As innovation proves to be particularly difficult for well-established companies, McKinsey & Company has researched the successful innovation strategies of big companies and focussed on the question what other companies can learn from them. As a result, the consulting firm identified eight attributes, which are all present in the companies that are labelled as successful innovators. Consultancy.uk provides a summary of the eight essentials.
In its recently released research into the successful innovating strategies of big companies, McKinsey & Company identifies eight attributes that are present at every big company that is seen as a high performer in product, process, or business-model innovation. The results are based on a multiyear study comprising in-depth interviews, workshops, and surveys of more than 2,500 executives in over 300 companies in a variety of industries and countries.
According to the consulting firm, the essentials, which are often overlapping, iterative, and non-sequential practices, can be divided into two groups. The first four (aspire, choose, discover and evolve) are strategic and creative in nature and will help set the terms to make an innovation successful. The last four (accelerate, scale, extend and mobilise) are organisational in nature and help deliver innovations repeatedly over time. Consultancy.uk provides a brief summary of the eight essentials for innovation:
According to McKinsey, high-level aspirations should be combined with estimates of the value that the innovation should generate for the business. Making the innovation an explicit part of future strategic plans, will help solidify the importance of and accountability for innovation. The quantified “innovation target for growth” should subsequently be cascaded down the organisation in the form of targets and timelines.
For many companies, the difficulty to innovate is not about a scarcity of new ideas, but about a struggle to choose the ideas to support and scale. McKinsey stresses that to get “the most from a portfolio of innovation initiatives is more about managing risk than eliminating it.” Companies should set in motion more projects than they will finance in the end and create boundaries for their opportunity spaces, making it easier to kill the ones that prove less promising.
According to the firm, innovation requires actionable and differentiated insights by examining three areas: companies should have a valuable problem to solve, a technology that enables a solution for the problem, and a business model that generates money from it. This so-called insight-discovery process is “the lifeblood of innovation.” Prototypes can be used to help companies to learn during the innovation process.
Companies that want to innovate often need to reinvent their business by adopting business-model innovations, changing the economics of their value chain, diversify profit stream, or modify their delivery models. Leading companies constantly re-evaluate their position and adapt their business model to deliver value to their customers.
McKinsey indicates that many companies get in the way of their own attempts to innovate as cautious governance takes over. A balance must be struck between checking this bureaucracy and the ‘rush to market’ to prevent the undermining of collaboration, learning cycles, and clear decision pathways that are essential to innovation. Another key issue to accelerate innovations is to test promising ideas with customers early in the process.
Determining the appropriate reach of a given idea is essential to ensure that the right resources are available when pursuing the idea. This will allow for a quick delivery of the product or service at the desired volume and quality.
To successfully innovate, external collaborations are required. These partnerships can be used to source new ideas and insights, but also to share costs and finding faster routes to market. Leading companies asses the skills and talents of other companies to find new ways to create value for their customers.
For any company wanting to innovate, it will be essential to get everyone behind the idea. They need to stimulate, encourage, support, and reward innovative behaviour and thinking, and incorporate innovation in their culture by promoting collaboration, learning, and experimentation.
The authors conclude by saying: “Big companies do not easily reinvent themselves as leading innovators. Too many fixed routines and cultural factors can get in the way. For those that do make the attempt, innovation excellence is often built in a multiyear effort that touches most, if not all, parts of the organisation. Our experience and research suggest that any company looking to make this journey will maximise its probability of success by closely studying and appropriately assimilating the leading practices of high-performing innovators. Taken together, these form an essential operating system for innovation within a company’s organisational structure and culture.”