By Fiona Grandi
In today’s incredibly dynamic market environment, the level of disruption and pace of change are increasing exponentially. This is raising the stakes for organizations that are looking to innovate to grow. But how do companies know if they have the right innovation strategies, investments, and approaches in place to drive growth for the future?
Innovation Leader’s second report, Benchmarking Innovation Impact 2020, sponsored by KPMG, provides insights into how leading organizations are financing, supporting and scaling innovation efforts and the roadblocks and challenges that get in the way of success.
Last year, we found that the conventional split between incremental, adjacent, and transformational investments (70-20-10) had shifted to 50-30-20. Survey results this year were similar, signaling that companies are allocating resources towards more ambitious goals. Further, organizations that are underinvesting in transformational innovation may be putting themselves at a strategic disadvantage.
And while respondents this year are showing more confidence in their ability to make the right investments in innovation, politics and competing priorities continue to impede success at many of the companies surveyed.
So how can decision-makers today set themselves up for success in the future?
1. Integrate innovation efforts into the organization’s overall strategy – ’Role model’ companies – those found to have more mature innovation processes in place – are over 50 percent more likely to have innovation completely integrated with, or highly collaborative with, their organization’s strategy teams. These companies were even more likely to have innovation activities connected with their corporate development and VC teams.
2. Find the right balance between investing in autonomous innovation teams and embedding innovation in the core business – ‘Role model’ organizations were more likely to rely on funding and involvement from the business units. Business unit staff are leveraged for nearly 82 percent of incremental innovation, compared to 24 percent for transformational innovation. To drive impact, innovation initiatives should be aligned with sponsors from the business.
3. Create a culture that supports innovation and get leadership buy-in – Roughly half of respondents identified politics/turf wars/alignment as the biggest obstacles to innovation. Competing priorities also pose a challenge to scaling innovation. Securing leadership buy-in and bringing in the right people are crucial for overcoming roadblocks.
4. Engage the CFO to help strike a balance – CFOs of the future will need a mindset that extends into business strategy and innovation investment. Fifty-eight percent of respondents use revenue generated from innovation products to measure the success of innovation and 40 percent cited a lack of funding as an obstacle to innovation success. The right CFO can help companies balance making money today with investing for the future.
Across large organizations, we all face the same core question: are we being audacious enough and investing in the right things – at the right time – to accelerate growth? Companies are moving faster than ever before to successfully innovate to grow, but even that speed may need to increase.
To learn more about the findings of Innovation Leader’s Benchmarking Innovation Impact 2020 report, sponsored by KPMG, or to arrange an interview with Fiona Grandi, please contact Jamie Bredehoft.
Download the report.