Blair points me in the direction of Booz & Company’s 2011 Global Innovation 1000 for some interesting insights as to why innovation works for some and not for others. (Thanks Blair.)
According to Booz & Co, innovation spending increased in 2011 to $1.15 trillion globally. The 1000 companies that Booz & Co surveyed represented almost half this spend and in the last year their innovation spend was up 9% on the previous year.
However, what interested me was the news that the companies that spent the most were not necessarily those that got the most out of their innovation investment. In fact, the top 10 innovators (Apple, Google, 3M, GE, Microsoft, IBM, Samsung, P&G, Toyota and Facebook) out-performed the top 10 spenders in three key metrics: revenue growth; EBITDA and market capitalisation.
So innovation can work but it doesn’t always work, and it doesn’t work the same for all. What really counts is the context in which innovation is applied. According to the report, 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals —and that their cultures strongly support those innovation goals — delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking that alignment. (By contrast, over half of companies reported that their innovation programmes and their business strategies and culture were out of alignment, and 20% of companies didn’t even have an articulated innovation strategy.)
My own view is that the distinctions between innovation and improvement have been blurred in recent times, and the advantages of focus over finance have been overlooked. With so much hoopla about innovation in the business press, it’s tempting to believe that any change is innovation and any innovation will work.
But keeping up is not the same as forging ahead and brands need to be a lot more judicious in that regard in their identification of what they are developing. What may look like adjacent innovation at the outset can, at the pace at which markets move today, be little more than incremental improvement by release date. Incremental improvement is vital of course – but it’s not a gamechanger. It simply keeps you up to speed in the game you’re in.
More importantly, true market leadership is powered by exciting ideas not just impressive ideas. It seems to me that too many companies judge the success of their innovation programmes on technical shifts that wow colleagues and industry insiders. But the significance of these breakthroughs does not necessarily translate to marketability and therefore sales. And the changes themselves are not necessarily in line with where the company is heading, what the brand represents or where demand will rise.
There’s a significant difference between invention and innovation in a commercial context. Invention makes something new. Innovation contributes something new. It actually changes the company’s possibilities. That won’t happen if innovators don’t develop engaging innovation; innovation that doesn’t just solve a problem but actually meets a tangible and evolving need in fascinating ways.
Engaging innovations are the ideas that will power the business forward because they will gamechange the sector to your brand’s advantage, lift margins, meet future market needs, inspire customers to buy and directly contribute to the purpose you have set yourselves as a business.
Does your innovation programme do that?
If not, let me make two suggestions. First, change the innovation conversation so that it does.
Secondly, and even more importantly, change the participants in those conversations. If there’s not a senior marketer in the loop, changes are your circle’s either plain wrong or not wide enough.
The new role of marketing
The great customer vanishing act: what happens when you can’t track them?
The portfolio approach to strategy
The fall of the wall between customers and culture
The power of being purposeful
- The Leader’s Path to Innovation: Less Control, More Chaos (forbes.com)
- Innovation Overusue (om.co)
- The 6 Keys to Creating an Innovative Organization (punchandkiss.com)
- Is Experimentation Innovation? (marketersstudio.com)