As executives exhale after surviving the debilitating recession that paralyzed business and ravaged the economy, they find they are confronted with a new reality. Many trends that were fledgling when the disaster struck developed more rapidly and wended their way into general practice. There had been little time for measured learning and deliberate adaptation to the vagaries and vicissitudes of a new business paradigm. Things changed extensively and the single best tool to cope successfully with the new environment is innovation. Uncluttered, uncomplicated, unadulterated innovation.
In this year’s annual survey of top executives by Bloomberg/Business Week/Boston Consulting Group, 83% of respondents said innovation will be a key component of their strategy to benefit from the economic recovery. Remember, the idea might be intoxicating, but you don’t own it. Your competitors are also aware of developments and will be working diligently to become more innovative. Think about these results from the study: 72% of companies see innovation as a “top three” strategic priority, and 61% are planning to increase the amount they spend on innovation.
Most executives know innovation is important, but not all have committed to making it a top priority. There is a startling contrast between the totally involved and the partially involved or the uninvolved. The difference between a company whose CEO and leadership team have an “all in” mentality regarding innovation, and one whose executives give little or no encouragement to innovation, is unmistakable— and so is the impact on the company’s culture and performance. Leaders who think their company can win the innovation challenge without being truly committed, think again. Too many of your competitors are led by fully engaged leadership teams that have conflated innovation with the company’s business strategy and are investing in the outcome.
Innovation is not restricted to the manufacturer, but will also motivate the retailer and the distributor. As consumers’ tastes vary to countless numbers, so does the need for innovation multiply. Variety is one of the cornerstones of business and its mother is innovation. Global economies are emerging and developing rapidly and challenging the dominance of more mature markets, like the United States and much of Europe. China, India and Brazil and their companies are competing for world leadership, a position they relish and strive for relentlessly.
The best way to stay ahead of this new wave of intensely motivated competition, and to keep it from becoming a tsunami, is innovation. Considering the urgency, still only 41% of respondents in the survey said they are planning to increase their innovation investment in these countries—down from 45% in 2009. These countries will represent an increasingly formidable source of competition, but they also offer major advantages in the pursuit of more successful innovation: skilled talent, low input costs, and proximity to some of the world’s fastest growing markets and most demanding consumers. Greater emphasis on these markets also increases a company’s exposure to some of the world’s most creative and dynamic companies—and potential partners.
Mill executives should make these markets a major part of their innovation strategy, and if the markets are already a focus, commitments should be raised still further. The study also revealed a significant increase in innovation work starting about a year ago, at the time the first wave of companies realized the world wasn’t going to end and that they were going to survive no matter what hardship visited them, despite the ailing economy. So, these companies turned their attention to improving their innovation productivity and the race was on. If your company hasn’t embraced the new sensation, innovation—then you’re about a year behind.