9 ideas Innovative Companies do to stay on Top -Innovation isn’t this abstract thing that some companies have and some don’t. Innovation is actually a business skill that executives and employees can develop and master.
1: Everybody might be an innovator
Innovative companies believe that all employees should be creative. That means that all employees are looking for better ways to do things in their jobs. They are rewarded, not shunned, when they try to alter the status quo. With that as a corporate culture, new ideas thrive and so do new products.
2: idea-generation measured
Whatever a company values, it measures. Companies that value innovation measure how many of the ideas they generate turn into development projects. Most companies Booz surveyed convert fewer than 20 percent of their ideas into products, but a few say they convert up to 60 percent. Size matters here in a surprising way. The smaller the company, the more likely they are to act on their ideas, the report said. That’s because even though smaller companies have fewer resources, they also have less bureaucracy.
3: Ideas change a lot before becoming a product
The magic of innovation doesn’t really come at the idea stage or the winnowing stage. It comes at the feedback stage where iterations of the idea are developed and tried. Successful companies incorporate what a customer asks for with new things that the customer didn’t know were possible, so the iteration stage is as much about education as it is about feedback.
4: Ideas tested with customers
Innovation isn’t just about coming up with ideas, it’s about choosing between them. The best companies know how to pick which ideas to pursue because they have good idea-picking systems in place. Many of them line up customers to be guinea pigs, trying things out for them. They find risk-taker customers who are likely to buy new things. They also build a network of internal employees and partners to be guinea pigs, too.
5: An internal “idea Caesar”
Innovative companies make one or more execs responsible for finding new ideas and turning them into products and services. The Booz report calls these folks “innovation champions” and says they are assigned “to coordinate the capture, development, and internal promotion of new ideas.”
6: Customers & partners associated to innovations
Creating ideas means knowing customers really well. Most creative companies say they find their best ideas by talking to customers. And “talking” means having senior execs converse with actual people about new ideas. It doesn’t mean hiring a market research firm to talk to people, although one-third of the most innovative companies do that, too. Nothing beats direct, unfiltered input from real-life customers.
7: Ideas found everywhere
Innovative companies don’t care where ideas come from. They look inside their company and they look outside. Acquisitions can be a way of bringing in innovation. A company might make a purchase to open up a new area of expertise, a new market, or to bring in entrepreneurs with cutting-edge thinking.
8: Ideas generated in 3 basic ways
Innovative companies fall into three categories, according to how they most frequently generate ideas, Booz finds:
- Need Seekers talk to customers to find out what they want and generate new products based on that.
- Market Readers closely watch the market and then quickly create incremental improvements on hot up-and-coming ideas already in the market.
- Technology Drivers create brand-new stuff by letting their tech experts experiment.
9: R&D spent thoughtfully & not reckless
The 10 most innovative companies aren’t the ones that spend the most on R&D.
Of the list of the most innovative (Apple, Google, 3M, Samsung, General Electric, Microsoft, Toyota, Procter & Gamble, IBM, and Amazon), only three of them — Toyota, Microsoft, and Samsung — are among the companies with the biggest R&D budgets, as listed in this chart from Booz. (Click here to see the chart.)
For example, Apple, Google, and 3M together spent $9.2 billion on R&D. Samsung alone spent $9.0 billion in total. Yet Samsung was ranked as more innovative.