While the importance of innovation is crystal clear for many organizations, daily execution usually remains challenging. When renewing products, services or business processes, companies often encounter the same obstacles. But what if companies could learn from each other? Can innovation be streamlined by sharing successes and failures? That’s precisely what the first CREAX innovation roundtable was determined to find out. In collaboration with Oracle, we gathered a diverse group of innovation professionals for a lively debate on how to move from theorizing to getting things done. This is what we learned.
People from these companies joined us for the roundtable debate:
The main question of the day was:
How can companies increase their ‘return on innovation?
R&D usually requires large sums of money, but too often the tangible results – such as new or improved products and procedures – are lacking.
Setting the scene with some cold facts
In order to get the discussion going, Patrick Smets of Oracle presented the results of an innovation survey distributed to 150 companies from diverse industries. Some remarkable results came back:
- 76% think innovation is critical to the survival of their business;
- 90% admit they are slow to market innovations and often over budget;
- 84% admit significant overhead to track people, costs and progress;
- 84% have no time to focus on ensuring that they are investing in the right things.
Earlier research by Pricewaterhouse Coopers had already found that 97% of companies think innovation does not yield enough results. These numbers sparked off an animated discussion, during which all participants shared their experiences and points of view.
4 key insights
1. Sales can be both a blessing and a curse
In many cases, sales executives are the only ones in a company who are in direct contact with clients. They handle day-to-day questions, including requests that require specific R&D efforts. This makes them an invaluable source of information. However, if innovation teams are only dancing to the whims and fancies of clients, there is a risk that either too many projects – or just the wrong ones – are hastily and halfheartedly processed.
Random market pull innovation tracks divert attention and resources from carefully planned, strategic innovation. A possible solution is to bring R&D people in contact with clients as well, or to hire sales people that have experience in R&D. Either way, two-way communication between sales and R&D is essential to keeping a clear focus on the innovation projects that have the right potential.
2. Shortening the time to market requires a proactive approach
One of the biggest difficulties in innovation is hitting the market in a timely manner. ‘Time to market‘ – the amount of time between a new idea and a product that is available for sale – often dictates success or failure.
In a fast-changing environment, companies need to anticipate shifts. Whether it’s changing consumer behavior, emerging trends or new legislative frameworks: companies need to be ahead of the curve as much as possible. By continually assessing changes in line with business objectives, companies can create roadmaps for the future. In this way, they won’t need to start from scratch when new opportunities arise and ‘speed to market’ is of the essence.
3. Return on innovation can’t be measured by classic metrics
Following up on the ‘return on innovation’ demands specific metrics and KPIs. However, quite often, company HQs use classic financial benchmarks to assess the success of R&D efforts. This creates an ‘unequal fight’. The financial structure of a company is often based on direct costs instead of lifetime costs, which makes it virtually impossible for long-running innovation initiatives – with high initial costs – to be successful.
Measuring the returns of innovation projects requires different metrics. Instead of focusing on direct financial results, it makes more sense to set milestones in terms of progress. Striving for substantive deadlines will push the research and development further, without constraining the creativity by rigid procedures and financial analyses.
4. Don’t isolate innovation teams from the rest of the company
It is a common misconception that innovation teams should be separated from the rest of the company. Quite the opposite in fact: letting technical R&D people work as lone rangers can be a recipe for disaster. One of the participants gave an example of a product development process that ran for over three years. During this period, sales had never been consulted. Needless to say, the project went south.
Don’t lock your innovation teams in an ivory tower. Instead, stimulate a versatile partnership between the innovation team and other departments, such as sales and marketing. Cross-pollination creates company-wide buy-in for innovation projects and propels them forward.
Join our next innovation roundtable!
Our first innovation roundtable clearly showed that an informal discussion about innovation challenges results in valuable insights. A small group of innovation professionals from diverse industries creates the perfect platform for collaboration and knowledge sharing.
CREAX will definitely organize new roundtables in the coming months, so let us know if you’d like to pull up a chair and join us!