Innovation Leadership2

Innovation LeadershipInnovation Leadership

Rene A RosenthalRene A Rosenthal

Microsite MobileMicrosite Mobile

Founder amp CEOFounder amp CEOPart 2

22

Innovation LeadershipInnovation LeadershipKey characteristics of innovation leaders

Five core characteristics of todayrsquos innovation leaders are described These are notthe only differentiators of enhanced innovation performance but they are perhapsthe most commonly applicable that can be considered in all sectors

1048713 In-depth customer insight

1048713 leading-edge technical awareness

1048713 inspirational leadership

1048713 motivational organizational rewards

1048713 sharing knowledge


Other capabilities such as the exploitation of partnerships the personalization ofproducts and services the use of collaborative networks and the flexible workprocesses that are also being leveraged are all having significant impact Howeversome of these issues are currently being seen to be applicable in only a few sectors

Summary

Despite evidence to the contrary many companies hold uninformed opinions about innovation and how it relates to them These include for example that innovation only applies to small companies or to products not services or that it cannot be managed or measured or always requires new technologies These are myths

Innovation provides a source of competitive advantage Whether through incremental new developments to a product or a big leap forward innovation involves the creation selection and efficient delivery of new ideas to allow companies to outperform their competitors by being the quickest and smartest to grasp new technological opportunities create unique propositions and deliver compelling new products and services


Innovation is significant in both good times and bad In times of economic growth new ideas products and services are the lifeblood of sustained increases in revenue and profitability In a recession innovation is no longer an option to add value and deliver competitive advantage but a core means of survival in an increasingly selective market

Innovation affects the organization as well as financial performance A companywith a creative culture and a motivated workforce sends a positive message to theoutside world and attracts the best people

Innovation also influences the external environment Through the impact oncustomers suppliers and subcontrators innovation success within a firm promotesand encourages more innovation outside (eg founding new companies by ex-employees new ventures relocation of a partner or supplier into the local area)


Introduction

Organisations fearing the impact of innovation or believing that innovation does not apply to their arenas of activity frequently cite a number of justifications for not embracing it They create excuses and do this not from the perspective of what it is about their company that is preventing innovation but as opinions about innovation itself These views are used to refuse investment in new ideas maintain a conservative status quo dispel arguments supporting organic growth and in effect become one of the primary barriers to innovation and progress These innovation myths are killers of creativity diluters of organisational capability development and often obstructions to substantial progress Before addressing how organisations have and continue to successfully innovate it is therefore pertinent to first dispel these myths for what they are ndash myths

Innovation LeadershipInnovation LeadershipInnovation ndash the myths

ldquoInnovation does not impact the bottom linerdquo

Yes it does Companies that use innovation as a core part of their strategy and as a key driver of new product and service development have been proven to be more successful than those that do not Study after study has shown that firms that use innovation to differentiate their products are more successful that innovative companies grow faster and that the most innovative firms provide returns in such hard measurable areas as

shareholder value many times those of non-innovators Innovation whether focused on new technologies new products new business models or new customer relationships not only fuels top line growth but also has a direct and positive impact on the bottom line Companies as diverse as American Express Honda and eBay all use innovation as a key part of their business strategies not because it sounds good and will make the CEO stand out from his peers but because it has a direct positive effect on profitability

Innovation LeadershipInnovation LeadershipldquoInnovation only applies to products not servicesrdquo

Federal Express UPS Cantor and Sprint are all US-based organisations that are continually developing and offering new innovations into the marketplace First Direct Egg Rentokil and Direct Line are similarly innovative companies in the UK Likewise across the rest of the world from News International and AMP in Australia HSBC and Hutchinson in Asia to Deutsche Post and Swiss Re in the heart of Europe and Skandia in Scandinavia leading companies are using innovation as a core growth driver

Although innovation is often associated in the media and hence the lsquobusiness mindrsquo with product-based firms such as Sony the companies mentioned above are innovating in services across the board from financial services and delivery services to telecommunication services Moreover there is an increasing array of firms from

Amazon and Dell to Shell and Zara that are using innovation in both products and services to sustain growth increase market share and improve margins Although this report only reviews companies that provide products it is in no way a reflection on the status and importance of innovation in product-providers and service-providers

Innovation LeadershipInnovation LeadershipldquoInnovation is only relevant to a few industriesrdquo

The noise that is generated whenever new products are released in some areas makes it is easy to believe that innovation is only applicable in industries such as consumer products retailing banking aerospace pharmaceutical and telecommunications However innovation is certainly not restricted to these sectors It is just as relevant in education insurance real estate distribution and construction industries Companies as varied as BOC Dow EF Lloyds CGNU Pilkington and Amec are all keen innovators

in their own fields They and their innovations from new chemical solutions to online house-selling and fast-track construction techniques may not be as famous in the consumer mindset but they are all testament to the power of innovation across all industries In fact in these sectors where innovation is not as expected the ability to use it and apply it as a key source of gaining competitive advantage is in many ways more impacting

Innovation LeadershipInnovation LeadershipldquoInnovation requires high investment in new technologyrdquo

If a bookstore is improving service quality by introducing a slimmed down order intake process or doubling home deliveries it is innovating Where is the new technology here Innovation can be enabled by new technology but it is not a prerequisite For many industries innovation is technology independent Quicker production processes more accurate customer targeting reduction in component cost faster order turnaround and improved brand awareness are all components and consequences of innovation and can all be achieved without investment in technology Many of the companies studied in

this report do actually invest a large amount in technology by virtue of their industry sector for example Software IT Electronics Automotive In general however although technology has to be used to enable innovations resulting in improved microchip manufacture or automated voice recognition software these are actually in the minority Less than 20 of innovation involves technology investment for the majority is focused on the improving the processes strategies and organisational structures delivering new products and services none of which are implicitly linked to technology investment

Innovation LeadershipInnovation LeadershipldquoOnly small companies can innovaterdquo

An understandable but again false perspective for innovation is a capability that can and is successfully utilised across organisations large and small alike This is often more evident in the success of a small company entering into a new market or developing a new technology specifically because the success of the firm itself is probably highly dependent on how successful and therefore how well promoted is the associated innovation In large companies innovation is just as prominent as in small ones It is

because large companies already have an established market position product portfolio and customer base on which a good proportion of the organisation and revenue generation is focused that innovation is sometimes less apparent There are many large companies that can be characterised by successful innovation Canon Sony Du Pont Adobe intel and Microsoft are clearly some of the exemplars in their respective sectors but other less innovation-renowned companies such as Exxon Corus Nestleacute and Bank of America all have active new product and service development activities driving and supporting corporate growth Innovation is not unique to any size of company it is a capability that applies and can be adopted by all





22

Innovation LeadershipInnovation LeadershipKey characteristics of innovation leaders

Five core characteristics of todayrsquos innovation leaders are described These are notthe only differentiators of enhanced innovation performance but they are perhapsthe most commonly applicable that can be considered in all sectors

1048713 In-depth customer insight

1048713 leading-edge technical awareness

1048713 inspirational leadership

1048713 motivational organizational rewards

1048713 sharing knowledge



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Summary








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Innovation Leadership2

Business

Transcript of Innovation Leadership2