The key to success: Innovation

No progress without innovation

Innovation is the systematic practice of developing and marketing advanced products and services for adoption by customers. ??It is the ability to conceive, develop, deliver, and scale new products, services, processes, and business models for customers. Most succeed by optimizing existing core businesses, and some companies do succeed at innovation. ?The companies that harness the essentials of innovation see a substantial performance edge that separates them from others with evidence that mastering innovation can generate?players. Successful innovation has historically occurred at the intersection of several elements, which can guide prioritization efforts. An example from inventor and businessman Thomas Edison helps illustrate the concept. “In every case, he did not just invent the what, he also invented a how, in the case of the light bulb, he created the filament and the vacuum tube that allowed it to turn on and off, and he developed the production process that enabled mass production. The attributes and behaviors behind superior innovation performance were validated in action at hundreds of companies. The eight critical elements?for organizations to master: Aspire:?means innovation-led growth as critical, cascaded targets. Choose:??comprehensibly, time- and risk-balanced portfolio of initiatives, and devote sufficient resources. Discover?Business, market, and technology R&D efforts actionable and capable of converting into winning value plans. Evolve:?Ability to create new business models that provide defensible, robust, and scalable profit sources. Accelerate:?Do you develop and launch innovations quickly and effectively? Scale:?Do you launch innovations at the right scale in the relevant markets and segments? Extend:?Do you create and capitalize on external networks Mobilize:?Are your people motivated, rewarded, and organized to innovate repeatedly? Two of the above only merit particular:?aspire?and?choose. It’s particularly crucial to ensure that leaders are setting bold aspirations and making tough choices. ?

?Mercedes-Benz Group invested extensively in digitizing its product development system. That allowed the company to prune its innovation cycles significantly and its capabilities for personalizing cars have improved, even as assembly efficiency rose by 25 percent. Gavi, a public-private partnership founded to save children’s lives and protect their health by broadening access to immunization, used nonfinancial targets to help drive its innovation efforts and this helped the organization broaden its aspiration for impact in a way that was bold, specific, measurable, and time-bound. Leadership created a vision and strategic plan connected to financial targets cascaded down to business units and product groups. Doing so allowed the organization to move from 4 percent annual growth to 13 percent, by launching several new brands. ?International insurance company Discovery Group?mobilized the organization around innovation?by creating incentives for a thousand of the company’s leaders using semiannual divisional scorecards. Innovation is a requirement and a part of the organization’s culture. Now disruptive innovation shakes up an entire industry and top tech trends?such as the Bio Revolution. Cross-functional groups gather in a structured process to think through the intersection of unmet customer needs, technology trends, and business models, bringing creativity and specificity to the process of idea generation. Challenge orthodoxies:??Make analogies to other industries:?they systematically apply these value propositions to their ideas to see if the analogy can create new sources of value or fresh opportunities Apply constraints:?The way to pick good ideas ignore the bad ones. An innovation portfolio?is a thoughtfully curated bundle of potentially innovative initiatives, with clear aspirations and required resources defined for each. One way to measure innovation is to look at innovation-driven net new growth, which we call the “green box”.?This phrase refers to how you quantify the growth in revenue or earnings that an innovation needs to provide within a defined timeframe. This concept can help clarify aspirations and influence choices on the innovation journey.?While many imagine that innovation is solely about creativity and generating ideas, at its core, innovation is?a matter of resource allocation. To put it another way: it’s one thing to frame innovation as a catalyst for growth, and another to act upon it by refocusing people, assets, and management attention on the organization’s best ideas. The green box can help to solidify a tangible commitment?by defining the value that a company creates from breakthrough and incremental innovation, on a defined timeline (say, five years), with quantifiable metrics such as net new revenue or earnings growth. Crucially, the green box looks at growth from innovation alone, setting aside other possible sources such as market momentum, M&A, and so forth. And once defined, the growth aspiration can be cascaded into a set of objectives and metrics that the company’s various operating units can incorporate into its individual innovation portfolios What’s critical is selecting a metric that is a proxy for value creation. A large US healthcare payer, for example, looked to spur innovation that would improve patient satisfaction and the quality of care Separate from the concept of the green box,?two simple metrics?can also offer surprising insight about innovation vis-à-vis the effectiveness of an organization’s R&D spending. Both of these lend themselves to benchmarking, since they can be gauged from the outside in, and they offer insight at the level of a company’s full innovation portfolio. The two R&D conversion metrics are as follows: R&D-to-product conversion:?This metric is calculated by looking at the ratio of R&D spending to sales from new products. It can show how well your R&D dollars convert to actual sales of new products—and it might reveal that spending more doesn’t necessarily translate into stronger performance. New-products-to-margin conversion:?This metric considers the ratio of gross margin percentage to sales from new products. It can indicate how new-product sales contribute to lifting margins.

While no metric is perfect, these may offer a perspective that keeps the focus squarely on returns from innovation and the value it creates—often more meaningful than looking inward at measures of activity, such as the number of patents secured. Innovation is a team sport. Experience working with strong innovators and start-ups has helped identify?those fall into four big categories:?vision, or the ability to spot opportunities and inspire others to go after them;?collaboration, which relates to fostering effective teamwork and change management);?learning?or absorbing new ideas; and?execution, with traits that facilitate snappy decision-making even when uncertainty arises. Being strategic about the composition of an innovation team can help minimize failures and bring discipline to the process. One broad piece of advice centers on?creating a culture that accounts for the human side of innovation. Additionally, related articles share perspectives from leading experts who have helped their organizations tackle inertia and unlock bold strategic moves. If you are looking for words of wisdom, their insights can help spark inspiration to innovate.?“Creating a safe environment for innovation is really what you need to do to get the greatness out of the people who work with you, which is ultimately what drives growth.?“If someone knowledgeable thinks what you are doing is a bad idea, make sure they have a seat at the table. Put them on your board; make them one of your advisers so you don’t have any blind spots. A key skill is being able to hold two divergent thoughts and approaches in your brain and in your team at the same time. Great companies will be ambidextrous innovators to disrupt themselves in the future while serving the core [business] today. The execution and focus. It is hard sometimes to say no to valid, exciting ideas that could be transformative.”

Conclusion

No civilization was possible because of innovation. It is a contemporary problem that crops up. Who invented covid vaccine: this was a global demand. For an organization it's important because we have to keep our existing, we must enhance features. It will help to sustain the markets.