Four attributes critical to be among the leaders
Innovation remains a critical element for companies across the world. In the 10th annual survey on the state of innovation—The Most Innovative Companies 2015—conducted by the Boston Consulting Group (BCG), 79% of C-suite executives ranked innovation as either their top priority or a top-three priority. That’s the highest ever since the survey started in 2005 (66%), while the highest till now being in 2013 (77%). The four attributes that fuel innovation—an emphasis on speed, well-run R&D processes, use of technological platforms and systematic exploration of adjacent markets—according to BCG, are interrelated. While Apple and Google have retained their top two slots even this year, Tesla Motors has shot up the ranks to be the third most-innovative company. Despite the impact of technological developments, non-technological companies have still managed to retain their position. Five of the top-10 and 38 of the top-50 are non-tech companies. The list comprises 29 American, 11 European and 10 Asian companies. While three Chinese companies—Tencent, Huawei and Lenovo—have made the cut, India has only Tata Motors, at rank 26.
The most important element for innovation is speed which enables companies to catch trends as they happen, leave competition way behind and drive costs down. Faster speed to market boosts a company’s top- and bottom-line. There are two aspects to speed: the rate at which companies develop new products & services and the rate at which they deliver these to the market. In this year’s survey, long development-time was among the major obstacles to generating returns on innovation and product development. Strong innovators are also two to three times more likely to adhere to lean principles than their weak counterparts. So, companies that are first to master lean R&D methodologies gain competitive advantage by developing higher quality products at least six months before the competition. Advances in technology platforms is among the most important factor driving innovation, followed by big data analytics. This includes using analytics to improve decision-making, employing digital technologies to retool manufacturing and harnessing mobile capabilities to improve marketing. Technology platforms can provide benefits in four areas—cost and time-line reduction, business transformation, process enhancement and business model innovation by creating new products and services. But, the true hallmark of innovative companies lies in adjacent growth. That’s what many older companies—3M, General Electric, Proctor & Gamble—and today’s young tech-based innovators such as Google, Amazon and Apple have followed. As markets mature and competition rises, growth in the core portfolio slows down. Adjacent markets help innovative companies to open new avenues for growth. Only a few Indian companies—the Tata Group, Reliance Industries, Infosys—have made it to the list of innovative companies over the years. It is time Indian entrepreneur-led companies are part of the list on a sustained basis. That could be the true test of innovation for Indian companies.