Weighing Innovation Readiness Factors
There are various methods and strategies to measure and evaluate this readiness, as companies, governments and other institutions strive to stay competitive with their innovation efforts. The lack of preparation is often called the innovation readiness gap, and yet even in measuring those deficiencies, it can help companies better understand how they can prepare for the future.
According to a blog on innovation readiness by RGI from IdeaNote, developing a culture of creativity is key, in addition to incentivizing collaboration; investing in research and development initiatives; providing access to mentors who can offer guidance; offering rewards for innovating ideas; using customer feedback channels; encouraging failure as part of the learning process; and introducing agile working practices. All these measures aim at improving organizational flexibility so that new opportunities can be quickly identified and capitalized upon when needed.
When evaluating an organization’s level of innovation readiness, several factors should be taken into consideration, advises RGI. Having a clear vision on how innovations will benefit customers/stakeholders; availability of adequate financial resources; strong leadership that can motivate employees while setting realistic goals; and easy access to information sources related to current trends within the market. “A key component of any successful effort towards increasing levels of innovation readiness should include an evaluation process where all relevant stakeholders provide feedback on proposed changes,” notes RGI.
Closing the Innovation Readiness Gap
It’s this paradox, and the innovation readiness gap, that concerns BCG as it released its study, the 2024 Most Innovative Companies. According to BCG’s article as part of its study, “Innovation Systems Need a Reboot,” the consulting company asserts, “Companies have never placed a higher priority on innovation—yet they have never been as unready to deliver on their innovation aspirations.”
BCG reports, “We first discussed the readiness gap in our 2021 Most Innovative Companies report. At the time, 20% of companies scored as “ready” based on BCG’s proprietary Innovation-to-Impact benchmark—despite 75% ranking innovation a top-three priority. Today, our 2024 research finds 83% of companies seeing innovation as a top-three priority, but only 3% ready to translate their priorities to results.”
With only 3% of global innovators in the “ready zone,” it speaks to a growing innovation readiness gap. This could be troubling news, although it also speaks to some opportunities in the space to boost corporate enterprise innovation efforts.
Other key takeaways of the BCG report include:
- While innovation leaders’ number one challenge is an unclear or overly broad strategy, the vast majority are focusing on process optimization, not strategy.
- Those organizations that exhibit a strong alignment between business strategy and innovation strategy report a share of sales from new products 5 percentage points above the sample average.
- While nearly all organizations are experimenting with GenAI in innovation, few are implementing at scale—missing opportunities to reshape their innovation processes or to enable new products, services, or business models.
Clearly, there is work to be done in the innovation space. Positioning a clear innovation strategy that links to business strategy is one area that needs improvement, suggests BCG. “Strategy-led innovators achieve a share of revenue from new products 74% higher than companies with just a weak link between strategy and innovation. It’s time for innovators to recommit to strategy,” says BCG.
Can a focus on generative artificial intelligence lead the way back to innovation readiness? BCG reports, “While 86% percent of innovators in our research are experimenting with GenAI to at least some degree, ready innovators are moving out ahead. They’re applying GenAI more frequently in a single use case and are five times more likely to have applied it at scale.” Clearly, AI is becoming a powerful tool to reshape and retrain the innovation space for greater readiness.
Preparing for the Future
Is your company ready to lead innovation during a crisis? All Things Innovation looked at just that in, “Leaning into Crisis Innovation.” In times of crisis, conventional wisdom seems to indicate that companies tighten the reins on personnel and their budgets, and that innovation efforts are stifled as firms go into survival mode. Yet during recent times of uncertainty, such as the pandemic, we also experienced that the opposite could hold true, and that innovation can thrive. Many companies expanded their innovation efforts during the pandemic. For example, out of necessity, many expanded their digital transformation initiatives to meet the needs of consumers and the marketplace.
In addition, we have also examined, “Avoiding Innovation Traps.” The road to innovation can sometimes be straight and unencumbered. But more than likely, it can also be a long and winding route, with many obstacles along the way. There are also innovation traps to avoid if possible. One such trap is the competency trap, which can impact even the most ambidextrous organizations. The competency trap is said to be the false belief that the same practice that led to past success will necessarily lead to future success. An infamous example often cited is that of Kodak, which invented the digital camera back in the 1970’s but struggled and failed to capitalize on the opportunity.
Sharpening Innovation Strategy
So just how can innovative companies avoid this seeming paradox in the marketplace, one where prioritizing innovation seems to be on the rise, yet readiness remains alarmingly low? The BCG study points to several ways that companies can reinforce readiness. Positioning innovation strategies, along with aligning goals, is one way to strengthen readiness, notes BCG. Leveraging artificial intelligence may also give companies a substantial edge.
BCG advises, “Given the significant declines in readiness, it makes sense for organizations to continue their efforts to strengthen the efficiency and consistency of their innovation processes. But that alone won’t be enough to drive superior performance. Achieving real, exceptional outcomes will require attention to two critical areas: first, sharpening strategy for the race ahead—and aligning innovation strategy, resource allocation, and pipeline shape to win in the priority domains; second, embracing GenAI to drive growth and accelerate success across the whole innovation cycle.”
Video courtesy of Boston Consulting Group
