This article describes the key elements of a High Performance Innovation System that will help your business achieve growth over the long-term.
What is Innovation?
There’s a lot of innovation “fluff” around. The prize is delivering long-term growth to your company by repeatedly delivering new and valuable products, processes or services to the market. Innovation occurs at three scales; through incremental improvements, radical departures within existing markets or by game-changing disruption. Successful innovators move beyond “R&D” to harness the entire organizations creativity.
Should You Care?
It’s a hot topic. The world faces economic challenges. Companies may struggle to compete and renew their offerings. The Boston Consulting Group’s Innovation 2012 survey identified innovation to be a Top 3 strategic priority with 85% of leaders and investment in innovation activities at 5-year high.
The IBM Global CEO study sees leaders fearful of falling behind in the innovation arms-race. Innosight’s report found many innovation leaders dissatisfied with the innovation performance of their organizations. I was shocked to find the UK Governments 2012 Innovation Survey revealed only 31% of firms actively innovating. There’s more to do…
The days of large central R&D groups is largely over: the name of the game is collaboration because of the availability of external experts, the mobility of knowledge and demands for lower cost and faster, more reliable delivery.
Benefits of Innovation
Choosing to install, overhaul or invest in your innovation system has big rewards for your firm’s growth. Success looks like better returns per Pound/Dollar/Euro of investment and improved ability to radically innovate. Studies have shown that the best innovators enjoy a 3-year Total Shareholder Return above peers of 6.3% and higher operating margins compared with the average. Critically, this is achieved by focused and determined efforts across the entire organization, not just “R&D”.
Key Elements of High Performance
So, innovation must not be left to blind luck and it is much more that having only good ideas. Too often companies are let down by poor leadership, strategy, weak processes and culture. The best performance is delivered by connecting the parts of your innovation machine. Systemic innovation brings together the core elements to produce more-than-the-sum-of-the-parts performance. The elements of a high-performance innovation machine are:
- Innovation strategy in alignment with the business/corporate strategies, and…
- High quality leadership and governance to create, support, direct and invest in the innovation activities, and…
- Appropriate innovation tools and techniques, and…
- Fruitful collaborative partnerships through Open Innovation, and…
- Innovation culture exhibiting the right behaviours in front-line staff and management.
Do you want to improve?
We can learn from how firms have journeyed from struggle to success and become effective, in sustaining growth over the long-term. Fundamentally, it’s about making a positive choice and working to make the necessary changes stick. Take these specific actions to enjoy high innovation performance:
- Identify the current state of the innovation system and intervene to improve,
- Embark of a process of opening the innovation system and collaborating through fruitful partnerships.
- Install an innovation infrastructure to make decisions and facilitate improvement.
- Train innovation staff in appropriate tools and techniques.
- Sensitively manage the hard and soft changes in a determined way, backed up by top-level commitment.
High performance in innovation leads to good results for you, the company and shareholders, over the long-term.
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