Last week Boston Consulting Group (BCG) released its list of the 50 most innovative companies of 2014. Included in the report was an assessment of what senior global innovation executives are prioritizing this year. Unsurprisingly, innovation was in the top three, with 61% of executives reporting that they have increased innovation spending since 2013. Among some of the interesting findings from the report:
- One of the biggest changes in level of innovation was in the automotive industry. In 2013, 14 automakers were in the top 50, in 2014 that number has shrunk to 9.
- While the automotive industry saw a decline in innovation overall, interestingly, electric car maker Tesla was the biggest jumper of the year, moving 34 spots up from its 2013 standing.
- All of the top 5 spots on the list are held by technology and telecommunications companies.
- Only 13% of respondents reported a “significant ambition to deliver radical innovation” and of those, 42% rated their companies innovation capabilities as no better than average.
BCG identifies three types of innovators: disruptive, strong and breakthrough. Of the 1,500 senior global innovation leaders surveyed, only 7.6% of their companies were identified as breakthrough innovators.
Based on BCG’s report, there are three ways breakthrough innovators stood out from the competition:
- Their ideas come from many sources across the organization. They encourage collaboration and look beyond a small group of leaders for the best ideas.
- Their products are part of a broader business model. Introducing a product in the context of a service has helped many companies move from strong or disruptive innovators to breakthrough innovators.
- They look beyond financial indicators and use a variety of KPIs. Breakthrough innovators are more likely to focus on a number of metrics related to product success to inform their business instead of focusing solely on the bottom line.
BCG underscores the importance to focus on innovation, but also reveals how challenging it is to be innovative in practice. What is also clear is that companies that prioritize innovation across the enterprise will be the ones with the best chance to make it to that upper-right quadrant. To learn more about what makes a breakthrough innovator read the full report.
Why do most products fail in the market? Innovation agitator Alberto Savoia has the answer. Read “The Law of Market Failure.”