Recent research conducted by Accenture has revealed that only 18 percent of senior executives believe that their organisation’s innovation efforts are providing them with a competitive advantage. Yet, 93 percent of the surveyed executives said that the long term success of their company depended on their ability to innovate.
For an organisation to achieve a true competitive advantage through innovation, there needs to be a split focus on both incremental and disruptive innovation – innovation relating to improving the core of the business, and innovation efforts focused on non-core areas. However, 64 percent of respondents admitted to their organisation’s innovation strategy primarily being focused simply on line extensions. This low risk approach to innovation was identified as the key reason why executives felt that their innovation efforts were not differentiating their organisation from competitors.
Having a formal innovation management system was seen as one of the key differences between companies that were very satisfied with their return on innovation efforts, and those that were not. This involved having an end-to-end process that specifically designed to generate, nurture, scale and launch innovations. Indeed, organisations that had taken a formal approach to innovation were twice as likely to be very happy with their return on innovation efforts.
The likelihood of having a formal approach to innovation varied significantly across industries. Consumer Goods and Services, Electronics and High Tech, and Health Providers were most likely to have a formal innovation program in place, with approximately 70% of those surveyed admitting to having this. In contrast, only 40% of organisations in the Travel and Transportation industry had a formal approach to innovation.
In order to ramp up your organisation’s innovation efforts, start by ensuring that your company has a clear and well communicated process so that employees know what business challenges are important to solve, have an outlet for their ideas and a transparent method for making decisions. Ensure that ideas are prototyped leanly and rapidly so that you can learn and iterate faster than your competitors.
Organisations also need to invest in training staff to become skilled at identifying opportunities for innovation, such as teaching methods for finding current customer frustrations, and how to generate unique and effective solutions in how to solve these challenges and to rapidly prototype solutions.
Finally, ensure that your innovation efforts are split between incremental and disruptive, as a low risk, incrementally-focused approach to innovation will fail to provide your company with the competitive advantage you are looking for.
Dr. Amantha Imber