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Improving company innovation: A 5-step approach

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How can companies improve their innovation track record? Here's a 5-step approach that the top 25% of corporate innovators follow.

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Page 1: Improving company innovation: A 5-step approach

How can companies boost innovation?Part 2: Some suggestions

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 2: Improving company innovation: A 5-step approach

Can companies boost innovation?

Money doesn’t buy innovation.

• In the previous presentation, we learned that annual spend on R&D doesn’t correlate to improved R&D results.

• In fact, R&D spend as a sole facet of innovation efforts was negatively correlated to sales growth, gross profit or shareholder return.

So what gets you to the top 25%?

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 3: Improving company innovation: A 5-step approach

How can you improve your company’s innovation?

In a Strategy& 10-year longitudinal survey, the most innovative firms raised their innovation game by focusing on core innovation capabilities and processes. The most effective recommendations? Identify your CORE INNOVATION CAPABILITY:

It’s a path to:

• -- something customers need.

And is:

• -- something competitors can’t do.

Concentrate on a short, coherent list of innovation capabilities.

Don’t try to be good at everything.

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 4: Improving company innovation: A 5-step approach

How can you improve your company’s innovation?

In a Strategy& 10-year longitudinal survey of 1000 global companies, the most innovative firms had raised their innovation game by focusing on core innovation capabilities and processes. The most effective recommendations?

• Align your innovation portfolio with customer needs and wants

• Develop and retain people with the right technical knowledge

• Understand the technology and trends related to new products and services

• Align innovation leaders with business leaders

• Pursue lean product development

Focus on two areas: Capabilities and Processes

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 5: Improving company innovation: A 5-step approach

How can you improve your company’s innovation?

In a Strategy& 10-year longitudinal survey, the most innovative firms raised their innovation game by focusing on core innovation capabilities and processes. The most effective recommendations?

Capabilities and Processes:

1) What do customers want?

2) What are your competitors’ core competencies in new product development?

Go all Blue Ocean on them.

3) Apply these:

1) Align your innovations to customers

Focus on changes in market and demand.

2) Track product/service technology and trends

3) Hire subject matter experts you need

4) Get innovation team and business leaders talking

“The business side knows what it’s going to get, and the R&D side knows what it has to work on.” – Oliver Nussli, Nestle.

5) Shorten the product development process; implement “agile inspiration”

Understand the implications of customer desires, competitor abilities, and company strengths.

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 6: Improving company innovation: A 5-step approach

Can companies boost innovation?

They’re doing it.

• 66%: “We’re aligning business and innovation strategies.”

• Conversations lead to alliances, lead to formal arrangements, lead to repeatable results.

• 75% “We understand our customers in much more detail than we did 10 years ago.”

Here’s how …

Aligned

Not aligned

… we aligned business and innovation strategies.

More

About the same

… we understand more about our customers.

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 7: Improving company innovation: A 5-step approach

Returns from improved customer insights

1 1 1

1.65

2

3

0

0.5

1

1.5

2

2.5

3

3.5

Shareholder Returns Return on Assets Operating Income

Axis Title

Indirect Customer Insights Direct Customer Insights

James Janega, [email protected]://jamesjanega.wordpress.com/

Page 8: Improving company innovation: A 5-step approach

In the next installment: R&D approaches for three types of corporate innovators

• Firms that benefit from superior customer insights

• Firms that benefit from superior incremental innovation processes

• Firms that benefit from internal technical capabilities

• Previous installment here: http://jamesjanega.wordpress.com/2014/11/12/how-can-companies-boost-innovation/

James Janega, [email protected]://jamesjanega.wordpress.com/