Business Strategy

3 Things That the Most Innovative Companies Have in Common

innovative companies

True innovation, game-changing innovation is rare and elusive.

McKinsey survey found that 94% of managers are unhappy with their company’s innovation performance.

That’s not for want of trying. Businesses now operate within an entirely new environment than they did a few decades ago. Competition for customers, market share, talent and finance, is more fierce than ever before. Innovation is necessary, for company’s of all sizes to survive and thrive.

The IBM Institute for Business Value and the Economist Intelligence Unit conducted a survey of 1,000 executives across 17 sectors worldwide, to discover if the top 9% (by revenue growth and operational efficiency) – of companies have taken a similar approach when it comes to building an internal innovation engine.

Innovation starts with failure

Turns out, perhaps unsurprisingly, that high-performance businesses are amongst the most innovative. There’s no magic bullet. A company will not become more innovative overnight. It takes time and effort. Success comes from taking a systematic approach, to ensure new ideas can be cultivated, tested, challenged and supported.

Also read: Why You Need to Set Yourself Up For Failure

Great ideas will thrive whereas bad ones should be allowed to fail fast. Nike’s Innovation Kitchen is one such example of a corporation giving staff a safe place for ideas to be given adequate road testing.

In startups, the concept of ‘failing fast’ is practically scripture. Eric Ries, founder of the Lean Startup movement, a Silicon Valley entrepreneur turned VC turned author is encouraging corporates to adopt this same approach. He is making slow progress, given that failure is a word with an expensive stigma in the corporate world. On one level, failure is associated with fallen giants, such as Enron, Lehman Brothers, Washington Mutual Bank, and the recession. Within C-suites, projects that fail can derail or delay otherwise promising careers.

And yet, as any entrepreneur knows, without failure there can be no true innovation. Nike was willing to test this theory, resulting in the Nike Flyknit (used by athletes in the 2012 Olympics and 2014 World Cup) and more recently, the FREE Hyperfeel. Failure and success, however, can’t happen within a bubble. Startups have no choice. But until now, larger companies always worked under a black shroud. Smart brands are including customers in the process.

For Nike, this meant working with athletes throughout the design process: “listening to and observing them from the beginning of a project all the way through to the end is extremely vital.”

Encouraging failure within a supportive environment ensures only the strongest ideas gain acceptance across an organization and make it to market.

There are several other common traits of the most successful company’s that are worth noting:

  1. Supporting Systemic Innovation

Ideas can come from anywhere. As great as they are, an idea is worthless as a concept. Most companies allow and encourage ideas to be shared and discussed within Intranet forums and wikis.

An ‘open’ innovation process encourages staff to think outside the box and put forward solutions for problems they deal with on a daily basis. However, only leading innovators have teams dedicated to testing and cultivating these emerging products, services and processes.

Also read: 10 Steps for Entrepreneurs to Drive Real Innovation

  1. Embed Innovation Within Company Culture

Brainstorming, company retreats, team meetings and other attempts to encourage innovation often lead to nothing. Or at least, nothing worth writing home about. Innovation should not be sporadic or reactionary.

Instead, link it to clear business objectives. The most successful companies are 79% more likely to sustain momentum through dedicated teams, but only after encouraging innovative thinking at a grassroots level.

Also read: Cambridge Consultants’ Innovative Culture in Action

  1. Measure innovation investment

Startups that grow from pre-seed into successful multinational brands measure the impact of everything, relentlessly. Learnings are put directly back into product roadmaps and other business areas. For corporates to innovate at the same speed, that same approach should be adopted by innovation teams.

The most successful teams have frequent interactions with customers. Instead of pushing out new products and explaining the value, they are working to solve problems with direct input and feedback. Technology has made this so much easier, empowering company’s and customers to interact in real-time.

Rod Collins, a former COO of the Blue Cross Blue Shield Federal Employee Program (FEP) was faced with an organization worth billions with painfully slow rates of growth. He turned this around, introducing agile management practices based around these core concepts:

  • A riveted focus on what the customers value and what’s most important to them.
  • A preoccupation with group process rather than distributed tasks.
  • Recognition that work is fundamentally iterative learning

Innovation is possible in any organization, providing management supports, empowers and enables teams who can cultivate ideas that spring from a culture that encourages innovation.

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