The World’s Most Innovative Companies: 4 Things that Differentiate Them
4 Things That Differentiate Them
The world’s best innovators draw on speed, lean processes and technology to explore adjacent growth opportunities. Here’s how to do it.
The world’s most innovative companies draw on some common practices to explore growth opportunities. Here’s how they do it.
continues to rise in importance: in THE IMPERATIVE FOR INNOVATION The Boston Consulting Group’s 10th annual global survey of the state of innovation, 79 per cent of respondents ranked it as either their top-most priority or a top-three priority — the highest percentage since we began asking the question in 2005.
At the same time, our research indicates that four attributes are critical to a robust innovation strategy: • an emphasis on speed; • the use of technological platforms; • well-run (and very often lean) R&D processes; and • the systematic exploration of adjacent markets.
In this article we will take a deep dive into each of these four practices, which are enabling innovation across industries, sectors and regions.
1 AN EMPHASIS ON SPEED Speed enables companies to catch consumer trends as they emerge, leave competitors flat-footed, and even drive costs down and quality up. In our survey, overly-long development times were the most-cited obstacle to generating returns on innovation and product development: 42 per cent of innovation executives said ‘development times are too long’ — a six percentage point increase over the 2014 survey.
The same frustration was shared by self-described ‘strong’, ‘average’ and ‘weak’ innovators in roughly equal measure — but there, the similarities end. Fast innovators are much more likely to also be strong innovators — 42 per cent, compared with less than 10 per cent of slow innovators. Fast innovators are also more disruptive — 27 per cent versus 1.5 per cent. They get new products to market quickly and generate more sales from them (at least 30 per cent of revenue). This is true for 35 per cent of fast innovators, but only 11 per cent of slower ones.
One example of a fast innovator from our study is fashion retailer Zara, part of the Inditex Group, the world’s largest apparel seller. The typical fashion retailer is organized around individual functions to gain scale and cost advantages; as a result, product development, manufacturing and delivery take months. Zara gets new styles to market in two-to-four weeks. To do so, it uses a cross-functional, integrated organization to accelerate decision-making and eliminate delays in functional handoffs.