3 ways companies can drive innovation and performance
Over the past two years, businesses have experienced unprecedented operational disruption and market uncertainty due to the COVID-19 pandemic.
Thus, many business leaders give priority to innovation to gain in competitiveness and performance in 2022. This is easier said than done as the list of supposedly essential innovative practices is long and continues to grow. lie down.
For example, recent research shows that innovative companies, relative to their non-innovative counterparts, engage in many highly touted best practices. Although these practices can improve competitiveness, some are more important than others and their implementation in the absence of a strategy is very problematic.
As a marketing and innovation management researcher, I found that these complexities led me to two research questions. First, what type of organizational culture best supports the implementation of these innovative practices? And second, which of these practices universally improves business performance?
C. Brooke Dobni and I have investigated these questions in our next article in Research-technology management, an innovation management journal.
Global Innovation Study
In cooperation with national conference councils in the United States, Europe and Asia (nonprofit organizations that support research to help leaders address societal challenges), we collected data from 437 companies, in 11 sectors, in 27 countries.
Our results showed that an innovation-driven culture was needed to successfully implement crowdsourcing, gateway systems, design thinking, open innovation, big data analytics, innovation, scientific discovery and prototyping. However, only some of these practices have improved business performance.
Read more: How companies can determine if design thinking is right for them
Companies with strong innovation cultures have leaders who support innovation, dedicate resources to experimentation, pursue knowledge generation and dissemination, and have processes for testing and launching ideas. Great innovators are able to execute strategy, create competitive advantages, and achieve performance goals.
We found that highly innovative people were more successful in implementing all innovation practices. We also found that across industries, companies with a strong innovation culture outperformed their counterparts without a similar culture. Given its performance benefits, how do you create a culture of innovation?
Past insights from Fortune 1000 companies suggest leaders need to set innovation goals, encourage all employees to innovate in their roles, prioritize individual and organizational learning, remove the negative consequences of failure experimentation and support activities with incentives.
Based on the results of our study, we argue that an innovation-driven culture is the necessary first step. It is only once companies have created an enabling environment that they can attempt to implement innovative practices.
Innovation at the service of performance
Companies across all industries have experienced the performance-enhancing benefits of crowdsourcing, open innovation, innovation management software, scientific discovery, and prototyping:
We recommend that companies explore implementing these innovative practices as they have universal performance benefits. But it’s important to remember that engaging in such practices should be guided by organizational strategy, and a culture of innovation is the necessary first step.
Less successful innovative practices
While there’s a lot of hype around stage-gate systems, design thinking, and big data analytics, our research shows that only companies in specific industries benefit from these practices.
Stage-Gate systems are a linear process involving a series of sequential steps to launch new products. We argue that the innovation process is anything but linear and that such a rigid process is not conducive to most industries.
Our data confirms that Stage Gate systems are most effective in manufacturing, IT, and healthcare environments, but not others.
Design thinking, an approach that uses a designer’s sensibility and methods to match consumer needs with what is technologically feasible, is nebulous and even hazy among those who practice it.
We argue that the ambiguity of design thinking is the reason only companies in the arts and entertainment, retail, and marketing sectors have benefited from its benefits.
Read more: Why designers arrived in corporate boardrooms
Surprisingly, big data analytics – collecting, interpreting, and making decisions based on large data sets – has only benefited companies in certain industries. Upon closer examination, we found that only companies in industries that conventionally managed and interpreted large amounts of data (such as finance, healthcare, and IT) realized such value. We believe this speaks more to the inability of some companies to manage big data than to its value.
We offer managers three ways to fuel and foster innovation based on our research:
All executives should seek to create a culture of innovation.
Once a culture of innovation is established, companies need to strategically engage in some of the universally beneficial practices.
Some practices should be avoided altogether because their benefits are limited to specific industries.