is increasingly important to drive competitiveness in the global marketplace. What separates successful innovators from other companies?
The Boston Consulting Group, October 2014
Innovation is increasingly important to drive competitiveness in the global marketplace. In its recent report, “The most innovative companies 2014: Breaking through is hard to do”, the Boston Consulting Group (BCG) considers what separates successful innovators (described as “strong” and “breakthrough” innovators) from other companies. Interesting findings include:
- 75 per cent of the 1,500 global senior innovation executives surveyed reported that innovation is among the top three priorities for their companies.
- Notwithstanding the high priority accorded to innovation, 70 per cent of executives said that their companies’ innovation capabilities are only average, and 13 per cent see them as weak.
- Strong innovators are three times more likely to leverage technology to enhance their value proposition or improve operations, use big-data mining for new project ideas, and actively target innovation in digital design and mobile products.
- Strong innovators pursue a portfolio approach for risk taking, leverage internal and external knowledge sources, have strong corporate governance, and have a dedicated budget for new concepts.
- At the highest level, breakthrough innovators put a higher priority on innovation, and know that innovation is essential to their future. They cast a wider net for ideas, use more business model innovation, and have cultures geared toward break-through success.
The report focuses on the importance of culture to successful innovation. It states, “At big companies, innovation requires commitment, discipline, strong processes, and a willingness to take risks and fail – those latter attributes, especially, are not ones that most corporate cultures embrace”. Successful innovators work hard to make sure that the value of innovation is reflected in their corporate cultures, that they are organised to move new ideas forward, and structures and processes are designed to facilitate innovation.
Although innovation will not be a priority for all companies, BCG describes the aspiration of executives to “raise their innovation game” as “nearly universal”. Boards can help foster innovation in their organisations by focusing on innovation in their strategy development. This may be assisted by selecting directors who have a good understanding of innovation-led strategy. Boards should ensure that there are frameworks in place to foster innovation at all levels of their organisations.
The board can also play an important role in building and reinforcing a culture that is conducive to innovation. Values statements, incentive and reward schemes, and internal communications championing innovation can assist in developing such a culture.
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