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Archive for November 12th, 2010

How Do Big Companies Successfully Innovate?

Friday, November 12th, 2010

Everybody is talking about innovation these days but how do successful companies do it?Do they outspend competitors on R&D, use special methods or what? According to Booz Allen Hamilton’s recent report, Global Innovation 1000: How Top Innovator Keep Winning, the success factors are:

1. Build focused innovation capabilities (ideation, project selection, product development and commercialization) around one of three strategies – need seekers, market readers or technology drivers

2. Align innovation strategy with overall corporate strategy and management effectiveness otherwise your innovation premiums get canceled out by misalignment or weakness in other aspects of the business system

3.  Globalize the effort by conducting innovation activities in key markets in countries in which the company is not headquartered

You need to make an investment but outspending your competitors is not the driver of innovation success.  Check out the variation in R&D spending in the chart below:

top-20-innovators.gif

The key is focused capabilities:

What matters instead is the particular combination of talent, knowledge, team structures, tools, and processes — the capabilities — that successful companies put together to enable their innovation efforts, and thus create products and services they can successfully take to market.”

Distinctive skills within the capabilities that are important for all three innovation strategies include (and I quote):

* General understanding of emerging technologies

* Broad consumer and customer insights

* Customer engagement

* Product platform management

* Pilots and controlled roll outs

Working with customers, doing prototypes and pilots and striving for authentic insights into how to best use emerging technologies should be no surprise to design thinkers. This is how companies such as Google, 3M, GE, IBM and Samsung do it.

For more detail on how and why successful innovators are going global check out Beyond Borders.

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