We appreciate reports like PwC’s recent Reinventing Innovation. Based on a survey of executives at more than 1,200 companies, the report provides statistics and wide-ranging perspectives that we can weigh against our own experiences with our partner clients. The whole report is worth a read, but we wanted to highlight a few items that caught our attention.
Though unstated, the underlying theme of the findings seems to be tension — companies struggling, with varying degree of confidence and success, with the inherent contradictions in innovation. It’s disruptive — and we’re not referring here to disrupting markets, which is a goal. We’re referring to the internal disruptions of roles, departmental boundaries and longstanding practices that innovation often requires. As the report authors put it, “Random acts of innovation rarely pay off. For any initiative to deliver true value, the effort must clearly align with a company’s business strategy.”
Fifty-four percent of innovating companies struggle to bridge the gap between innovation strategy and business strategy. That’s more than twice as many that point to any other strategic challenge. This issue holds true across all industries and becomes more salient as a company invests more of its resources in innovation. Sixty-five percent of companies investing 15% or more of revenue in innovation say that aligning business
strategy with innovation vision is their top strategic challenge. The upshot? Too many companies are flying blind (or semi-blind), with a lot of money on the line.
We wrote about this dynamic last year:
While much of the heavy lifting of new product innovation can be outsourced to a partner like NS, at the end of the day, responsibility for marketing, distributing and supporting the product post-launch falls to the company that owns it. The problem is that this seemingly simple concept runs headlong into a fundamental fact about most large, successful companies — they are hyper-focused on efficiency. Innovation, however, is not a tidy, linear process that maps itself readily to these kinds of scorecards.…
Sometimes the companies creating [Vice Presidents and Directors of Innovation] roles understand that true innovation requires more than making the word part of someone’s title; sometimes they don’t. Many of these folks have few direct reports — especially little to no operational reports — and soon find that they are hemmed in by varying levels of resistance from the individuals and departments whose cooperation they need to move the product concept from the successful focus group to manufacturing, in market sales pilot, and beyond. Culture can temper enthusiasm for the boldest ideas.
The stages of bringing an innovation to market often involve realignments of resources that can feel downright radical, especially if the company is trying to move into adjacent spaces. Trust is essential. As “outsiders” in partnerships, sometimes with companies that have rarely or never worked with consultants, we’ve seen the process play out many times, and it’s never the same twice. But there are two key components: ongoing, vocal support from the C-suite, and an internal “champion,” someone who knows the organization and its culture, is respected and can deal with the day-to-day demands and challenges of the project.
One such champion we worked with encountered a lot of initial resistance from his colleagues. The company, an industry leader, had never sought outside help for product development, and people understandably wondered how outsiders could teach them anything they didn’t already know, and what it meant for their own futures. He patiently won them over with what he called “deskside chats” — informal, one-on-one and small-group conversations in which he listened to their concerns, then countered with the case for the short- and longterm benefits of the partnership. The result was a wholly new product line that went on to win awards, and achieving one of the CEO’s priorities, becoming a “learning organization” that can innovate on its own.
Another type of tension described in the PwC report is that of investment in innovation — not just spending enough, but spending wisely. On the one hand, self-identified industry “innovation leaders” expect greater growth than those who do not consider themselves leaders. Some of those leaders (one out of five) expect growth to exceed 15 percent over the next five years.
On the other hand:
Over the past dozen years, our annual Global Innovation 1000 study has found no statistical relationship between dollars spent on research and development (R&D) and financial performance, suggesting that the way you spend your innovation dollars is more important than how many of those dollars you spend.
The key, the report suggests, is expanding beyond traditional, siloed R&D and trying “more-inclusive operating models, such as open innovation, design thinking, and co-creation with partners, customers, and suppliers.” We’ve preached the team approach for years. Including representatives from insights, design, engineering, commercialization and marketing, from the start of the project to completion, ensures true collaboration, and that elusive alignment of innovation and business strategies.
*Source of Data: PwC’s Innovation Benchmark Report: Reinventing Innovation
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About us: Nottingham Spirk is a business innovation and product design firm with an unrivaled record of delivering disruptive consumer goods, medical devices, and packaging design solutions to market. We collaborate with Fortune 1,000 companies, funded start-ups and non-profit organizations to discover, design and execute product programs and strategic business platforms that will wow customers, grow markets and generate new revenue streams. Learn more about what makes us different here.
