The main question of the day was: How can companies increase their ‘return on innovation’?
R&D usually requires large sums of money, but too often the tangible results – such as new or improved products and procedures – are lacking.
People from the following companies joined for the roundtable debate:
In order to get the discussion going, Patrick Smets of Oracle presented the results of an innovation survey distributed to 150 companies from diverse industries. Some remarkable results came back:
Earlier research by Pricewaterhouse Coopers had already found that 97% of companies think innovation does not yield enough results. These numbers sparked off an animated discussion, during which all participants shared their experiences and points of view.
In many cases, sales executives are the only ones in a company who are in direct contact with clients. They handle day-to-day questions, including requests that require specific R&D efforts. This makes them an invaluable source of information. However, if innovation teams are only dancing to the whims and fancies of clients, there is a risk that either too many projects – or just the wrong ones – are hastily and halfheartedly processed.
Random market pull innovation tracks divert attention and resources from carefully planned, strategic innovation. A possible solution is to bring R&D people in contact with clients as well, or to hire sales people that have experience in R&D. Either way, two-way communication between sales and R&D is essential to keeping a clear focus on the innovation projects that have the right potential.
One of the biggest difficulties in innovation is hitting the market in a timely manner. ‘Time to market’ – the amount of time between a new idea and a product that is available for sale – often dictates success or failure.
In a fast-changing environment, companies need to anticipate shifts. Whether it’s changing consumer behavior, emerging trends or new legislative frameworks: companies need to be ahead of the curve as much as possible. By continually assessing changes in line with business objectives, companies can create roadmaps for the future. In this way, they won’t need to start from scratch when new opportunities arise and ‘speed to market’ is of the essence.
Following up on the ‘return on innovation’ demands specific metrics and KPIs. However, quite often, company HQs use classic financial benchmarks to assess the success of R&D efforts. This creates an ‘unequal fight’. The financial structure of a company is often based on direct costs instead of lifetime costs, which makes it virtually impossible for long-running innovation initiatives – with high initial costs – to be successful.
Measuring the returns of innovation projects requires different metrics. Instead of focusing on direct financial results, it makes more sense to set milestones in terms of progress. Striving for substantive deadlines will push the research and development further, without constraining the creativity by rigid procedures and financial analyses.
It is a common misconception that innovation teams should be separated from the rest of the company. Quite the opposite in fact: letting technical R&D people work as lone rangers can be a recipe for disaster. One of the participants gave an example of a product development process that ran for over three years. During this period, sales had never been consulted. Needless to say, the project went south.
Don’t lock your innovation teams in an ivory tower. Instead, stimulate a versatile partnership between the innovation team and other departments, such as sales and marketing. Cross-pollination creates company-wide buy-in for innovation projects and propels them forward.
In close cooperation with sales, business development and management, Diederik explores ways to expand the CREAX brand by improving the services, identifying target markets and developing strategies to communicate with them. Diederik has 5 years of experience in leading innovation projects within CREAX and is still regularly consulted to share his insights.