What are the Primary Concerns regarding Innovation?
Nearly 40 percent of firms identified challenges related to process and alignment as their highest priority – a further indication that implementing innovation is a tough task. (The chief technology officer from a major U.S. manufacturer describes this challenge as “improving the path to the sea,” perhaps indicating the need for an unobstructed flow of ideas.)
1. Alignment issues revolve around implementing an innovation process across all businesses that will create a symbiosis between new and existing businesses, and doing a better job of leveraging innovation across lines of business. At the same time, respondents are searching for how to establish a “complete, robust, and speedy” innovation process.
2. Looking further downstream, a few respondents speak of successfully implementing customer relation management,” “the cross sales systems,” “reorganizing the sales and marketing process,” or “training the sales force.”
3. Fine-tuning the strategy-setting and implementation process and making innovation “a part of the way we work, rather than an add-on” are top process concerns.
4. Respondents also speak of the importance of sustaining innovation, of “keeping the momentum going in depressed times,” and maintaining the “engagement and commitment” of senior management.
5. They also acknowledge the perennial issue of “funding, funding, funding.”
6. Assessing the needs of the innovation portfolio, some respondents see the need to “find a quick win” and to “focus on a few R&D projects with a high impact on the core business,” while others are looking ahead to “develop a pipeline of new growth opportunities.”
7. Some hope to “re-establish the premium value of core technologies in the product food chain,” while others want to acquire external technologies to expand their portfolio.
8. Better integration of business and technology planning is yet another priority.
To keep innovation alive, innovators need to produce tangible results, and respondents hope to create the evidence they need by meeting the following goals in the short term:
–Making more focused investments and being accountable for the returns
–Ensuring that innovation contributes to profits at an early stage of the life cycle
–Producing volume growth
–Using innovation to leverage stock market attention about the company’s performance/ growth prospects
–Pushing more products through to commercialization
–Moving advanced products into development and improving life-cycle management
–Launching more efforts that win in the marketplace
Longer term, executives may need to consider a whole new approach to innovation, going beyond a focus on products, services, or processes to an emphasis on their customers’ total experience.
Characteristics of Companies Successful at Innovation
What distinguishes the handful of companies in the highly successful group from those reporting low success?
The maturity of the innovation process may be an important but not a critical factor-42 percent of the least successful firms have created an innovation initiative within the last five years, but 50 percent of this group has pursued innovation for over 10 years.
Instead of these broad categories, the data indicate that companies with high rates of innovation achievement:
–are more likely to have senior management that emphasize innovation;
–link their performance management reward structure to innovation performance;
–have innovation portfolios that contain a higher percentage of breakthrough and disruptive innovation;
–place a greater emphasis on working with outside partners;
–include cost reduction as well as the need to formulate innovative new business strategies among their high priority goals;
–recently upgraded their IT systems/software; and
–accomplish alignment through use of a wide array of mechanisms, including the Intranet.
Less successful companies focus on cross-unit mechanisms and senior level coordinating councils-not necessarily wrong choices but perhaps insufficient. These companies also struggle with issues of customer satisfaction and loyalty and the need to identify new customer segments.
In addition to winning commitment to innovation at the top of their organization, study participants are:
–Taking a broad view of what innovation means in their firms
–Thinking ahead to growth and “big” innovation
–Creating alignment mechanisms
–Well on the road to putting innovation teams and processes in place and using them effectively
–Supporting innovation with “people” practices
–Building a varied portfolio of metrics to measure their progress and success
Overall, the most successful firms appear to be operating off a comprehensive roadmap for stimulating and capitalizing on innovation, rather than taking a piecemeal approach. As companies forge ahead, issues around convergence, alignment of internal and external sources of innovation, spiraling customer expectations, and greater customer participation will continue to challenge the resourcefulness and creativity of their entire enterprises.
(Source: Conference-Board Report “Making Innovation Work: From Strategy to Practice” by Kathryn Troy.)