October 30, 2013 - FILED UNDER Agile Business
Innovation Investment is On the Rise
“Innovation” has officially become more than an industry buzzword. No longer relegated to the annals of mission statements, innovation has become a top priority for executives and organizations. And it’s not just a core value — it’s now an investment strategy.
Investment in innovation is steadily rising as more and more executives rank innovation and product development as a top-three priority, according to a seven-year survey performed by The Boston Consulting Group. Putting money where their mouths are, 85% of the 50 most innovative companies also expect to spend more cash on innovation than they did in the previous year. The key findings from this study show that there is a serious increase in the emphasis being placed on innovation.
- 70% of executives surveyed indicate that their organization is committed to innovation. This is up from 60% in 2012.
- 77% of executives rank innovation and product development as a top three priority
- 67% of surveyed companies have cross-functional teams working on innovation projects, as opposed to 56% the previous year.
- 63% said that decision-making processes around their innovation efforts are clear. 53% said the same in 2012.
- 59% say sufficient budget and resources were allocated to their innovation efforts, as opposed to 52% last year.
And it is not just the technology sector that is thriving on investing in innovation. In a death spiral just a few years ago, the automotive industry has seen a meteoric rise to the top, now holding more spots in the top 20 Most Innovative than any other industry. How did they do it? You guessed it: huge investments in innovation.
Automakers are spending billions of dollars to bring cars to market faster that better meet consumer needs. The destructive stagnation/innovation cycle that the automotive industry has repeatedly put itself through in the last 40 years is a prime example of why consistent and repeatable innovation is so important. Relying on brand recognition alone is never enough. To stay on top, you have to continually take the pulse of consumers to drive the idea development process.
Monetary investment in innovation is obviously important, but what BCG found in its survey is that the most successful innovators do more than throw money around. It’s a matter of full cultural commitment to innovation. BCG identified 5 key attributes that separate the leaders in innovation from the rest:
- Their top management is committed to innovation as a competitive advantage.
- They leverage their intellectual property.
- They manage a portfolio of innovative initiatives.
- They have a strong customer focus.
- They insist on strong processes, which lead to strong performance.
These are seen not as individual rules that can be picked and chosen, but “an interconnected and reciprocally reinforcing” system. As we often emphasize, repeatable, impactful innovation takes a process. And once that process is established, you can begin to lay the groundwork for building value and long-term growth.