Three actions you can take to improve your innovation ROI
“Too many companies see ‘innovation’ as something abstract from solving real problems and creating real value. As a result, too much time and investment is spent on efforts at the periphery that have no link to value—and the opportunity to create true change within the companies is missed, once again.” (Accenture, Discover Where Value’s Hiding, 2018)
Linking innovation investment to value is easier when companies know where to look. While each organization’s profile is unique, we have found certain patterns that apply to many organizations. Below are three key actions most organizations can take right away to improve their innovation ROI.
1. Be Open – share ideas with competitors
Openness is where market innovation truly takes place. Successful organizations use external resources in an open co-creation process to achieve a larger accessible market through building value nets and growing the total market. Competitors share in the development of new ideas, more expertise is focused on the problems at hand, and everyone wins in the end.
A tangible example is Tesla, where Elon Musk gave away patents to grow the electrical car market instead of fighting against all car manufacturers. Ultimately, the market evolved to support a declining price based on competitive price pressures, and that is good for everyone.
From a cost perspective, we’ve seen this strategy work well in the non-profit realm, where charitable organizations with similar missions have combined their resources and merged their organizations, providing a sizeable increase in mission spend through the reduced operating costs of a larger integrated organization, increased sharing and the elimination of duplication in research mandates, etc.
2. Improve Your Innovation Platform – build a robust decision process at each stage
The innovation process can be unwieldy and costly to operate. Our research suggests that most organizations have challenges in one of more of the four stages of innovation – i.e., ideation, selection, development and commercialization – often relating to gating and decisioning efforts as they move through the four stages.
Ensure you have a structured and well documented new product development (NPD) process and a robust decision-making process in place at each funding stage.
The fast-moving consumer goods (FMCG) and consumer electronics industries are examples of where this is done well.
3. Really Utilize Customer Insights – ask for and act on them
This is by far the most underdeveloped area which we see in all our data regardless of geography and organization size. Many companies fail to ask clients for their input. Ask them, and then create something new and exciting based on those customer insights. Much like our discussion above regarding competitors, companies who take advantage of the “network” of customers can sometimes harvest significant competitive advantage.
Innovations and enhancements here will increase the value of the company’s offerings and these actions drive sales and loyalty, generating recurring revenue and high lifetime value.
An excellent example is the App Store in Apple. The App Store supports a superior experience and at the same time is used to understand patterns and behaviour drawing customers into an environment that is exciting and hard to leave.
Improve your innovation ROI with “The Wheel of Innovation”
Successful innovators are successful because they do certain things well. The “Wheel of Innovation” helps you to answer the question, “What do I need to do to improve the return on my innovation efforts?” Insights on revenue and market growth opportunities are drawn from data from thousands of organizations in more than 100 countries across the globe.
In simple terms, feedback is summarized under 16 aspects, which themselves are grouped into quadrants – offer innovation, sales innovation, organizational innovation and market innovation. Results are benchmarked against the success patterns of leading innovators from around the planet, across 66 different innovation capabilities and resulting in a roadmap for the future. Look for more information at www.innovation360.com
Stop investing in efforts that have no link to value and start investing in innovations that improve your ROI
Innovation is a complex task of aligning strategy, leadership style, culture, and capabilities to successfully build an innovative and sustainable business in today’s ever-changing market. Focusing on the 3 actions we’ve shared above will provide a good first step toward getting the impact you expect from your innovation investments.
For further reading, please see Accenture’s report Discover Where Value’s Hiding: How to unlock the value of your innovation investments