On the evolution of innovation in business, and what works best today
As businesses across the globe come to terms with one of the worst calamities of recent times, there can't be a better time for organisations to focus on innovation
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Innovation holds the key to achieving several business objectives, ranging from market leadership in a product category to warding off a disruptor in a market segment, to earning overall higher returns on capital employed. Firms such as 3M, DuPont, General Electric, Philips, Siemens have been able to achieve market leadership and financial gains on account of a robust innovation process.
The perspective on innovation has also been constantly evolving. From just being limited to new products and services to cover areas such as business models, go-to market strategies, management practices deployed, and so on. There has also been a recognition that innovation must hinge on the creation of new value for customers instead of just new products, technologies or services.
In addition, the importance given solely to the idea generation stage has now moved to the entire process of evaluation of the said ideas. This has allowed the non-promising ones to be rejected earlier without expending much of the limited resources. In essence, innovation today is an outcome of the creation of value by improving upon one or more dimensions of the business ecosystem.
The advent of digitisation has also helped catalyse the process of innovation in firms by offering avenues for quick experimentations, rapid dissemination of information and innovations developed through the use of data analytics and knowledge management.
The fast emerging trends are making it necessary to understand their interaction with and the resultant impact on the business ecosystem. So that organisations are able to distil the implications for them and develop suitable countermeasures and, in many cases, acts as a trigger for innovations.
Innovative firms also understand the role played by external players. They often collaborate with inherently agile and more innovative players such as startups to bring about innovations. In addition, the funnel of innovation—from the idea stage to its deployment—is made robust to ensure that the best ideas can progress swiftly and lead to beneficial outcomes.
Firms can begin their journey of innovation with trend analysis to understand influential trends of the future and the innovation landscape in their industry. This should be followed up with an assessment of the current state of innovation using a multi-dimensional assessment framework that covers all aspects required for processes and culture conducive to making organisations truly innovative. Based on this, organisations should develop an innovation improvement strategy. They can list the imperatives aligning current vision and strategy for innovation with market requirements, the KPIs, tools, and techniques.
While innovation has for long been a key driver towards profitability and growth of organisations, the volatile and uncertain business environment created by the onslaught of Covid-19 pandemic has increased the urgency for firms to embark on the innovation journey to sustain their competitive advantage and the related market and financial positions. Organisations would certainly do well to make innovation a key agenda in their planning cycles.
The writer is a partner and group Head at NRI Consulting & Solutions