A study by CBInsight found that larger companies, especially those generating more than $10 billion in revenue, place the highest importance on innovation. These are high-performing companies, defined as those in the top 15% of financial performance compared to primary competitions in the last 12 months.
But how do these firms reach this level of success? While 84.9% of respondents of the State of Innovation report agreed that innovation was important to business, not all companies have the same level of human and financial resources. Here are 4 lessons that businesses can learn from those at the top of the pyramid when it comes to innovation-driven growth.
1. They build cultures of innovation across functions.
When it comes to building a culture of innovation, high performers are five times more likely than low performers to nurture engagement across every major business function, including HR, finance, sales and marketing, among others.
2. They invest in riskier projects.
The study found that, while most companies focus on incremental innovation – on average, 78% of their innovation budget is allocated to continuous improvements to existing processes and products –, high-performing companies take more disruptive risks. This investment in uncertain projects also reflects the findings that high performers have a greater appetite for risk.
High performers are 2.7x more effective at idea generation than low performers.
3. They are more likely to be first-movers.
A total of 35% of high-performing respondents said they were more likely to strive for first-mover advantage, three times as much as low performers. A larger percentage of low performers also describe their innovation philosophy as ‘ad hoc’.
4. They centralise their innovation in upper management.
According to the report, high-performing CEOs do not delegate their innovation strategy. At high-performing companies, innovation is often centralised at C-level (39%).
However, regardless of performance levels, companies across the board are focused on measuring innovation – 71% of firms assess innovation quantitatively, with 85% tracking revenue generated as at least one of their metrics for success.