Navigating The Route To Innovation

Leading companies pursue a process of constant innovation, fueled by openness, risk tolerance and an explorer’s mindset.

- Elizabeth Spaulding and Greg Caimi

Innovation is an imperative for every company today. Given the dynamic and global nature of business, with technology disrupting everything from operating models to supply chains, innovation is now the nexus of strategy. Many well-established companies know that innovation is critical but have only just begun to test the waters. Others have set sail and are learning to navigate. The most advanced are mid-voyage, adventurers deep into a quest. The characteristics of the most advanced companies and the benefits accruing to those leaders are now becoming clear.

Wherever they are on their journey, companies that are especially good at cultivating innovation don’t view it as a task, a project with a set goal. Instead, they envision a permanent state of evolution and exploration.

Exploration can be difficult and uncomfortable, but the payoff is well worth the challenge, Bain & Company research has found. Working with Dynata, a leading data provider, we recently surveyed more than 1,200 executives actively engaged in innovation. We found that experienced innovators grew their market capitalisation at a five-year compound annual rate of 9.5 per cent, compared with just 0.5 per cent for those with the least experience.

SETTING SAIL: MANY APPROACHES AND EVEN MORE IDEAS

One of the survey’s most striking findings was the clear value of pursuing a variety of approaches to innovation. While corporate strategy often benefits from focus, the process of innovation requires making multiple bets. This may feel counterintuitive and could require changes in corporate behaviour and culture, but the data shows that the most innovative companies have already embraced this approach. Experienced innovators in our survey employ a variety of approaches to generate innovation, averaging 4.4 different tactics each, compared with 2.8 tactics for the companies least experienced at innovation.