The seventh annual Boston Consulting Group survey on innovation indicated that seventy-two percent of respondents revealed that their company considers it a top-three priority this year. However, thanks to the economy; companies are gearing their innovation toward minor improvements to existing products and services. Why is everyone behaving so cautiously?
The BCG ratings were the highest in the seven year history of the survey. A majority of the companies, sixty-one percent, indicated their company would boost spending, but only 26 percent planned to raise it significantly (by more than 10 percent). When probed, C-level executives and decision makers revealed that the two biggest factors holding down spending on innovation were a risk-adverse corporate culture or lengthy product development times. I am going to take the liberty and add a third factor – over processing.
Back in 2009 in my blog titled Good Thinking, I wrote that innovation is essentially about making unexpected connections between things (looking for new places to make connections). Unfortunately we are all guilty of getting caught up in the day to day firefighting of maintaining our business or staying on budget. As a result, we tend to overlook making those connections. When companies finally decide it is time to innovate, a majority tend to practice closed innovation and rely on their R&D departments or other key employees to fuel the lengthy process. Henry Chesbrough from the Center of Innovation at UC Berkley challenged our thinking back in 2006 when he published his book Open Innovation: The New Imperative for Creating and Profiting Technology. He advocated that companies need to use external ideas as well as internal.
With the advent of social networks, I now believe open innovation will thrive more than ever. As a result, companies will be able to reduce innovation spending – external online feedback notwithstanding the cost to monitor it, is relatively low cost. Let me share two great examples:
· Outback Steakhouse back in June posted a survey on Facebook asking their fans what favorites from the last twenty two years should they bring back. They fielded 600 comments. This approach appears more streamline than conducting internal brainstorming sessions, product tastings, product testing, etc
· Kimberly-Clark has been tapping into the various communities of young mothers for over a year now. Their listening validated research conducted by Babson College that documented women have been credited with starting businesses at nearly twice the rate of men, but still experience a difficult time raising venture capital. As a result, Kimberly Clark cleverly launched the Huggies MomInspired Grant Program providing $250 thousand in seed capital and resources to bring great ideas to market. Sounds like a great way to fill Huggies innovation pipeline.
Thanks to our “pull” economy, consumers/communities are constantly buzzing daily about products and services. Market leaders, take note, this is not the time to act cautiously. Make innovation your number one strategic priority – listen and anticipate.