innovation thoughts malcolm johnston
TRANSCRIPT
The 4 types of innovation
Tidd & Bessant 2013
Where to innovate?
Tidd & Bessant 2013
Which type of innovation delivers the best results?
• “Research shows that product R&D is significantly less productive than process R&D” (Tidd & Bessant 2013 p 570)
• “Process innovation has four times the rate of return as product innovation, but is more risky with more variable returns” (Tidd & Bessant 2013 p 572)
• “Product innovation no longer offers sufficient competitive advantage in differentiating successful companies” (McGrath, 2011)
• “Companies consider business model innovation as an opportunity to build sustainable competitive advantage” (Teece, 2010)
• 70% of CEOs regard business model innovation as a strategic priority (IBM, 2009)
Successful innovation
• Is strategy based• Depends on effective internal and external
linkages• Requires effective enabling mechanisms for
making change happen• Only happens within a supporting organisational
context
Tidd & Bessant 2013
Climate & organisational culture
• “Building a creative climate involves systematic development of organisational structures, communication policies and procedures, reward and recognition systems, training policy, accounting and measurement systems, effective reward systems and deployment of strategy.” Tidd & Bessant (2009)
Why culture is keyThe Global Innovation 1,000 PWC/ Booz & Co
• “Only 47% of all companies in the survey said their corporate culture robustly supported their innovation strategy”.
• “There is no statistically significant relationship between financial performance and innovation spending”.– Apple (ranked the most innovative company) and P&G (8th) spend less
than 3% of sales on R&D• “Companies with both highly aligned cultures and highly aligned
innovation strategies have 30% higher enterprise value growth and 17% higher profit growth than companies with low degrees of alignment”. The two most important cultural attributes are;– Strong identification with the customer and an overall orientation towards
the customer experience– Passion for and pride in the products and services offered
The Global Innovation 1,000 PWC/ Booz & Co Issue 65 Winter 2011http://www.strategyand.pwc.com/innovation1000http://www.boozallen.com/consulting/strategic-innovation