The hallmark of the most innovative companies is that they achieve great speed, perfect Lean R&D processes, leverage technological platforms and systematically explore adjacent markets, according to the results of a new survey.
The Boston Consulting Group surveyed more than 1,500 senior innovation executives—across a wide range of countries and industries—to gain their perspective on the state of innovation in business. In the new report, “The Most Innovative Companies 2015: Four Factors that Differentiate Leaders,” the firm lists the 50 companies that global innovation executives rank as the most innovative.
Not surprisingly, Apple and Google are listed as the first and second most innovative companies. Tesla Motors, which was ranked seventh last year, is listed as the third most innovative company. Microsoft and Samsung were ranked fourth and fifth respectively.
What I found most interesting isn’t the four factors respondents believe differentiate truly innovative companies, but their views on those capabilities. For example, fast innovators are much more likely to see themselves as strong innovators—42 percent of innovators reporting a culture of speed at their company also rated their organization’s innovation capabilities as strong, compared with less than 10 percent of slow innovators. Respondents from fast innovators also see their companies as more disruptive—27 percent of respondents compared to 1.5 percent of respondents from slow innovators.
One reason respondents place such an emphasis on the need for speed is to overcome a key business challenge. Indeed, 42 percent of the survey’s respondents cited long development times as a key obstacle to their organization’s ability to earn a return on its innovation investment.
Likewise, Lean practices, most often associated with manufacturing, have also gained favor in research and development. Strong innovators are two to three times more likely to adhere to Lean principles than their weak counterparts, according to the survey results.
“It takes a deft touch to get processes right in R&D—you need appropriate control, but not so much that you quash creativity, the lifeblood of R&D,” says Michael Ringel, a BCG partner and report coauthor. “It’s all about doing the work right and doing the right work. Doing the work right in R&D involves the same principles that are core to the Lean approach in manufacturing and other domains. But where Lean in R&D departs from these other domains is in doing the right work. There are so many degrees of freedom in R&D, given that it is a learning enterprise, that getting smart about which hunches you track down and which you let go becomes critical.”
Also of note is how respondents view advances in technology platforms: 50 percent of the surveyed executives see the advances as the most impactful type of innovation. Additionally, more than half of the respondents who see tech platforms and big data as having a big impact have incorporated them into their company’s innovation strategies.
Finally, the survey respondents believe adjacent growth is crucial for innovation. Recurring members of BCG’s annual list of the 50 most innovative companies such as 3M, Amazon, Apple, General Electric, Google and Procter & Gamble, are all noted for their ability to successfully identify and leverage new adjacent business ideas that drive revenue.
“As markets mature and competition increases, growth in [a company’s] core portfolio often slows,” says Andrew Taylor, a BCG partner and report coauthor. “Adjacencies help innovative companies open new avenues for growth through exposure to markets in which they benefit from 100 percent of the share they achieve. To be successful, these companies frequently leverage existing capabilities in lean, speed and technology platforms to enable innovations, whether next door or further afield.”
What are your thoughts on innovation? Do you also believe that the combination of speed, lean R&D processes, use of technological platforms and systematically exploring adjacent markets are key factors in becoming an innovation leader?