We have seen significant changes in the global marketplace where traditional solutions no longer work and businesses are striving to deal with change in an unprecedented way.
There is no doubt that innovation is perceived as being a high priority business strategy to deal with these changes, however our approach to innovation is in need of a radical overhaul.
blackswan® compiled a structured survey of 5000 senior managers, directors and business leaders across a broad range of industries. The survey investigated how to implement successful business strategies that deliver results. The rationale for launching this survey was the rapid development of exciting, market-based knowledge practices, technologies, and business models that drive outcomes.
A key section in the survey was the identification of what clients felt would be valuable enhancements to the current structures in place that would help them be more effective in enabling their businesses to be more successful in delivering profitable results.
As we stand today, the approach to innovation across business, academia and government is fragmented, disjointed and delivering unsustainable returns. It is impossible to see real progress happening when over 90% of innovation spend is being thrown away in the pursuit of a silver bullet to revive organisational fortunes.
There are three commonly held beliefs about innovation spend that we have found to be invalid.
- The centralisation of innovation within organisations (within R&D or to an innovation line of business) can, by itself, significantly affect the bottom line of an organisation.
R&D spend is delivering a return of less than 10% and has minimal impact on an organisation’s long-term bottom line or its new business development. Centralising activity without fundamentally changing the processes that govern it is doing nothing to increase these ratios.
- The current innovation environment is servicing customer needs.
The current innovation environment is inward looking and not focussed on the wants and needs of customers. We can all point to an organisation like Apple and claim, based on their success, that a secretive, expert-led approach is the future of innovation, but let’s not treat an exception as the basis for a rule. Also let us also not forget that this was an organisation that has imploded more times in recent history than most organisations can handle.
Where organisations like Apple now stand, there were others like IBM, DEC and Dell. All led the way, all have seen dramatic changes in fortune in the face of changing consumer whims. Want to build a PC from scratch, exactly to your own specification – THAT’S the future. Want to buy it off the shelf, ready to take home, to a predefined specification – THAT’S the future. Well what’s the next future?
Organisations have become adept at shaping customer expectations in the short term, but disruptive leaps in technology change the landscape quickly, and businesses are unable to cope with the change in customer mood. Slick marketing may go some way to slowing the inevitable customer dissatisfaction, but it will come. And remember, we are now living in a world where we measure these changes with a stopwatch, not a calendar. Can your business react to the tick of a second hand rather than the turning of a page?
- Experts in the subject are the best people to manage innovation spend.
87% of the survey respondents felt that many of the current development organisations, applied research agencies and academic bodies had personal agendas in relation to their domain expertise. Vested interests in pursuing some channels over others were apparent, and there was overwhelming evidence domain experts were often blinded their own capabilities.
The alternative, an independent innovation standards body, was supported by 76% of the respondents if it could deliver:
- International capability to establish how business can apply innovation more successfully given their position in the current business life-cycle.
- Independence from domain experts and service providers
- Scorecard identification and evaluation of ideas and proposals
- Capability to transfer the knowledge on how to ‘turbo charge’ good ideas to market
- Support for businesses to create bullet proof IP
- A ‘Phoenix’ process for identifying initiatives that should have been funded or that need to be revisited because they were shelved prematurely
- Key strategic investment insight based on global business evolution trends
- A managed service for developing, recruiting and placing talent with the required breadth and quality of skills, in the target domain areas at the right time across academia and business
The findings from the blackswan survey clearly outlines that innovation needs to be managed in a more structured manner and removed from domain experts’ control if it is going to produce the results required.
In a situation where 76% of the respondents said they would support an independent institution, blackswan, together with its partners are now examining options as to how we can meet these new challenges.