A recent PwC survey found that that innovation is high on the executive agenda in virtually every industry. In all, 78% of CEOs surveyed believe innovation will generate “significant” new revenue and cost reduction opportunities over the next three years. But it is highest for those where technology is changing customer expectations. In both the pharmaceutical and entertainment and media sectors, for example, more than 40% of CEOs believe their greatest opportunities for growth come from spawning new products and services.
Additionally, the survey found that CEOs are re-thinking their approach to innovation and increasingly seeking to collaborate with outside partners and in markets other than where they are based. For example, a majority of entertainment and media CEOs said they expect to co-develop new products and services.
The innovation process generally has four phases:
- Discovery: Identifying and sourcing ideas and problems that are the basis for future innovation. Sources may include employees as well as customers, suppliers, partners and other external organisations.
- Incubation: Refining, developing and testing good ideas to see if they are technically feasible and make business sense.
- Acceleration: Establishing pilot programs to test commercial feasibility.
- Scale: Integrating the innovation into the company; commercialisation and mass marketing.
However, the drive for innovation must arise from the CEO and other executive leadership by creating a culture that is open to new ideas and systematic in its approach to their development.
Therefore, the study also identifies 7 misconceptions about the innovation process:
- Innovation can be delegated. Not so. The drive to innovate begins at the top. If the CEO doesn’t protect and reward the process, it will fail.
- Middle Management is the ally of innovation. Managers are not natural champions of innovation. They to reject new ideas in favor of efficiency.
- Innovative people work for the money. Establishing a culture that embeds innovation in the organisation will attract and retain creative talent.
- Innovation is a lucky accident. Successful innovation most often results from a disciplined process that sorts through many ideas.
- The more open the innovation process, the less disciplined. Advances in collaborative tools, like social networking, are accelerating open innovation.
- Businesses know how much innovation they need. Leaders must calculate their potential for inorganic growth to determine their need to innovate.
- Innovation can’t be measured. Leadership needs to identify its ROII (Return on Innovation Investment).
Details about the study here.