Innovation increasingly important for long-term business survival
Despite innovation increasingly being seen as integral to the survival of businesses, it remains relatively difficult to achieve. A new report considers key areas in which innovative leaders set themselves out from the pack.
The new report, from PA Consulting Group, titled ‘Innovation Matters’, explores the importance of innovation to businesses and looks into the current approaches used by organisations to embrace innovative products, services and ways of working.
Innovation survival
The survey highlights the importance respondents place on innovation, with an increasing number of firms globally pouring resources into innovation centres. 66% confirm that their organisation will not survive without innovation. However, it also identifies that many (76%) of the survey firms do not feel fully confident that they have the skills and activities they need to be innovative.
The survey in addition notes that 37% of respondents say that their organisation has made no, or only minimal, changes to its innovation approach, while 50% say that they do not believe their leaders fully display the vision and passion needed to make innovation happen.
The consulting firm finds that while companies themselves see a need to innovate, particularly in light of new opportunities resultant from advancing technologies – the current lack of preparedness is likely to hinder development. The firm also found that certain groups among those surveyed were better able to develop innovation. The so called ‘innovation leaders’ provide insight into how other firms may be able to boost their innovation activity.
Companies can be impeded by risks on multiple fronts which impair innovation in relation to technological advances particularly. New market entrants, leveraging new technologies that lower the difficulty of market access, hold considerable potential to acquire market share from various segments of incumbents’ businesses. Aside from lower service costs, the new entrants may also offer improved customer service or a more compelling customer journey.
New technologies are also created room for new business models that disrupt earlier models, such as AirBnB and Uber. New markets may too arise, such as social media networks, that are able to indirection affect, among others, publishers and marketers.
In terms of how innovation leaders are looking to keep up with changes, as well as develop their own innovative solutions and propositions, the survey found that 41% of innovation leaders frequently take part in formal horizontal scanning and scenario planning, compared to 25% of less successful respondents. 57% of successful respondents were also found to be very good at making the business case for innovation, compared to 41% of less successful peers. Furthermore, 66% of successful innovators were found to be very good at understanding and anticipating customer needs, compared to 43% of all others. Finally, 81% of innovation leaders were found to offer their employees an inspirational sense of purpose, compared to 69% of all other respondents.
Agility and scale
Analysts further sought to identify how innovation leaders performed in the development and scaling of innovations within their wider business. The firm found that 61% of innovation leaders are very good at measuring the value of innovation, compared to 47% of other respondents – allowing them to more quickly move forward with a candidate for scaling. Innovation leaders (54%) were also found to cite killing a project as a core strength, compared to 40% of successful peers.
Once a project has been identified as showing potential, 51% of innovation leaders described themselves as ‘very good’ at scaling up innovation, compared to 39% of less successful peers. Additionally, 59% of respondents that were innovation leaders said that they were very good at the rapid deployment of technology to meet customer/consumer needs, compared to 49% of all other respondents – and finally, 61% said that they were excellent at getting innovation to market, compared to 42% of less successful peers.
Innovative employees
While the majority of respondents cited innovation as important to the survival of the firm, business culture and recruitment remain impediments to success. 21% of respondents, for instance, said that their organisation is struggling to recruit the innovation people they need for success, while 82% believe that their performance management approach rewards uniformity over creativity. Finally, 38% of respondents said that, when they do manage to hire the right creative force, they cannot keep them onboard.
In terms of how innovation leaders are outperforming their peers from a people perspective, 78% said that they have executive leadership teams with a diverse range of skills and professional backgrounds, compared with 66% of all other respondents, furthermore, 39% said that they have defined the skills they need to be innovative, compared to 21% of their peers.
Other areas in which they purport to outperform their peers are in making good progress around diversity, 81% vs. 66%, and having a creative open-minded culture, 75% vs. 66%. Frazer Bennett, Chief Innovation Officer at PA Consulting Group said, “We’ve found that innovation leaders design innovation into the heart of their business, use agile techniques right across their business, and are quicker to kill off ‘zombie’ projects. They have strong external networks and foster a culture that learns from innovation failures, as well as recognising success. We’re optimistic that organisations can address the innovation conundrum and get better at employing innovative practices. This will help companies all around the world set themselves up for future health."
