March 1, 2022

How to fuel innovation and drive performance in businesses

Category:

Global innovation study

Our findings showed that an innovation-focused culture was required to successfully implement crowd-sourcing, stage-gate systems, design thinking, open innovation, big data analytics, innovation management software, scientific discovery and prototyping. However, only some of the these practices enhanced company performance.

Companies with strong innovation cultures have leaders that support innovating, dedicate resources to experimentation, pursue knowledge generation and dissemination and have processes to test and launch ideas. High innovators are able to execute strategy, create competitive advantages and achieve performance objectives.

We found that highly innovative people were better at implementing all of the innovation practices. We also found that across industries, companies with strong innovation cultures outperformed their counterparts without a similar culture. Given its performance benefits, how does one create an innovation-focused culture?

Performance-enhancing innovation

Companies in all industries experienced the performance-enhancing benefits from crowd-sourcing, open innovation, innovation management software, scientific discovery and prototyping:

We recommend companies explore implementing these innovative practices since they have universal performance benefits. But it’s important to reiterate that engagement in such practices needs to be guided by the organization’s strategy, and an innovation-focused culture is the necessary first step.

Less successful innovative practices

Although there’s a lot of hype about stage-gate systems, design thinking and big data analytics, our research shows that only companies in specific industries benefit from these practices.

Stage-gate systems are a linear process involving a series of sequential steps aimed at launching new products. We argue that the innovation process is anything but linear, and such a rigid process is not conducive for most industries.

Our data confirms that stage-gate systems are most effective in manufacturing, IT and health-care settings but not in any others.

Design thinking, an approach that uses a designer’s sensibility and methods to match consumer needs with what is technologically feasible, is nebulous and even vague among those who practise it.

We argue that design thinking’s ambiguity is the reason why only companies in the arts and entertainment, retail and marketing industries experienced its benefits.

Managerial tips

We offer three ways managers can fuel and foster innovation based on our research:

  1. All executives should seek to create an innovation-focused culture.
  2. After an innovation culture is established, companies should engage strategically in some of the universally beneficial practices.
  3. Some practices should be avoided all together, as their benefits are limited to specific industries.

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