That was the conclusion of the tenth annual global survey of the State of Innovation by the Boston Consulting Group. In it, 79% of respondents ranked innovation as either the top-most priority or a top-three priority at their company, the highest percentage since the firm began asking the question in 2005, when 66% said innovation was such a priority.
The firm also released its annual list of “Most Innovative Companies,” which was headed by Apple, Google, Tesla Motors, Microsoft and Samsung Group.
Here are 4 ways CEOs say they’re trying to leverage science, technology and management acumen to boost innovation.
1. Speed things up. Size can give you scale, but for innovation, speed is more critical, Rakesh Kapoor, CEO of Reckitt Benckiser, an innovative CPG company. Told Boston Consulting. And the importance of speed is rising fast because it “enables companies to catch consumer trends as they emerge, leave competitors flat-footed, and even drive costs down and quality up.” In fact, overly long development times were the most-cited obstacle to generating returns on innovation and product development in its 2015 survey, Boston Consulting said.
2. Make R&D processes lean. Companies that are most successful at R&D emphasize process even though this is a creative function whose practitioners enjoy intellectual and practical freedom. The percentage of strongly innovating companies that followed “lean” principles for R&D was two to three times greater than for weaker counterparts, enabling them to gain significant competitive advantages by developing higher-quality products up to six months sooner than others while also reducing deviations from product target costs by more than 35%.
3. Rely on technology. Advances in technology platforms ranked as the most important factor driving innovation in Boston Consulting’s 2015 survey. More than half of those who saw tech platforms and big data as having a big impact were already actively pursuing them as avenues of innovation. General Electric, for instance, is using the new technology of additive (or 3-D) manufacturing to reduce the cost of making transducer probes, the most expensive component in its ultrasound equipment. This innovation resulted in both significant efficiencies and more flexible production lines, driving down costs, which in turn led to uses of the technology where price previously had been prohibitive.
4. Systematically explore adjacent markets. Adjacent growth is a hallmark of innovation leaders, Boston Consulting said, represented by the successes of GE, 3M and Procter & Gamble in developing new products in nearby markets that led to incremental profitable growth. They do so because as markets mature and competition increases, growth in the core portfolio inevitably slows, so adjacencies help innovative companies open new avenues for growth. Yet it can be difficult for mature companies to pull off.
More CEOs will explore these four avenues to stronger innovation as the pressure increases on them to make their companies innovation leaders.