Best practices for harnessing the power of innovation management
As digital technologies open new markets and broaden old ones, the economic landscape of the 21st century is constantly shifting, making the capacity to harness innovation an essential aspect of modern business, now more than ever. With this in mind, a new study from PA Consulting Group has identified best practices companies can learn from innovation leaders.
In recent years, getting the best out of innovation has become integral to running a successful company. Thanks to revolutionary new technology, and the changing customer attitudes which morph to expect new things as a result of these changes, entire industries are being redefined. According to ‘Innovation Matters’, a 28 page research report compiled by PA Consulting Group, this is being picked up by executives, with as many as two thirds (66%) of the 820+ senior executives surveyed globally stating that without mastering innovation, they believe their organisations “will not survive”.
The sentiment mirrors trends in the wider Research and Development space – analysis by Strategy& shows that spending on innovation by the globe’s top 1,000 corporations has increased in fourteen of the past fifteen years, to a total of $680 billion, up from $400 billion in 2005.
In practice, however, organisations are missing out on the potential of innovation to drive progress and profitability, as only 28% of PA’s survey say they are innovating successfully to drive growth and increase revenue. The analysis builds on previous research by PA into innovation, which found that innovation failures in the UK alone are costing organisations up to £64.7 billion per year.
The report warns that by failing to continue prioritising R&D, organisations without an “innovation mind-set” risk missing out on the new opportunities this presents. The authors also state that new market entrants benefit from by-passing or simply ignoring legacy processes of incumbent players, instead building quicker, more cost-effective customer-centric solutions, enabling them to outflank more established competition.
Best practices for successful innovation management
Analysing the key traits of innovation leaders – defined as organisations that realise a substantial increase in revenue and growth as a direct result of their innovation activity – PA’s researchers identify qualities essential to harness the power of innovation. “There are clearly identifiable steps for success, a set of tried and tested behaviours which are consistently displayed by those organisations who do succeed at innovation”, explains Frazer Bennett, Chief Innovation Officer at PA Consulting Group and one of the authors of the report, who believes “This will help companies all around the world set themselves up for future health.”
From the report’s sample of data, with 81% of respondents agreeing, leaders clearly believe instilling an inspirational sense of purpose in employees is integral to success – as ultimately the employees are the ones who implement the company’s vision ‘on the ground’ – however it was closely followed by executive diversity – with 78% stating their company leadership originated from a variety of professional backgrounds and skillsets. Relating to this, 61% of respondents also noted they were more likely to succeed if they used outsourcing to provide fresh external perspectives on a project.
A meticulous business plan was also perceived as an essential component of their companies succeeding – with 39% (compared to 21% of their peers) earmarking new skills and techniques to innovate operations in the future and 61% stating they make very good use of data to measure the value of innovation (a conclusion also found by a recent study by BCG). This constant stream of re-evaluation feeds into 66% of innovation leaders also believing they are very good at anticipating consumer needs, and consequently 59% define as “very good” at rolling out new technology in order to meet those projected requirements.
54% of respondents also stated a belief that they were very good at “killing” failing “zombie projects” (whereas 60% of their peers did not). 57% of innovation leaders subsequently defined as being extremely capable of stating the business case for new innovation, assured by this capacity to cut off dead wood, and subsequently enabled by this case-making prowess, over half of these leaders felt their company was “very good” at upscaling innovation – compared to just 39% of their peers.
Implementation
While PA’s comprehensive overview is certainly easier said than implemented, particularly by established companies that have perhaps become set in their ways, the report also provides four pragmatic action points for management teams looking to change their approach. The advice is to firstly focus on the future. “Begin exploring how your industry is liable to change, and then decide where to begin innovating”, says Bennett. The second step focuses on creating a framework within the organisation for the changes required. From this point, PA argues, businesses can create their own culture of innovation, changing how “people lead, work and are rewarded.”
Finally, on the path to emulating innovation leaders, the report recommends building a network with other organisations looking to innovate – a step a growing number of companies are taking through innovation centres or partnerships – to build this culture into the “ecosystem” of the business.
Related: 5 common killers that impede successful innovation.
