In our last blog, we talked about why companies are investing in innovation as a strategic competency. The level of investment is significant: according to a recent Accenture report, $3.2 trillion has been spent on innovation-related activities over the last 5 years, and a majority of companies are planning to increase investments in innovation by more than 25% over the next five years.
Are investments in innovation paying off? The answer is mixed.
What’s clear is that companies are pouring millions into new technologies, products and services in order to stay competitive. What isn’t so clear is how well innovation teams have been able to connect their work of cultivating and managing an innovation ecosystem to measurable business value.
It’s understandable. As innovation teams get off the ground, it’s natural to want to measure what can be measured – the number of startups visited, conferences attended, pitches reviewed. However, as innovation teams grow and mature, they face increasing pressure to prove their value through concrete measures such as the number of new products launched, speed to market, or profit growth. Delivering these outcomes requires a new set of processes and tools.
An outcome-driven approach
Moving from measuring activities to outcomes requires a holistic approach that looks at external innovation from start to finish.
It starts with understanding the internal needs for innovation and how to best serve the business. By mapping these internal demands, innovation teams can better target their scouting in the global innovation ecosystem and find best-match solutions. Finally, effective collaboration and a clear process helps connect team members across regions and functions to get the right solutions into the hands of the right people at the right time in the organization.
Think of it this way: the innovation team is the nexus between the external innovation ecosystem and the organization. Without a deep understanding of each, the team will be unable to connect the needs of business with the solutions that can ultimately result in delivering real business value.
Three common challenges
In our work with customers, we’ve observed three key challenges in making the shift to outcome-driven innovation:
The teams most successful at overcoming these challenges are those who foster collaboration between business stakeholders and the innovation ecosystem, based on transparent access to data and market intelligence.
We often ask innovation teams that we meet with how they measure success. We’ve come to view responses to this question as a litmus test on the team’s maturity. Those with KPIs focused on concrete outcomes have successfully evolved beyond the activity tracking stage and as a result are more likely to deliver real value to the organization.