Meet the Innovation Achievers: Maximizing the Return on Innovation

We are living in a time of unprecedented speed and technological leaps that are blurring lines between industries and disrupting established business models. Whether it’s robotics, machine learning, AI, the promise of 5G, connected cars or flying cars, the pace of change will keep accelerating. The good news is that it expands our ability to turn a universe of new ideas into real value for people, businesses and communities.

The challenge for organizations today is to lean into these converging forces. Innovation carries higher risk than many other aspects of corporate strategy. Yet, it is foundational and is the lifeblood of growth. Companies need an innovation discipline to flourish.  

GE’s sixth Global Innovation Barometer is a survey of 2,000 global executives in 20 markets around the world. These executives are responsible for making decisions related to innovation, product development and other R&D areas in their companies (GE executives did not participate in the survey).  It provides a collective view of innovation challenges, opportunities and helps to understand how innovation is evolving as a corporate discipline to drive growth.

The Barometer’s findings highlighted both the power of innovation and the challenges preventing companies from keeping pace with the changes happening around us. The most cited obstacles standing in the way of the ability to take risks include converting ideas into actions, struggling with R&D investments, maximizing returns on innovation, and scaling innovation. In fact, 64 percent surveyed said that their company was incapable of taking a leap of faith on a big idea.

The innovation “achievers”

Despite the challenges, these executives are feeling more confident regarding their ability to translate innovation into commercial success. These executives are called innovation “achievers,” or businesses that say 50–100 percent of their company’s innovations have positively impacted their bottom line over the last five years.

The secret to their success? Achievers know that digitization is key, they focus on a more measured and strategic approach to innovation, focused on long-term strategy. They realize that although speed is of the essence, translating innovation investment into scaled commercial success takes time. It’s important to have the patience and discipline to see innovation through its various phases of growth.

Here’s what I mean. In innovation, speed gives you a competitive edge. Who wouldn’t want to be first in introducing new products and solutions? That said, in disruptive innovation, investing today doesn’t yield game-changing financial results the following quarter. We must balance transformative disruption with expected gains over a realistic time horizon. 

Innovation achievers have other common traits. They also take a measured, pragmatic approach to innovation. They put customers first and understand the problem they are trying to solve. They experiment internally and launch minimum viable products (MVPs) selectively before scaling to full solutions. These points continue to validate the same principles spelled out by Eric Ries in his first book “The Lean Start Up,” which we apply at GE.

Finally, innovation achievers are all in search of more structured and sophisticated ways of measuring the return on innovation. We know this is a challenge. Traditional corporate metrics such as operating profit growth, free cash generation and earnings per share amongst others would not serve early stage innovation programs or businesses well. Large companies now combine ways of measuring innovation success, for example, through growth in customer acquisition and in revenues.  Innovation achievers strive for systems to measure ROI.

Innovation, and beyond

It is clear to me that innovation has been experiencing a foundational moment that is changing the world in ways we can hardly imagine.  Innovation is seen through blockchain technology tracking refugees, driverless cars, 3D-printed patient heart replicas doctors can study before surgery, AI-powered medical imaging and applications to develop drugs for debilitating diseases such as cancer and Alzheimer’s. It is no longer the purview of just startups who play a vital role, it has also become foundational for corporations

One thing is known. Inventors, entrepreneurs and companies deploy new ideas at an ever-increasing pace, making seemingly abstract concepts come into clearer view faster than ever. Remember, the pace of change will never be as slow as it today. Innovation models of the past aren’t sustainable and must be expanded.

New partnerships models will be essential to transform innovative ideas to scaled solutions. The models range from startups to big company partnerships, and include co-opetition and non-traditional cross-industry players coming together to make possible what isn’t individually. This is where corporations must use innovation discipline and use their scale and global footprint as competitive advantage to win.

Organizations able to identify and execute on opportunities in this intersection of ideas, speed to execution rigor, and the ability to adopt and scale new business models will be the ones that will chart new paths to growth.  Our collective challenge is to embrace that pace of change, apply new ways to measure progress, and close the gap between the promise of technology and reality.