Build for the Future with Innovation Success

As market dynamics evolve and technology advances at breakneck speed, companies are under increasing pressure to stand out from the crowd through exceptional innovation. They’re expected to identify high-value inventions or market opportunities—and then find ways to launch new products, services, features, and experiences that capitalize on them.??

Those that do so and become leaders in innovation are able to improve near-term performance and lay the foundation for future success.??

Innovation Matters More Than Ever ?

Innovation is now a top priority for close to 80% of companies recently surveyed by BCG. Despite economic uncertainty, CEOs are focusing their spending on growth, balancing ambitious short-term goals with plans that will boost future performance.??

A small group is succeeding through innovation, focusing on key areas of future readiness. In fact, close to 70% of the value that these companies create comes from revenue growth driven by innovation, a percentage significantly higher than that of their peers and the S&P Global 1200.?

Over the course of three years, BCG conducted a systematic and forensic analysis of more than 100 BCG-supported digital transformations, supplemented with external research among 725 executives at companies that have undertaken digital transformations. A quarter of the companies we studied are innovation leaders.?

These companies deploy innovation in ways that improve short-term performance and long-term growth. Their leaders incorporate innovation in and beyond the core, which separates them from the pack, building more capabilities and delivering better outcomes for their organizations.??

They strengthen innovation muscles within operations and the operational value chain and in customer experience and organizational culture. Beyond the core, they innovate through new products, services, and businesses.??

Although use cases vary, leaders realize outsize financial and nonfinancial returns and create a more comprehensive approach to innovation-led growth. Today’s top innovators commit to innovation as a strategy, gaining assets despite operating during a period of uncertainty. ?

What Sets Innovation Leaders Apart ?

Innovation leaders depend on a range of specific enablers to inspire a level of growth that separates them from innovation laggards, including:?

• Empowered management?
• An entrepreneurial culture that values and rewards innovation?
• Next-generation technology?
• Innovation-specific metrics?
• Collaboration and knowledge sharing?
• Recognition of growth and expertise over tenure?
• A willingness to make big bets?

Innovation leaders allocate resources on the basis of the outcomes they want to achieve, including for internal and external initiatives, and for short-term gains and long-term growth. To overcome barriers that could stand in the way of successful innovation, companies must focus on three critical actions:?

• Strategize. Develop a clear understanding of what successful innovation looks like by linking goals to strategy.
• Create and scale. Develop ideas that will deliver business value, and—after sufficient testing—use top talent to launch, operate, and quickly scale the most successful ideas into full businesses.
• Accelerate. Use technology, people, and governance to expand innovation-related capabilities and ways of working in a way that maximizes ROI.?

Turning Innovation into Action?

Here are some examples of how leading companies are deploying innovation.?

The Multiphase Approach. A premium beverage company launched a business unit to focus on select areas of needed transformation, including sustainability, digital, and health and wellness. This centralized group led the charge on next moves, prioritizing partnerships, new ventures, and acquisitions. The approach enabled the company to scale new businesses to $1 billion in revenue and helped it emerge as an early leader in new, fast-growing consumer product categories and technologies.?

The Aggressive-Target Approach. A global telecommunications company wanted to boost revenue from digital services, which accounted for only 1% of total revenue. It landed on a vision for transformation, designed an innovation strategy, established cross-functional teams dedicated to building products for specific customer journeys, and updated its IT architecture to support the new offerings and faster development pace. The result: more than 15 new products, which are expected to add $250 million to the company’s annual operating income.?

The AI Approach. A global consumer goods manufacturer is considering using generative AI in business development to quickly conceive of new product ideas and related promotional campaigns. In a demo, the AI tool simulated customer segmentation, generated ideas for new products in existing categories, and mapped out potential social media promotions. The tool produced focus-group guides and simulated how target customer segments might answer questions to predict possible feedback.?

Whatever the approach, becoming an innovation leader allows companies to build for the future and leave their rivals behind.??

More of our top reads on innovation:?

• What Innovation Leaders Do Differently ?
• What Does It Take to Build for the Future?
• Most Innovative Companies 2023: Reaching New Heights in Uncertain Times ?
• What’s Possible? GenAI and Innovation ?
• An Innovation Culture That Gets Results

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