29 Nov. 2017 | Comments (0)
Across the globe, one business challenge has the ear of CEOs like few others: innovation.
Six in 10 surveyed executives think the chance to avoid falling behind their competitors has passed. Much of the anxiety from today’s business environment ties back to their commitment – or lack thereof – to innovation.
On the upside, new findings shed light on the practices that successful innovators use to innovate. Developed by InnovationOne and The Conference Board, the survey polled a global audience of over 400 business leaders. Based on their responses, individuals fell into one of two groups: high innovators and low/lagging innovators.
For CEOs looking to make their companies competitive amid unprecedented competition, taking these innovation-focused steps could go a long way.
1) Spread Innovation Beyond R&D to the Whole Organization
High innovators think of innovation as a strategic imperative for the whole enterprise – not just the R&D department. This alone is a major factor in separating the two cohorts and gives the high innovators a statistically significant advantage.
“Companies as varied as Amazon, Gap and Superior Cabinets have learned to use their workforces as beta groups to generate new ideas or test new innovations.”
Why do executives often fail to make a holistic commitment to innovation?
Often, their strategic planning and marketing focuses too much on their current domain and on short-term results, overlooking early signals of disruption to their markets. Consider Honeywell, which has a long-standing residential thermostat business. But, they were caught off guard when Nest disrupted the market by understanding that millennial homeowners would want to program home temperatures and view images from their home security cameras through their smartphones. Consequently, Honeywell was challenged to come up with its own Wi-Fi smart thermostat to compete with Nest. If Honeywell had involved its broader workforce in its approach to innovation, it may have been alerted to the changing consumer demands. Companies as varied as Amazon, Gap and Superior Cabinets have learned to use their workforces as beta groups to generate new ideas or test new innovations.
2) Commit to a Culture of Innovation
High innovators use culture management to promote transparent and collaborative cultures. This represents one of the biggest factors that distinguishes them from lagging innovators – it separates the cohorts by a margin of nearly two to one. The comments from the survey respondents speak volumes – particularly those classified as lagging innovators. They advocate for the mere basics of culture development, tools, processes and metrics.
For guidance on this front, the medical device maker Medtronic warrants a look. For decades, the company’s CEOs have frequently highlighted the company’s innovation strategies and projects at global all-employee meetings. During routine reviews, project leaders evaluate progress against technical and patient-service metrics. Moreover, the company’s culture empowers top executives from separate business units to dedicate their experts to the innovation projects of other units to help overcome obstacles.
3) Measure, Measure, Measure!
High innovators also place a major premium on using metrics to measure innovation. Again, by a margin of almost two to one, this factor separates high innovators from lagging innovators. Companies that ineffectively use metrics leave their innovation to gut feel and chance.
Executives who want to improve their company’s metrics game plan should consider the case of SaskCentral. The financial institution was facing deregulation and competition from new entrants using digital technology and new business models. After spending time reconnecting with its customers and employees and restructuring its operations, SaskCentral began quarterly reviews of its innovation roadmap and projects, using various product, customer, and cultural measures. It has since gone on to achieve its highest net income to date.
The upcoming holiday season will likely bring new examples of how innovation can make or break a company. The winners and losers of Black Friday and Black Monday for example, will make headlines across the country. If an executive is looking for a New Year’s resolution as 2017 comes to a close, he or she should consider making a newfound, smarter commitment to innovation. No silver bullet exists. But a good start would entail extending the commitment to innovation across the whole organization, making it a top cultural priority, and leveraging all that metrics can offer.
This piece was originally featured on Chief Executive.