10 ways to achieve growth through innovation: "
Companies that manage innovation with the same rigor and discipline they bring to other business processes can see sustainable growth and a higher return on their innovation investments.
Accenture has completed new research and analysis about the state of innovation with more than 900 companies in 11 industries. The industries included information technology/high tech, electronics, wireline and wireless communications, automotive, banking, capital markets, consumer goods and services, insurance, manufacturing, pharmaceutical and medical products, and retail. The research sought to gain insights about management perceptions of innovation processes and investments.
Based on this research and analysis, I propose 10 actions companies in the business technology and other industries examined should consider taking to improve their innovation performance.
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1: Conceive of innovation as a business discipline, and then manage and execute it systematically.
That means as an end-to-end, uniform process, from insight development to idea generation to development to marketplace launch.
2: Craft a precise definition of innovation’s role in the overall corporate strategy based on the company’s industry, market, and competitive environment.
Specify the types of innovation being sought to build a sustainable competitive position and the specific value the innovations are expected to generate. To be effective, this definitional approach needs to be broad enough that no one in the firm is let off the hook. If innovation is defined too narrowly, executives can always say that it’s not relevant to the business. But if innovation is about continuously finding new sources of value, defined in whatever terms are appropriate for a particular industry, executive teams have no choice but to look at the processes they currently have in place for identifying new sources of value, setting up teams to explore and execute around those sources, managing the teams, and measuring results.
3: Focus much more time and resources on breakthrough, long-term, game-changing innovation.
Spend less time on incremental innovation that yields only short-term benefits. Several of the world’s greatest companies have performed exceptionally well by delivering breakthrough innovations based on ‘big bet’ initiatives.
4: Take more risks, reward failure, and encourage continuous improvement.
The fastest and most effective path to breakthrough innovations is to think big and act big. Be bold in your actions and decisions. Create a corporate culture that not only tolerates risks but rewards it. And when employees fail while taking big risks, reward them. Without such a culture, breakthrough ideas are impossible to consistently identify and capitalize upon.
5: Measure innovation performance and results as you do other business functions, such as marketing, strategy, and operations.
There’s a tendency to keep inconsistent and unusable records about corporate innovation. This makes it tough to measure innovation performance. Tracking more detailed, disciplined, consistent metrics about innovation performance will translate to better innovation performance. Ensure that the metrics span the end-to-end innovation process. This means beyond the customer and embracing both forward- and backward-looking metrics. Tracking only backward-looking metrics is insufficient. Without the ability to measure past successes and estimate the future market impact of new products, companies will continue to ‘fly blind.’
6: Focus on the customer experience and less on technology.
Zero in on a problem looking for a technology solution rather than a technology solution looking for a problem. High performing companies use ethnographic, best-practice observational customer understanding techniques, whereas lower performers rely more heavily on traditional market research. You can’t ask people what they want, because when it comes to technology, they usually don’t know. On the other hand, you can’t develop something just because a room full of engineers think it’s cool. You have to know whether the idea will resonate as a real benefit to people. The way you hear the voice of the customer is to listen better to the customer. A key metric should be how well you are meeting your customer’s expectations of your company.
7: Embrace open innovation and open innovation tools.
This means tapping external sources, such as universities and corporate start-ups. Keeping all innovation activities within your company is a recipe for failure.
8: Encourage idea generation from everywhere, both inside and outside your company.
Include everyone from the highest levels of the company to the lowest. Often the most innovative ideas are submitted by junior employees.
9: Consider appointing a chief innovation officer and setting up a uniformity of command for corporate innovation accountability.
Accenture’s research found a direct correlation between the level of successful innovation within companies and the presence of a chief innovation officer (or an executive who has innovation as a major part of his/her job responsibility). Companies designating one executive to be accountable and leading innovation execution report dramatically higher satisfaction levels across all aspects of their innovation performance. This performance includes developing a product or service pipeline of initiatives and extracting value from innovation programs. Having an executive in this role creates a more focused, continuous process for improving corporate innovation. Companies that don’t have such executives tend to be less skilled and lower performing in innovation.
10: Have a dedicated budget for innovation.
Appointing a chief innovation officer isn’t enough. Too often, companies have appointed someone to lead the innovation charge only to run up against the crippling ‘who owns the budget?’ problem. A dedicated budget is a vital component of successful innovation. But there does need to be an adequate level of resources to fund the innovation infrastructure.
Conclusion
These recommendations are part of a large set of new Accenture research results about the status of corporate innovation around the world. Overall, Accenture’s research revealed that innovation is a top priority for companies seeking to grow. But flaws in managing innovation, such as overemphasis on incremental improvements, are resulting in poor returns on innovation investments. Accenture believes these poor returns can be turned into profitable, sustainable growth by systematically managing innovation end to end with the same rigor and discipline as other major business processes.
Adi Alon, North American managing director - Accenture’s Innovation Performance Group, can be contacted at adi.alon@accenture.com.
(Via 10 Things.)
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