Despite innovation increasingly being seen as integral to the survival of businesses. It remains relatively difficult to achieve. This insight sets out organizational areas in which innovative leaders set themselves out from the pack.
The report, from PA Consulting Group, titled ‘Innovation Matters’, explores the importance of innovation to businesses and looks into the current approaches used by organizations to embrace innovative products, services and ways of working.
Innovation survival
The survey highlights the importance respondents place on innovation. There are an increasing number of firms globally pouring resources into innovation centres. Sixty-six percent of leaders confirm that their organisation will not survive without innovation. However, it also identifies that many (76%) of the survey firms do not feel entirely confident that they have the skills and activities they need to be innovative.
The survey, also, notes that 37 percent of respondents say that their organization has made no, or only minimal, changes to its innovative approach. Fifty percent say that they do not believe their leaders fully display the vision and passion needed to make innovation happen.
The consulting firm finds that while companies themselves see a need to innovate, particularly in light of new opportunities resultant from advancing technologies – the current lack of preparedness is likely to hinder development. The firm also found that certain groups were better able to develop innovation. The so-called ‘innovation leaders’ provide insight into how other firms may be able to boost their innovation activity.
Risks on Muntiple Fronts
Companies can be impeded by risks on multiple fronts which impair innovation about technological advances particularly. New market entrants, leveraging new technologies that lower the difficulty of market access, hold considerable potential to acquire market share from various segments of incumbents’ businesses. Aside from lower service costs, the new entrants likely also offer improved customer service or a more compelling customer journey.
New technologies are also created room for new business models that disrupt earlier models, such as AirBnB and Uber. New markets may too arise, such as social media networks, that can indirection affect, among others, publishers and marketers.
Regarding how innovation leaders are looking to keep up with changes, as well as develop their innovative solutions and propositions, the survey found that
- 41 percent of innovation leaders frequently take part in formal horizontal scanning and scenario planning, compared to 25% of less successful respondents
- 57 percent of successful respondents were also found to be very good at making the business case for innovation, compared to 41 percent of less successful peers
- 66 percent of successful innovators were found to be very good at understanding and anticipating customer needs, compared to 43 percent of all others
- 81 percent of innovation leaders were found to offer their employees an inspirational sense of purpose, compared to 69 percent of all other respondents
Agility and scale
Analysts further sought to identify how innovation leaders performed in the development and scaling of innovations within their broader business. The firm found that 61 percent of innovation leaders are very good at measuring the value of innovation, compared to 47 percent of other respondents – allowing them to move forward with a candidate for scaling more quickly.
Innovation leaders (54 percent) were also found to cite killing a project as core strength, compared to 40 percent of successful peers.
Once a project has been identified as showing potential, 51 percent of innovation leaders described themselves as ‘very good’ at scaling up innovation, compared to 39 percent of less successful peers. Additionally, 59 percent of respondents that were innovation leaders said that they were very good at the rapid deployment of technology to meet customer/consumer needs, compared to 49 percent of all other respondents – and finally, 61 percent said that they were excellent at getting innovation to market, compared to 42 percent of less successful peers.
Innovative employees
While the majority of respondents cited innovation as essential to the survival of the firm, business culture and recruitment remain impediments to success. Twenty-one percent of respondents, for instance, said that their organization is struggling to recruit the innovation people they need for success, while 82 percent believe that their performance management approach rewards uniformity over creativity. Finally, 38 percent of respondents said that, when they do manage to hire the right creative force, they cannot keep them onboard.
In terms of how innovation leaders are outperforming their peers from a people perspective. Seventy-eight percent said that they have executive leadership teams with a diverse range of skills and professional backgrounds. This compares with 66 percent of all other respondents. Furthermore, 39 percent said that they had defined the skills they need to be innovative, compared to 21 percent of their peers.
Concluding Thoughts
Other areas in which they purport to outperform their peers are in making good progress around diversity, 81% vs. 66%. By having a creative, open-minded culture, 75% vs. 66%.
“We’ve found that innovation leaders design innovation into the heart of their business, use agile techniques right across their business, and are quicker to kill off ‘zombie’ projects. They have strong external networks and foster a culture that learns from innovation failures, as well as recognizing success. We’re optimistic that organizations can address the innovation problem and get better at employing innovative practices. This will help companies all around the world set themselves up for future health." — Frazer Bennett, Chief Innovation Officer, PA Consulting Group
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