Innovation as a discipline is nothing new; innovation techniques such as design thinking and the lean start-up methodology have been widely adopted. Yet, according to a survey in KPMG’s Benchmarking Innovation Impact 2020 study, 59% of respondents said their innovation efforts are ad hoc or emerging, with fewer than 13% having reached a stage where their innovation programs are perceived to be strategic or integrated.
At the same time, innovation efforts are shifting from invention and R&D to full transformation. In the past, innovation portfolios were allocated 70% incremental, 20% adjacent and 10% transformational, however, results from the wider population indicted 50% emphasis on adjacent and transformational categories. Taking it a step further—more mature companies were at 60% investment in these areas.
“We hear from clients that as innovation efforts become more disruptive to the core business, they often change into transformation programs, with names like ‘Digital Bank of the Future’ or ‘Future Ready 2025,” stated a spokesperson from KPMG.
However, the study also found that many innovation teams are struggling to articulate how their innovation efforts are aligned with strategy and transformational initiatives. As such, leaders are questioning if their innovation, organic, and inorganic growth programs collectively form a strategy.
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In role model companies surveyed, 81% say their innovation team is completely integrated or highly collaborative with the strategy group, versus 56% of all respondents. This signifies that companies have an opportunity to develop the right strategies and approaches to successfully scale innovation and align imperatives with other groups across the business.
According to the report, with today’s rate of change, innovating for the 21st century requires a new playbook. “Organisations must be able to scan the horizon, adapt portfolios, and implement more agile investment and experimentation approaches. Companies must accept that core business disruption and continuous reinvention are the new normal. The key to the new innovation playbook is to have a vision for how the company views itself, a strategy on how to get there, and a clear picture of the risks associated with that strategy. Only after you have articulated the strategy and the market risks can you confidently identify the areas where you need to innovate.”
“One key to longevity and impact for innovation teams in any industry is that they find ways to collaborate with other parts of the organisation,” said Scott Kirsner, CEO and co-founder of Innovation Leader. “Creating allies and supporters is key because there are always internal conflicts and resource debates you’ll need to work through.”