For decades, everyone has called innovation the “fuzzy front end.” On everything from Advanced R&D to Corporate Ventures, program-level investment decisions have largely been driven by leadership intuition. Either you believe in the premise, or you don’t.
If that sounds familiar, then I have news for you. Those days are gone.
Wellspring’s new research study shows that specific innovation practices correlate directly with breakaway revenue growth. And companies that adopt a modern Innovation Ops approach no longer have to wonder which innovations are driving business results.
Based on data from 300 mid- to senior-level executives at $1b+ companies across industries, we built an econometric model to understand the connections between innovation practices and corporate revenue growth. We can now say with high statistical confidence that the fastest-growing companies are much more likely than others to:
- Invest in long-term innovation by placing key bets in strategic development areas.
- Empower upstream R&D to explore and incubate high-impact emerging technologies.
- Develop networks of partners ranging from startups to universities to government labs.
- Coordinate innovation globally to harmonize projects and activities across the portfolio.
Through qualitative interviews, we gained key insights into how these practices work best in the real world. Some of these findings supported the data in specific and detailed ways. For example, we learned the importance of a strategic Corporate Ventures program for incubating and de-risking nascent innovation bets. We also heard about the importance of a Chief Innovation Officer and/or a corporate-level innovation group that could act both independently and globally.
But the most consistent lesson was that the “how” is just as important as the “what”. Pursued in isolation, any of these innovation practices will fizzle and fade. It’s critical to link them into a coherent corporate-level innovation practice.
Many of today’s companies do plenty of innovating, but the innovation work happens in disconnected siloes, without sufficient cross-functional support or company-wide orchestration. At best, such efforts deliver a parade of one-off improvements but not many strategic outcomes. At worst, various competing “innovation” teams get in each other’s way – often without realizing it. They commit too many “random acts of innovation” while blocking the highest-leverage opportunities through death-by-committee. Instead of keeping pace with industry leaders, these companies exhibit mediocre to sub-par growth performance.
In contrast, top-performing companies institute Innovation Ops as an enterprise discipline. In doing so, there’s a handful of key components. First, high-growth companies develop strategic areas of focus, defining the mid- to long-term innovation directions that are likely to have an outsized future impact on the business. Then, they pursue those innovation priorities (as well as others that arise over time) with both persistence and flexibility. They constantly scout for new partners, new technologies, new paths to market, and new sources of value. They incubate strategic bets and emerging technologies separately from the day-to-day business. And they keep lines of collaboration open throughout the company. That way, the company can pursue upstream innovations with dedicated focus and strategic intent, while also preserving a downstream ability to productively integrate winning bets back into core functions and operating units.
If you’ve read this far, I highly recommend perusing the full report. We’ve crammed as many insights into its pages as possible – with much more breadth and depth than we have the space to cover here. You’ll see that the best companies treat innovation as a strategic priority, and how they no longer view innovation as “fuzzy” in any way. You might even re-think some of your own views on innovation management, which could be the best outcome of them all.