To Foster Productive Innovation, Culture is Key
This year’s Booz & Company Global Innovation 1000 study concludes that the most crucial factors to innovation success are strategic alignment and a culture that supports innovation.
The study of 600 innovation leaders from companies around the world, large and small, in every major industry sector found half of all respondents acknowledging ‘inadequate strategic alignment’ and ‘poor cultural support’ for their innovation strategies.
Overall, 36 percent of all survey respondents admitted that their innovation strategy is not well aligned to their company’s overall strategy, and 47 percent said their company’s culture does not support their innovation strategy. Not surprisingly, companies saddled with both poor alignment and poor cultural support perform at a much lower level than well-aligned companies. Companies with both highly aligned cultures and highly aligned innovation strategies were found to have 30 percent higher enterprise value growth and 17 percent higher profit growth than companies with low degrees of alignment.
A stunning twenty percent of the companies surveyed conceded they had no innovation strategy whatsoever.
In the 2010 study, Booz & Company looked at the innovation capability sets companies put together and which of these capabilities best enabled companies to outperform their peers. This year’s study instead analyzed the ways that critical organizational systems and cultural attributes support those capability sets that are most likely to promote innovation.
It goes without saying that companies whose strategic goals are clear, and whose cultures strongly support those goals, possess a huge advantage over companies with no or poorly articulated innovation strategies. To foster innovation, connecting with customer needs, a “passion/pride in products”, respect for technical talent and knowledge, being open to new ideas, and the ability to collaborate across geographies and functions ranked high amongst study participants.
Building a strong culture of collaboration is vital to fostering productive innovation. To help build a healthy, sustainable innovation ecosystem in the enterprise employees must be provided with an environment that equips them with the proper skills, tools, and knowledge resources to improve their effectiveness. Included in this support must be a practical framework for collaboration around innovation.
Other key highlights of the report include:
- Across the board study participants identified “superior product performance” and “superior product quality” as their top strategic goals. And they asserted that their two most important cultural attributes were “strong identification with the consumer/customer experience” and a “passion/ pride in products.”
- This year’s study reaffirms that there is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues
- R&D spending grew in all nine sectors included in the study, with computing and electronics, healthcare, and automotive sectors contributing the most to this growth
- Every geographical region increased R&D spending in 2010 (a significant turnaround from the previous year, when the three regions that make up the lion’s share of innovators — North America, Europe, and Japan— all cut back R&D spending)
- Top three most innovative companies, as cited by survey respondents were Apple, Google and 3M
Click here to access the Booz & Company report: The Global Innovation 1000 – Why Culture is Key