A firm’s ability to innovate and to establish a pro-active approach in order to respond to changes in the market is becoming the main competitive factor.
Changes in mass market consumer habits and the constant progress of new technologies and computerisation are forcing companies to become more flexible both in terms of the way they work and in their relationships with their customers. In fact today it is their capacity for innovation rather than just their operational efficiency that most differentiates company results. This at least is the view of 75% of the senior executives and company heads from 25 countries around the world polled by multinational professional services firm PwC for its Global Innovation Survey, entitled Breakthrough Innovation and Growth. It is a fact is that stability is becoming increasingly difficult to attain as companies are faced with the constant need to learn and keep ahead of changes in their existing markets, the smartphone market – which is undergoing increasing segmentation – being a key example of this.
Innovate to survive
Out of the 1,700-plus executives polled by PwC, 43% are convinced that innovation is already today a ‘competitive necessity’ for their organisation, a figure which rises to over 50% when they are asked to look forward five years. These survey results indicate that the drivers for growth have changed over the last few years. A few years ago the executives would have said that the most powerful lever for growth was globalisation and especially the opening up of the Chinese market. Now however it is apparently innovation that has taken over as the key factor. Some 93% of those surveyed predict that organic growth as a direct consequence of innovation will be the main driving force behind revenue growth in the coming years. These views appear to be corroborated by the results posted by the most innovative firms. Thus 67% of the most actively innovative companies recognise that innovation is of vital importance, compared with only 19% of the least innovative. Growth statistics point in the same direction, with a majority of the most innovative firms posting strong growth, compared with only 20% of the least innovative companies.
Strategic approach required
The term ‘innovation’, does not just mean devoting investment to research and development; it implies that a company actually sets up a structure and an approach that really fosters innovation. Accordingly, 79% of the most innovative companies, compared with 59% of the least innovative firms, intend in the coming years to shift their business model towards the creation of new value propositions. In the same vein, the use of social tools, especially social networks, may well prove to be a competitive advantage in the way the firm engages with its customers. Over two thirds of the most innovative companies polled incorporate social networking into the process of innovation development. So there is clearly a wider strategic issue here. Focusing on innovation is more than just an aspect of the company’s marketing approach. It requires firms to make fundamental changes to their structure, whether in terms of developing customer relations using tools such as social networks, or more generally by implementing a structured innovation strategy. The survey results reveal that 80% of companies posting the highest growth claim to have implemented a clearly-defined innovation strategy.