4 Key Drivers of Innovation
Michael Ringel, Andrew Taylor, and Hadi Zablit of the Boston Consulting Group (http://www.bcg.com) have just released the list of the most innovative companies of 2015. You can access the full list and report at https://media-publications.bcg.com/MIC/BCG-Most-Innovative-Companies-2015-Nov-2015.pdf.
The interesting part of the report is the identification of key drivers of innovation. Speed is one of the major sources of differentiation for true breakthrough innovators. Speed often enables firms to realize first-mover advantages, lowers developmental costs, increases market share, and results in greater forecasting accuracy (since the concept to market cycle is shortened).
Speed has two dimensions - the rate at which companies develop new products and services, and the rate at which they deliver those products and services to market. Either way, organizations built for speed appear to have four things in common: adherence to the lean philosophy and lean processes, the use of prototyping to get customer feedback fast (don't wait for the perfect product or service), dedicated people and resources (100% of 10 people's job is far better than 10% of 100 people's responsibility), and the application of the right metrics (don't focus on the tree and lose sight of the forest).
To be sure, this is a complex process. All kinds of choices have to be made - requirements to be built into a product or service, sequential versus parallel development, prioritization, and perhaps the most difficult choice: when to call it a day and terminate a failing project. Each of these decisions can be challenging, and the difficulty is exacerbated when the providers of information have vested interests - job security, the desire to make a breakthrough, or the ability to work in a discipline of interest that may promote optimism bias in their evaluations.
The best companies strongly focus on the process of decision-making to offset potential biases by applying a few core principles: optimization and not sub-optimization, courage (willingness to make big bets), attention to cultural issues that promote optimism bias, real differentiation in investment priorities, and measurement on ROI.
The key levers to innovation breakthroughs are modularized design and transparent requirements (related to products and services), flexible workload leveling and reduced bottlenecks (processes), empowered project management and fact-based fast cycle steering (leadership and behavior), and speed-supporting tools and expertise-driven development (enablement).
I would urge you to read the fascinating report.