PwC releases the latest Innovation Benchmark Report
PwC’s latest Innovation Benchmark Report has recently been published. We are always excited to read about the latest findings and this report has a focus on how to guide strategy through to execution. The survey was put to over 1,200 executives in 44 countries, questioning them about their innovation strategy, operating models, culture, metrics and more.
One of the key findings in PwC Innovation benchmark report was that bringing more stakeholders into the innovation process is the most effective way to drive success in innovation. This is because it helps to align innovation and business strategies, facilitates access to new ideas and talent, enables people to fail faster and bring new innovations to market quicker. In this post we will consider the five key findings of the report and share our points of view.
Strategy over spend
In a recent post on why innovation is mind over money, we explained why a greater innovation budget does not necessarily equate to a better output. It is about the way you spend the money, how it is applied and the value generated. This is why there must be a greater focus on strategy, in order to ensure the most effective use of the available spend.
“Over the past dozen years, our annual Global Innovation 1000 study has found no statistical relationship between dollars spent on innovation and financial performance.” – PwC, Reinventing Innovation
Innovation is a broad process encompassing many facets and objectives, but ultimately the end goal of any business initiative is to drive growth and increase monetary returns. In order to achieve this, the majority of companies are putting greater emphasis on involving more stakeholders in the process.
“Open innovation (61%), design thinking (59%), and co-creation with customers, partners, and suppliers (55%) are all far more prevalent models today than traditional R&D (34%).” – PwC, Reinventing Innovation
These approaches are all means of ensuring that an innovation strategy remains relevant and effective, helping to secure both revenue growth and cost containment. At the end of the day, any innovation strategy should be underpinned by financial motivation. However, the key finding here is that spend is not synonymous with returns; strategy is where the money’s at.
Readdressing business models
We have already addressed the importance of strategy in determining a successful innovation output. Easier said than done, one of the key barriers to devising and implementing one that works is the difficulty in aligning the innovation and business strategies. Failing to make the connection between the two leaves companies making blind bets. Putting time and money on the line without the framework of a business strategy that complements the innovation process is a risky approach (and not the good kind of risk!).
“54% of innovating companies struggle to bridge the gap between innovation strategy and business strategy.” – PwC, Reinventing Innovation
To do this it is necessary to readdress the business model and integrate innovation into the business strategy from the get-go. Involve the relevant people as early as possible – bring the innovation leaders into the business strategy and bring the business thinkers into the innovation strategy. Stakeholder collaboration and cross-departmental cooperation are key to aligning business with innovation.
“We look horizontally within the company, across the various industries, and ask, ‘What can we take from the various trends in each of these verticals and bring them together to create an opportunity?’ It’s all about the horizontal place.” – Sue Siegel, CEO of GE Ventures
Breaking down silos
An extension of the horizontal approach mentioned above, removing the boundaries of traditional silos opens up opportunity for fresh ideas, insight and talent. It is important to note that we are not just referring to internal silos but also external ones. Involving customers, suppliers and partners is just as important as internal collaboration and is quickly replacing the more traditional R&D model.
This is not about completely stamping out R&D – it will always be an important part of the drive for growth – but it is about taking a new approach to this research and development. Customers are playing a growing role in the innovation process and customer engagement is the key to driving the initial phase of an innovation strategy.
“54% of companies say customer engagement strategy helps define innovation from early ideation and 35% of companies say customers are their most important innovation partners.” – PwC, Reinventing Innovation
Power of the people
We have always stressed the importance of involving as many people in the innovation process as possible and the report from PwC proves the value that employees can bring. Executives are allocating increasing value to the soft skills honed by employees, such as natural intuition, careful judgment and fresh thinking. In order to leverage the talent potential of a workforce, it is necessary to build an appropriate workplace culture that fosters innovation. Finding these individuals and harbouring their ideas and talent is one of the biggest challenges executives face.
“32% of the businesses surveyed say that finding employees with the right skills is their biggest people-related innovation challenge. This challenge is topped only by the need to establish a leadership culture conducive to innovation, cited by 37 of companies.” – PwC, Reinventing Innovation
Leading with technology
There is no doubt that technology plays a central role in any innovation strategy. This is evidenced by the fact that executives rate technology partners as their second most important innovation collaborators (beaten only by employees). Unsurprisingly, the vast majority of breakthrough innovations are fuelled by technology and tech companies are generally the most successful in terms of innovation capacity.
For a more detailed view of PwC’s ‘Reinventing Innovation’ report, you can download it here.
June 22, 2017