View Source: Claus Jepsen

The Most Innovative Companies 2021 report from BCG reveals that successful innovators make innovation a priority, commit investment and talent to it, and have an innovation system to transform ideas into results.

The BCG report is a scientific study, but I’m pleased to see it accords reasonably well with my own personal experience of leading innovation in a technology business. Here are what I have found to be the essential ingredients in successful innovation.

  1. Keep an external perspective. The first thing you need to innovate successfully, in my opinion, is perspective. It’s essential to understand what’s going on in the world outside of your organization. How is the business environment evolving? What’s happening across the economic and financial landscape? How is customer behavior changing? Good innovators keep a watchful eye on changes occurring in their external environment.
  2. Assemble the right team of people. The next ingredient is people. You need to assemble a team with diverse experiences and viewpoints. Bring together people from different disciplines, backgrounds and generations, and get them working together. They’ll come up with better ideas, but ideas are the easy part.
  3. Be ready to take action. The key component, of course, is action. This is where many organizations, especially larger incumbent ones, trip up. They know what needs to be done, but they don’t do it. Enterprises like predictability, and innovation threatens that. The company convinces itself it doesn’t need to act — not yet anyway. Meantime, new entrants are stealing their lunch.
  4. Have a willingness to change. The antidote to this inertia is a willingness to change. Innovation inevitably requires change across multiple aspects of the organization — business model, processes, organizational structure and supporting technology. For it to succeed, you have to be willing to embrace the full extent of changes that will be necessary.
  5. Build a system for managing the transition. Innovation also requires a period of transition from old to new. It’s during this that organizations must ask themselves the hard questions: What will the new customer experience need to be? How will processes need to change to support the new vision? How will systems need to change? You need a formal system for managing this process.
  6. Have an appetite for change. Successful innovators have a healthy appetite for upheaval. This is necessary to counter people’s reluctance to reinvent something that seems to be working satisfactorily. To them, radical change just looks too hard, so they convince themselves it’s not necessary. The successful innovator knows the status quo will have to be replaced one day and thinks: “OK, then. Let’s get on with it.”
  7. Cultivate a culture of embracing risk. The most essential factor in successful innovation is probably culture. Innovative companies have a culture that is never satisfied with being good enough, that embraces risk in the quest for being better and that accepts temporary setbacks as an inevitable part of the process. Innovators should build a diverse team with a relentlessly positive attitude and a willingness to experiment.
  8. Show courageous leadership. Leaders have a critical role in fostering this culture. They need to define and communicate a sense of purpose, be prepared to change themselves and support others to take risks and make mistakes as long as they learn from them. Leaders must also show the courage to push through radical changes that their teams might hesitate to implement but are necessary for success.
  9. Make sure you follow through. It’s this readiness to follow through that turns ideas into successful innovations. People who are invested in the status quo may argue that improvement could be achieved by tweaking business as usual. However, the innovative leader will ensure success by insisting that change will be required everywhere — across finance, operations, people and technology.
  10. Treat innovation as continuous. My own experience leading innovation in a technology company has taught me that it’s essential to accept that innovation is both big and continuous. When we looked at what technology platform we would need going forward, we realized we would have to reinvent it entirely if it was to support our vision for the future. We also understood that innovation was not a one-off exercise and that we would need to create a technology platform that was easy to keep on changing.

You may have noticed that, even as a CTO of a technology company, I do not list technology as one of the main drivers of innovation. Of course, you need technology to support the innovations you come up with, and the technology itself needs to be easy to change going forward.

However, success in innovation is much more about being honest about the need to change, fostering a culture that embraces risk and having a system for managing the process from idea to impact.