Why You Need to Manage Innovation

The Truth of the Matter

Strategy&, part of PWC, has completed an annual study since 2005 (under their previous name Booz & Co) called The Global Innovation 1000. Every year they look at how much companies spend on R&D and compare it to overall financial performance. And year after year the results confirm there is no statistical correlation between pure R&D spend and financial success. ¹ They have proven, however, that companies that manage business strategy and innovation processes hand-in-hand have a better chance at long-term profitability. As the 2013 Global Innovation 1000 outlined, "Our studies have consistently shown that innovation investments in select capabilities, tools, talent, and culture which are tightly aligned with a business's strategy are what drive sustained success.” ² Furthermore, in their most recent study they found that a larger, global “footprint” of innovation strategy is helping corporations to outperform their less-globalized peers. ³

Are You Really Managing Innovation?

It is clear that managing innovation matters for continued enterprise prosperity. But how are successful organizations managing their approaches to innovation? Through their extensive research, Strategy& has recognized three general stratagems that organizations employ for their innovation strategy: ⁴

Need Seekers – those that launch new products/services based on “superior end-user understanding”
Market Readers – those that keep their finger on the pulse of the market and launch products/services when the timing is just right in the marketplace
Technology Drivers – those that rely on their own internal technology advances to deliver new products/services

How would you categorize your own company? Is it maybe a combination of two or even all three? Do you manage innovation at all? Every business is different, so every innovation plan and process will be different. However you manage innovation, it needs to be a close ally to your business tactics while having buy-in from stakeholders across the enterprise in order to truly be effective. Do you manage innovation investments and portfolio performance in a Microsoft ^®Office program like Excel ^®? If so, your corporation is missing out on the benefits that come with an updated, holistic dataset for true data-driven decision making. Information hidden in one-off documents precludes transparency and isn't visible across the corporation. Also, relying on a work-around solution like a spreadsheet or PowerPoint ^® slide to manage your entire innovation process means you are likely using outdated and inaccurate data because this document is just one of many static information silos. There is no single source of truth for important data, and executives and business leaders are forced to make important decisions based on partial and outdated information. Bring some clarity to your data and manage innovation with a rich innovation management software platform that offers up-to-date information. What every enterprise needs is an end-to-end software solution that helps the business govern, manage and align investments and resources across the full innovation lifecycle, from strategic planning, ideation and concept development, through process and portfolio management, and portfolio optimization.

Build the Business Case to Manage Innovation

By now you've maybe had the “ah-ha moment” by realizing there is no correlation between R&D spend and an organization's financial prosperity, but there is a correlation between investing in the right areas of innovation and fiscal success. It's time to take the next steps to fulfilling your enterprise innovation performance potential. Share the recent Global Innovation 1000 studies and bring your management team up-to-speed on the research:

Be sure to spend some time on their website and explore the interactive graphs, insightful videos from the Global Innovation 1000 authors, infographics, and other interesting resources. Don't squander money on unfruitful investments. Set yourself up for financial success by investing in a sustainable profitability predictor: innovation.

References

¹2015. Past Year Studies. Accessed March 30, 2016. http://www.strategyand.pwc.com/global/home/what-we-think/innovation1000/past-year-studies. ²Barry Jaruzelski, Richard Holman, John Loehr. 2013. "HIGHLIGHTS FROM The 2013 Global Innovation 1000 Study NAVIGATING THE DIGITAL FUTURE." http://www.strategyand.pwc.com/. Accessed February 29, 2016. http://www.strategyand.pwc.com/media/file/Strategyand_2013-Global-Innovation-1000-Study-Navigating-the-Digital-Future_Media-Report.pdf. ³Barry Jaruzelski, Kevin Schwartz, and Volker Staack. 2015. Innovation's New World Order. Accessed March 15, 2016. http://www.strategy-business.com/feature/00370. ⁴Barry Jaruzelski, John Loehr, Richard Holman. 2012. "The Global Innovation 1000: Making Ideas Work." strategy+business. Accessed February 15, 2016. http://www.strategy-business.com/article/00140.