Boston Consulting Group: Six innovation best practices

04 February 2013 Consultancy.uk

Innovation is becoming increasingly important as a competitive differentiator for companies. But the key question is: how can companies maximize the returns on their investment? And how can they successfully embed innovation principles within the organization? According to strategic advisory firm The Boston Consulting Group (BCG) it all comes down to six main factors. An overview of the six factors that distinguish best-practice innovators from the rest.

Get the customer involved early

Best-practice innovators get current and potential customers involved early in the innovation process. Customers participate in idea-generation sessions, offer frequent input on early concepts in order to help projects "fail fast and fail cheap," and critique current offerings in the market. The challenge involves how to add external-facing processes that enable companies to capture and efficiently use the voice of the customer.

Envision innovation as a holistic system

Managers cannot simply optimize one piece of the innovation ecosystem in isolation. In order to ensure successful innovation, companies must take a holistic approach and optimize the parts of the system that are critical to their competitive advantage. This approach begins with building a strong case for change that proves to the organization why innovation is so critical to the future success of that organization. Without this buy-in, even an optimized innovation system will fail to deliver the intended results.

BCG - Innovatie Best Practices

Use data to drive tough decision-making

Many companies do not have a systematic way to make trade-offs. They lack consistent and comparable data across markets and product lines for evaluating investments in the innovation portfolio. As a result, the inevitable trade-off decisions are often made on the basis of the "gut feel" of executives rather than metrics.

To be effective, innovation investments need to be allocated in a differentiated way. Executives at leading innovators are able to make tradeoff and investment decisions with confidence because the decisions are made for the right reasons on the basis of the right data.

Think strategically about trade-offs

According to the consultants, best-practice companies make strategic decisions based on the size of the future opportunities and not based on historical data (e.g. last year's budget). In addition, senior leaders have the tools and procedures to make innovation investments across several dimensions, such as businesses, markets, regions and products.

Ensure senior leadership commitment

Senior leadership commitment is considerably the respondents as the most important force driving innovation. BCG advises firms to appoint the CEO as the sponsoring executive for crucial innovation programs. "Appointing the CEO ensures that innovation clearly links to and supports the corporate strategy, and that innovation efforts focus on the most important areas in meeting current and future targets for growth" according to BCG as mentioned in the report ‘The Most Innovative Companies 2012’.

Optimize intellectual property to create value

The sixth dimension is according to BCG a relatively new phenomenon. Due to the increasing importance of technology in innovations, the value of intellectual property has skyrocketed over the past decade. Top innovators lead the way in terms of intellectual property management and have the right hard (IP life cycle, processes, metrics) and soft (skills, culture) criteria in place.

All six areas?

The Boston Consulting Group concludes by stating that best practice innovators do not necessarily have to be great in all six areas, but rather identify which ones are critical to their innovation strategy and ensure they perform best in class in those areas.

×

Two thirds of UK employees not empowered enough to innovate

18 March 2019 Consultancy.uk

A culture of equality can drive innovation at work, but only a third of UK employees feel empowered to innovate at present. This demonstrates a significant disconnect between workers and their bosses in the UK, with 76% of business leaders also claiming they empower employees to be innovative.

Despite innovation increasingly being seen as integral to the survival of businesses, innovation remains relatively difficult to achieve. A lagging disconnect between management and staff remains the driving force behind this. One study by PA Consulting previously confirmed that while 66% of companies believe they will not survive without innovation, only 24% said they had the skills needed for that, and only half thought they had the right leadership in place to change that in time.

In order to find a way around this problem, global consultancy Accenture has completed its own study into innovation, polling around 700 bosses and workers across the UK to do so. The key finding of the research is that companies with a culture of equality can see an individual’s willingness and ability to innovate improved by seven times that of the least equitable workplace cultures. At the same time, an innovation mindset is almost twice as high in the most-equal companies as in typical ones.

91% of employees want to innovate but just 34% in typical United Kingdom companies feel empowered to

What remains clear, however, is that most companies are failing to adequately create an equal culture, where staff of all ranks feel comfortable contributing new ideas. 91% of employees want to innovate but just 34% in typical UK companies feel empowered to. That is higher in the most equal companies, where 75% of staff feel confident making suggestions, compared to just 5% of the least equal, and 34% of typical companies. Since those equal companies are comparatively fewer, when averaged out, only a third of UK staff feel they are empowered to innovate.

That figure stands in stark contrast to the perceptions of UK executives, however.  76% of business leaders in Britain believe that they do indeed regularly empower their employees to innovate. As a result, it seems that leaders mistakenly believe that some circumstances encourage innovation more than they actually do. For instance, they overestimate financial rewards and underestimate purpose.

The opportunity which is presented by addressing this divorce is enormous. Accenture calculates that global gross domestic product would increase by up to £6 trillion over 10 years if the innovation mindset in all countries were raised by 10%.Top 10 workplace culture factors - by strength of impact on innovation mindsetAccording to Accenture, the best way to impact positively on a company’s innovation mindset is through the provision of relevant training – associated with a 10.5% uplift to staff’s confidence innovating. Allowing the freedom for employees to be creative followed, contributing an 8.1% boost, while ensuring that training times are flexible and the firm allows a healthy work-life balance both see a more than 7% improvement. Similarly, remote working being available and being common practice will buoy creativity by 6.9% – further demonstrating the importance of flexible working to improve innovation culture at a firm.

Commenting on the report, Rebecca Tully, executive sponsor for Human Capital and Diversity for Accenture in the UK and Ireland, said, “Our research reveals that a workplace culture of equality is an overlooked driver of innovation within companies. By understanding what motivates their employees and fostering an environment where people feel empowered, business leaders have the opportunity to unleash the innovation required to compete effectively in an era of disruption.”

The research came as part of a global survey by Accenture, which queried more than 18,000 professionals in 27 countries and 150 C-suite executives in eight countries. The overall research determined that an empowering environment is by far the most important of the three culture-of-equality categories in increasing an innovation mindset, which consists of six elements: purpose, autonomy, resources, inspiration, collaboration and experimentation. The more empowering the workplace environment, the higher the innovation mindset score.