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Published: November 27, 2012
 / Winter 2012 / Issue 69

 
 

The Global Innovation 1000: Making Ideas Work

Market Readers. These companies face a different strategic challenge. Their goal is to find ideas that lie within their business expertise, which they can then develop into incrementally improved products to take to market quickly and efficiently. They thus tend to focus on the further development of products that have already been introduced by competitors. Market Readers are the most likely of the three to rely on traditional market research to understand better what is already working in their markets. And they are significantly more likely than the others to turn to their customer support and sales teams for ideas about how they can improve the products they already have. This feedback loop between sales and R&D is critical for Market Readers, but companies that rely too much on it may find themselves with a new-product portfolio heavily weighted toward incremental improvements — a strategy that can work, although it depends greatly on the company’s ability to carry it out as efficiently as possible.

Market Readers depend less on networks of every kind than do either Need Seekers or Technology Drivers — which may be a further effect of the sales/R&D feedback loop. As a rule, they tend to find communities of practice and focused innovation networks effective in generating ideas, which is perhaps symptomatic of their determination to ensure rapid delivery of new products into the market. And when going outside the company for ideas, they are more likely than Technology Drivers to depend on their customer and supplier networks, but less likely to depend on universities and government agencies for new ideas, than companies following either of the other innovation models.

Tana Utley, chief technology officer of Caterpillar Inc., underscores why engagement with customers is crucial: “I’ve seen organizations let their engineers showcase technology ideas and develop some of them, but the innovation that results is often not directed to solving customers’ most pressing problems. If it doesn’t relieve a particular customer pain point, then there’s no compelling case to pull it through all the gates into production. As we develop projects, especially areas of new technology, we engage customers. And by the time we get the product out to them, it’s something that they can use in their business.”

Technology Drivers. These companies take a generally more self-reliant, inward-looking approach, impelled largely by their desire to develop new products based on the latest advances in technology. The key is to gain a broad understanding of what’s possible, and to use that understanding to direct their own R&D.

Technology Drivers’ forays into the market also include regular external idea and technology scouting. These companies depend to a greater extent on internal mechanisms such as regular meetings of their own experts, communities of practice across company business units, and technology road mapping, to develop far-reaching ideas that go beyond anything the market could suggest.

“Consumers don’t always know what is possible,” says Girish Nair, senior vice president of corporate strategy and alliances at Hewlett-Packard. “They can describe what they want, but they can’t know what the technology can do, especially because what the technology can do changes rapidly. You have to create it, show that it can be done, and then iterate.”

The risk for Technology Drivers is that their ideas and products, which reflect a highly technological imperative, may not be fully attuned to markets and customers. According to the survey, many of them do little to mitigate this risk in their use of ideation tools. Indeed, like Need Seekers, they rank innovation champions as the most common and effective internal networking mechanism. But Technology Drivers use such champions at a considerably lower rate. They also turn less frequently to the top outside networks — customers, channel partners, and suppliers — than do either Need Seekers or Market Readers.

 
 
 
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Media

  1. Top 20 R&D Spenders 2004–2011. An interactive look at the 20 publicly traded companies worldwide that spent the most on R&D over the past eight years.
  2. R&D Spending by Regions and Industries. This interactive graphic compares R&D spending by regions and industries from 2004 through 2011.
  3. 2012 Global Innovation 1000 Study. Authors Barry Jaruzelski and John Loehr discuss the results of the Global Innovation 1000 study, focusing on the “fuzzy front end” of the innovation process.

Resources

  1. Click here for the Methodology behind the 2011 Global Innovation 1000 study.
  2. Jon Gertner, The Idea Factory: Bell Labs and the Great Age of American Innovation (Penguin Press, 2012): A history of Bell Labs, a hotbed of innovation in the 20th century.
  3. Barry Jaruzelski, John Loehr, and Richard Holman, “The Global Innovation 1000: Why Culture Is Key,” s+b, Winter 2011: The most successful innovators ensure that their company’s culture not only supports innovation, but actually accelerates its execution.
  4. Barry Jaruzelski and Kevin Dehoff, “The Global Innovation 1000: How the Top Innovators Keep Winning,” s+b, Winter 2010: Highly innovative companies outperform by focusing on critical capabilities aligned with their overall business strategy.
  5. Barry Jaruzelski and Kevin Dehoff, “The Customer Connection: The Global Innovation 1000,” s+b, Winter 2007: This study first identified the three distinct innovation strategies: Need Seekers, Market Readers, and Technology Drivers.
  6. Steven Veldhoen et al., “Innovation: China’s Next Advantage?” (PDF) Benelux Chamber of Commerce, China Europe International Business School, Wenzhou Chamber of Commerce, and Booz & Company, 2012: Chinese companies are growing more innovative — competing with multinationals at home and, increasingly, abroad.
  7. Booz & Company’s Global Innovation 1000 Study microsite.
  8. Booz & Company’s online innovation strategy profiler: Evaluate your company’s R&D strategy and the capabilities it requires.
  9. For more thought leadership on this topic, see the s+b website at: strategy-business.com/innovation.
 
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