During 2012 creativity and product development regained their due importance as a central pillar of company activity. And investment was set to follow.
Some 76% of senior executives responding to a recently-published survey* carried out by the Boston Consulting Group consider that innovation and product development are among the three top priorities at their companies. In fact the innovation indicator has never been so high by close to a quarter of the 1,500 senior company executives polled. “This year we also found that companies are planning to put their money where their priorities are,” write the BCG experts. More than two thirds of respondents reported that they were planning to increase their investment in innovation during the year. This represents a considerable increase on 2010. (BCG did not publish a survey on the year 2011.) But there’s clearly considerable geographical variation, with “companies in emerging markets ascribing higher priority to innovation”.
India and South America out in front
In India and South America close to 90% of respondents put innovation among their top three priorities. This was also true for China during the years to 2010, but in 2012 the percentage fell to “only” 80%. In Europe the percentage also worked out at 80%, but the surprising figure was that of the United States, where the senior executives responding to the survey were rather cautious, barely two thirds ranking innovation in their top three priorities. By contrast US firms shine in the final ranking of 2012’s most innovative companies, with Apple, Google, Microsoft and Facebook all among the top five and only the South Korean firm Samsung managing to muscle in on the US domination. While the top rankings remain the preserve of high-tech companies, BCG points out that “the importance of innovation has increased for most industries in recent years”.
Innovation across all industries
The automobile, financial services, energy, industrial products, and media and entertainment industries are the ones where innovation has grown most markedly in importance in recent years, but the global financial crisis has had a significant impact on plans to increase investment. Based on BCG’s experience with clients and additional research outside the survey, the firm offers some advice to company decision-makers who need to continue innovating on a restricted budget. For example, they suggest “getting the customer involved early” in innovation processes, the thinking here being that if a new idea is not going to work out well, it’s better to “fail fast and fail cheap”. Another piece of advice is to “think strategically about tradeoffs”, making explicit decisions about how to deploy innovation investments across businesses, markets, regions, and other dimensions. As a basis for this advice, BCG points out that its list of top-50 innovators features an increasing number of companies which operate across multiple industries. As regards innovation in the future, BCG underlines that: "Best practice companies do not make these decisions in reference to last year’s budget, but rather on the basis of the size of the future opportunities”.
*The Most Innovative Companies 2012: the State of the Art in Leading Industries; Boston Consulting Group, January 2013; a survey among 1,500 senior executives representing a wide variety of industries worldwide.