7 Lessons from the 50 Most Innovative Companies

Rather unsurprisingly, the 50 companies that Boston Consulting Group recently ranked as the most successful at innovation were global players, with a top 7 comprising the Technology/Telecommunications giants; Apple, Google, Samsung, Microsoft, Facebook, IBM and Sony. However, an interesting development has been the rise of Industrial Products and Process companies. Most of the industrial companies that have risen to now make up a full fifth of the rankings are conglomerates such as General Electric, BASF, DuPont and 3M. For many of them entry into the top 50 rankings is a recognition of strong leadership involvement in innovation, the commercial rigour of their innovation processes and their ability to identify new innovation potential between their business portfolios.

For companies with more modest portfolios, engineering links between different business activities is less of a challenge. Similarly, business leadership participation in all aspects of business operations, including innovation is often a given. However, the recent success of these Industrial Products and Process companies does have much to teach other businesses.

I have identified 7 examples of Innovation Process Excellence demonstrated by these companies that can and should be taken up by all product and service companies with an innovation growth strategy:

1. Cultivate a deeper customer understanding Build a capability for incorporating the voice of the customer in innovation by leveraging customer insights as a source of ideas for growth. When visiting a customer always ask what would significantly improve their business success.

2. Segment the customer base to identify the most innovative customers Direct innovation activities to meet the future needs of “early adopter” customer segments. Innovative customer segments are the most challenging, but satisfying their needs can significantly reduce the speed (and cost) to market.

3. Target innovation effort at attractive pockets in the market Markets with differential growth, high current and future profitability and aligned to existing customer industries should be targeted. The ultimate goal should be to sell systems that combine products, technologies and application know-how to accessible, high growth areas.

4. Actively manage innovation using a “Staged” innovation process A typical innovation process has around 5 stages – beginning with preliminary idea evaluation and finishing with a post-project review stage (ref). Installing a discipline whereby all projects must deliver against pre-agreed, market-relevant criteria in order to pass to a higher resource-demanding stage prevents “mission creep” that can seriously drain resources.

5. Internal criteria should also be used to select projects Whilst external criteria such as value creation potential in existing or emerging markets are important in selecting ideas or continuing funding, projects should also meet internal criteria. These will be different for each company, could include a cost-to-value ratio or the ease of selling for the existing sales force.

6. Consider licensing Intellectual Property (IP) rights It is estimated that 70% of research work being done today has already been done elsewhere. So why re-invent an increasingly expensive wheel? Big industry players have the resources establish and defend a dominant IP position, but they are also becoming more aware of advantages of licensing their IP. Not only does licensing produce a healthy revenue stream, licensing can also; allow the market to be tested with a reduced reputation risk, help shape the market in the direction desired and facilitate the broader adoption of licensors technology as the market standard.

7. Fully utilise the business leaders’ skills in the innovation process In smaller businesses the chief executive will often play the role of the “decider in chief”, particularly where budgets are concerned. However, the CEO’s other skills particularly the interrogation of available data for commercial rigour and strategic perspective can also be beneficial when tough resourcing decisions have to be made between target sectors and the short and long term targets.

The tools and techniques for Innovation Process Excellence already exist and are used by the 50 best companies in innovation. It is the willingness of business leaders to utilise this extant process knowledge that is the difference between success and failure in putting these techniques into practice. Karl Ronn a former vice president of P&G, Scott Anthony author of “The Little Black Book of Innovation” recently said that “Companies that think they have an innovation problem don’t have an innovation problem. They have a leadership problem.” If you are a business leader who would like to employ the techniques of Innovation Process Excellence you can speak to us at Pennog  by calling +44(0)1484 443001 or contact us anytime using our easy contact form and we can arrange a call.

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