‘Innovation a Matter of Survival’ For Businesses
Innovation has now outstripped all other means of potential expansion, including seeking new markets, mergers and acquisitions, and joint ventures and other alliances according to a survey by PricewaterhouseCoopers of 1200 CEOs from around the world.
The survey showed that innovation in the form of developing new products and services has become as important to growth for CEOs as raising their share of existing markets.
The survey was published simultaneously with another PwC findings showing new regulations being introduced at the international and local scales as the top risk faced by the insurance industry.
Particularly on the executive agenda in every industry, the 14th annual Global CEO survey showed how high innovation is, with 78 percent of CEOs believing it generates ‘significant’ new revenue and cost reduction opportunities over the next three years.
But innovation is highest in areas where customer expectations are changed by technology.
For example, more than 40 percent of CEOs in both the pharmaceutical and entertainment and media sectors believe their greatest opportunities for growth come from spawning new products and services.
Moreover, CEOs were shown to re-think their approach to innovation and seek to collaborate with outside partners and in markets other than where they are based.
John Sviokla, partner and Business Leader for Innovation and Strategy at PwC US, described innovation as “a matter f sruvival for companies” in sectors that face rapid technological changes and high customer expectations.
“Forward-looking companies strive for innovations that will give them competitive advantage and create growth. In today’s fast-moving environment companies must constantly improve and re-invent their products, services and even brands,” he said in a statement.
Sviokla projected that the dynamics of over a billion new customers, global connectivity, and radical new technologies and science will make the next 10 years the “most innovative time” since the Industrial Revolution.
“In mature markets companies must innovate to differentiate themselves; in emerging markets, they need innovation to lessen their dependence on lower costs.”
CEO and other executive leadership are the source of the drive for innovation when they create a culture that is open to new ideas and systematic in its approach to their development, according to a PwC study called “Demystifying Innovation: take down the barriers to new growth.”
There are four parts to innovation process according to PwC.
First, PwC proposes to identify and source ideas and problems that are the basis for future innovation. They can come from employees as well as customers, suppliers, partners and other external organizations.
Next is to refine, develop, and test good ideas to see if they are technically feasible and make business sense.
PwC added ‘acceleration’, or establishing pilot programs to test commercial feasibility. Finally, innovation needs to be integrated into the company.
Additionally, the study found some misconceptions about the innovation process.
Companies used to believe innovation can be delegated.
“Not so. The drive to innovate begins at the top. If the CEO doesn’t protect and reward the process, it will fail,” PwC said.
There is also a common belief that middle management is the ally of innovation. However, PwC said managers “are not natural champions of innovation.” PwC continued, “they to reject new ideas in favor of efficiency.”
Others view money as what triggers people to be innovative, while the rest consider innovation as a lucky accident.
“Establishing a culture that embeds innovation in the organization will attract and retain creative talent…Successful innovation most often results from a disciplined process that sorts through many ideas,” PwC concluded.