How to Emerge from Crisis by Knowing your Innovation Growth Opportunities & Competitors’ Strengths
Companies sometimes behave like the ostrich with their head in the ground while others emerge from the crisis like a phoenix. Not knowing with which new products or services your company really earns money is a bit like the ostrich. However there are effective means to gain transparency on innovation spending without too much effort. These tools also allow a comparison with your competitors to understand what they are doing differently in their approach to successfully managing their innovation activities. Finally, they help companies which currently struggle with the economic situation to become more effective and efficient in their innovation management.
Learn about your company’s innovation management performance
Your first question as the manager is what is part of a state-of-the-art innovation management and how can I compare my company’s innovation management performance with others before I can start improving it. You will think of the innovation process that takes you from the idea to the new product, new service or to a new process or business model. But you also need to ask yourself what are the criteria for selecting the right ideas. Here a clear strategy will help you focus on the market needs and technology trends while at the same time taking your company’s own core capabilities and resources into account.
Overall the innovation results are what count and where most of the companies have little transparency on.
You might have already developed a culture that fosters innovation and leverages the wide array of innovation enabling factors such as project management, innovation controlling or better IT support. Overall the innovation results are what count and where most of the companies have little transparency on. Imagine, you would have insight in the contribution of your innovation management to growth in sales and in profit. This will allow you to more efficiently and effectively allocate your resources and out-perform your competitors.
Figure 1: The “A.T. Kearney House of Innovation”
There are strong links between the various dimensions of the “A.T. Kearney House of Innovation”. The targets set by the innovation strategy need to be translated by the innovation organization and culture into action that then need to be managed along the entire innovation life-cycle – from the first idea to the successful launch of the innovation and its continuous improvement.
Develop your own “House of Innovation” as key asset to re-gain competitiveness
Your own innovation strategy is unique.
For each company, the “House of innovation” has the same structure however the design and content are different. Your own innovation strategy is unique. It is based on your ambition to grow by innovation and on your willingness to take risk. Your innovation strategy should not only be known by yourself as the manager but also by your team and staff members. They need to understand how they can leverage innovation as key driver for profitable growth: for which new markets or technologies you want to identify new ideas? To what extent are the new offerings are expected to contribute to your company’s growth? etc.
The innovation strategy should be the compass for your organization and therefore guiding your idea management, and setting the objectives for your innovation project management. If you are ambitious and willing to take more risk, you will ask for ideas that lead to more radical innovation as they will have a high growth potential. This also requires a culture that supports risk-taking and risk-sharing. Such organizations take learning from failure as essential part of their innovation processes yet they focus on the business impact of potential new products, services or business models. Therefore, they clearly define targets for their innovation projects regarding budget, time, resources and expected quality. They also monitor the time to market and the time it takes the innovative offering to reach the break-even point.
Innovation controlling as a key enabling factor for innovation then monitors the progress of the innovation project as well as the compliance with the defined target from launch of the innovation project to the successful introduction to the market and the contribution to revenues and profit.
If you don’t know what your innovation spending is, you will not know what the contribution of that innovation is to your profitable growth. You can check how transparent and effective the innovation spending is in your company by asking the following questions:
- How much do we invest in technology and market trend analyses?
- How much does our idea management cost?
- How much do we invest in the development of new offerings?
- How much do we invest in the marketing and sales of our innovative products, services or business models?
- What is the revenue from our new offerings or the savings from our new processes?
If you are one of the few companies that have full transparency on all these issues, you are one of the very few that are currently not on a blind flight. Creating more transparency will show you the levers for more effective and efficient innovation management. In this context you would like to know how other companies in your industry are dealing with innovation management – an innovation management benchmarking would be most desirable.
Benefit from systematic innovation management benchmarking
A comprehensive innovation management benchmarking is just a mouse click away. This benchmarking is ample, caters to different industry sectors, ages and sizes, and it provides you with a thorough assessment of your own innovation management performance in comparison with those of your competitors along the dimensions of your “House of Innovation”. What I have just described is the IMP³rove Assessment. already successfully applied by almost 3,500 companies.
Therefore, you are invited to take your own IMP³rove Assessment to quickly find out where your innovation management needs improvement. We strongly recommend involving a trained IMP³rove Guide who will be able to support you in the preparation for the IMP³rove Assessment and can then also can give you valuable hints on what measures will create a significant impact on your innovation results and your overall innovation capabilities and competitiveness. The IMP³rove Assessment is part of a “full-service” approach to better innovation management.
Figure 2: IMP³rove Approach from online innovation management assessment to improved innovation management performance
Concrete benefits from the IMP³rove Approach
By following the IMP³rove Approach you can:
- Improve your knowledge about innovation management
- Identify your own strengths and weaknesses in innovation management
- Achieve profitable growth by increasing your management capabilities that turn new ideas into successful innovations
- Keep your competitors at distance
Improve your knowledge about innovation management
When filling in the IMP³rove questionnaire with the support of a trained IMP³rove Guide you will discuss the importance of the five dimensions of the “A.T. Kearney House of Innovation” for your organisation. First of all, you will gain an understanding of why you should think about your innovation strategy or why design management could be an innovation enabler for your company. At the same time you will learn about the inter-linkages between the various dimensions of innovation management. Furthermore, you will realize see that many issues that you have addressed already are part of a systematic innovation management. Despite the good news, you still need to put the aforementioned into a clear framework.
Identify your own strengths and weaknesses in innovation management
The IMP³rove Assessment report will present your strengths and weaknesses in innovation management in a systematic manner. For each dimension of innovation management you will see your score compared with the score of the growth champions and the average. The growth champions are those companies that have achieved the highest growth from innovation in terms of revenue, profit and number of employees during the last four years.
Another notable feature is that you can select the benchmarking class against which you would like to compare your company. Mostly likely you will select the companies from your own industry sector – your competitors. So within less than 1 hour after you completing the IMP³rove questionnaire you will have access to your IMP³rove benchmarking report with detailed benchmarks presented in a well-structured manner.
Figure 3: IMP³rove Assessment: Benchmarking innovation management performance with competitors
Just imagine how much time you would normally spend in finding out what your competitors are doing differently – for example, ability to offer their products at a lower price or at a better quality. And this research usually does not generate a systematic analysis of their innovation management capabilities. And here these insights are presented to you within less than one day.
Gaining profitable growth by increase your management capabilities in turning new ideas into successful innovation
Once you have analysed the IMP³rove benchmarking results you will identify measures that will help you to close the gaps that became obvious from the benchmarks. Your IMP³rove Guide might help you in defining the most effective improvement measures and develop an action plan. This will be geared to increasing the innovation results. It might be that you need to accelerate your time to market or your time to profit. It might require that you need to sharpen your innovation strategy or that you need to better fill your idea pipeline. Value-creation is the performance indicator that you should apply when selecting the measures and when evaluating the performance of your IMP³rove Guide.
Keep your competitors at distance
The IMP³rove Approach encourages you to monitor your innovation management performance on a regular basis. Thus you can also check your competitors’ moves towards improved innovation management. This is especially relevant if the innovation results are to be seen as an indicator for competitiveness. And there are significant differences within the same industry sectors. In some sectors the difference in the annual growth rate of income from sales over the last 4 years is three times higher within the growth champions compared to the other SMEs.
Your decision: Ostrich or Phoenix?
Now it is up to you whether you would like to remain the ostrich that prefers to close his eyes on the changes that take place in the market. The pressure from low-cost suppliers or from the innovation leaders will not disappear. So why not take the opportunity and your managerial pride in taking a look into your company’s innovation management performance. You will find areas where you always had the feeling that your company is good at, and there will be other ones where you already had the notion that there is something that could be improved, however, you did not quite know how to change it. The few hours for preparation and completion of the IMP³rove Assessment are well invested considering the return on investment that you will gain here for your company.
Use the IMP³rove services yourself
If you consider using the IMP³rove Approach for your own company then visit the IMP³rove web-site www.improve-innovation. There you will find more detailed information on all the benefits it offers and the access to the IMP³rove benchmarking questionnaire. The IMP³rove questionnaire and the IMP³rove Benchmarking report are available in eight different languages.
By Eva Diedrichs
About the author
Eva Diedrichs is senior consultant at A.T. Kearney and project manager of IMP³rove and of the launch of the IMP³rove – European Innovation Management Academy (non for profit).
Join the web session
The IMP³rove services will be presented on March 13, 2013 during an IM Channel One web-session. Sign up here!
Topic: How to develop your innovation management consulting business in tough times
Date: March 13, 2013
Time: 15.00 Central European Time