Although the term “innovation” has found a place in everyday diction, true, game-changing innovation still remains elusive. The increasing competition for customers, market share, and talent in almost every industry demands an innovative approach to business. Not only is innovation necessary for enhancing competitive advantage, it is a requirement for businesses to thrive as well as survive. Then why is innovation such a rarity? So much that a McKinsey survey reported that 94 percent executives are unhappy with their business’ innovation performance.
A common approach that drives innovation
A study by IBM Institute for Business Value, called “More than Magic: How the Most Successful Organizations Innovate," that surveyed 1,000 C-suite executives across 17 industries worldwide, reported that the top 9 percent of the most innovative and successful organizations, in terms of both operational efficiency and revenue growth, use a similar approach to build their internal innovation engine. Innovation doesn’t happen overnight; it takes some successes, some failures, and a very systematic approach to be innovative. The most common aspect of some of the innovative companies is that they are also high-performing organizations. While each of these organizations has its own distinctive path to innovation and success, there are some common threads that connect them. Here’s what they are:
1. Innovation is a part of their organizational culture
In innovative companies, innovation is not sporadic. Such companies plan and execute innovative ideas across business activities by making innovation thrive in their company’s culture. They link innovation to their well-defined business objectives by establishing and maintaining dedicated innovation teams. Over 79 percent successful, innovative companies encourage innovative behavior throughout the organization.
2. They support systemic innovation
As an extension to making innovation a part of their culture and processes, innovative companies also organize themselves in ways that support open innovation. Ideas, no matter how great they are, are worthless as concepts. Innovative companies provide the right platform for their employees to share and discuss ideas and have dedicated teams to turn them into prototypes and test the prototypes resulting from those ideas.
3. They promote innovation leadership
Most often, leaders don’t need to be innovators. However, having leaders who drive and foster innovation accelerates a company’s growth. Top-tier managers handling innovation roles in successful companies set an example for the company’s employees to contribute to the innovation process. It also shows the company’s interest in investing in innovation. Some common examples of diverse leadership roles that are reinforcing innovation in their respective companies include GE’s “Chief Experience Officer” and Taco Bell’s “Chief Food Innovation Officer”, among others.
4. They encourage failure
Innovative companies give their employees the space to implement and test all types of ideas. While the good ones among those ideas will thrive, the not so good ones will fail fast. Allowing bad ideas to fail fast is a concept that the startup world considers sacred business scripture. Although failure is a stigma to the corporate world, Eric Reis, a Silicon Valley entrepreneur-turned-VC-turned author and founder of Lean Startup Movement, encourages companies to embrace the concept of “failing fast”. Nike’s Innovation Kitchen is a great example of a company that tests the theory that there can’t be true innovation without failure. The company’s Flyknit series is a result of such testing. Providing a supportive environment that encourages failure ensures that the strongest ideas gain organization-wide acceptance and reach the market as great products.
5. They are experience driven
Customer experience is a golden phrase for almost all successful innovations. And most of the top innovators have customer experience at the core of their business. Taking a holistic view of the complete customer journey along with new experiences that a product or service offers leads to disruption. BuzzFeed and Shyp are the perfect examples here. While the former moved from the comfort zone of being a publisher to becoming a social environment, the latter is disrupting the delivery services industry by making shipping experience more seamless for small businesses.
6. They measure their innovation investment
At innovative companies, innovation is not reactionary. Successful companies plan their innovation strategies well in advance and have separate funds for investing in their innovations. They also measure their innovation investments for the financial returns they accrue. In fact, successful companies measure the impact of anything and everything on their business. And whatever they learn or earn from such measurements, they put it to use in their product roadmaps or other business areas.
7. They are not just customer-centered companies but are also people-centered businesses
Think Uber and Airbnb, and what is the first thing that comes to your mind? Both of these companies are innovators who are witnessing exponential growth and expanding in new markets by being people-centered. Is being people-centered the same as being customer-centered? The answer is both yes and no as the difference is very subtle, yet it is the differentiator for game-changing innovations.
8. They adhere to lean principles of product development
A study by the Boston Consulting Group (BCG) reported that over 74 percent of strong innovators follow lean principles in their R&D processes. This helps them gain a considerable competitive advantage over their weaker counterparts. Having strong R&D methodologies in place that adhere to lean principles of product development reduces their product target cost by over 35 percent and improves their research and development productivity by 15 to 20 percent. Being lean means they not only have efficient processes in place, but they also have systems in place for evaluating what work is really necessary.
9. They are tech-savvy
What drives innovation in most successful companies are the advances in their technology platforms, followed by big data analytics. At the core of these companies is technology that allows them to respond to customers’ needs faster than their competitors and create new capabilities or business models. Technology doesn’t work in silos in successful, innovative companies, but it lays the foundation that enables them to create breakthrough innovation. Innovative companies foster a collaborative approach between their IT and other business units along with allocating separate budgets and incentives for technology-enabled innovations.
10. Their speed of innovation is phenomenal
A critical attribute common to strong innovators is their speed of innovation. Fast innovators are not only strong innovators, but they are also more disruptive innovators as compared to the slow ones. They are able to react and adapt quickly to market shifts, develop new products or services faster than their competitors, and deliver those to the market with the same speed.
There’s no magic bullet to make your company more innovative. However, you can make innovation more than magic for your business and outperform your competitors with a systemic approach that makes innovation a part of your company, its processes, and its culture. Innovate on purpose, innovate more often, and see innovation as a business process in itself to become a successful innovator.