In brief

In brief

  • Learn why the distinct approach of being change-oriented, outcome-led and disruption-minded matters to applying innovation successfully.
  • To unlock trapped value, high-growth companies apply innovation with greater intensity and more focus on changing the way they work with their ecosystem, compared to other companies.


So, now you know the seven characteristics that high-growth companies share. How then do they put innovation to work?

It turns out, unlocking trapped value requires a distinct approach to innovation. That means identifying the right place and pace for an investment that will unlock trapped value and yield an optimal return.

But that’s often easier said than done. Too many companies are focused on incremental innovation—improving “what is” rather than on creating “what could be.” This is innovation on the periphery.

And while incremental innovation shouldn’t be undermined, it is simply not enough.

"Most companies have failed to move at the same speed as technology develops around them. And as the pace of change has accelerated, that has resulted in a widening gap between high-growth companies and the rest.”

Andrew Smart
Energy Industry Managing Director
Accenture

Contrast that approach to what high-growth companies are doing to unlock trapped value. They’re more deeply and distinctly focused on commercial and scientific advancements that can create new markets and disrupt entire industries.

Here’s what we’ve uncovered on how high-growth companies turn their innovation investments into value. Their approach is:

Omar Abbosh

Chief Executive – Communications, Media and Technology


Dr. Vedrana Savic

Managing Director – Thought Leadership


Paul Nunes

Global Managing Director – Thought Leadership


Michael Moore

Senior Principal – Thought Leadership

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How being change-oriented enables business reinvention

Innovation shouldn't be seen as something that happens by chance, even though 53% of survey respondents think so.

Let’s examine what it means to be change-oriented, the first of three components making up a distinct approach to unlocking trapped value using innovation. With fundamental change in their sights, companies ready to invest in innovation must first determine which of the seven characteristics are central to their growth strategy. For example, when AT&T decided it wanted a talent rich and agile workforce, it invested heavily in programs for employees to learn new skills.

Once you’ve identified the “what,” you’ll be able to proceed with the “how.”

For that, consider the Bosch Group. The 132-year-old German industrial giant pivoted to IoT in 2008 when it acquired a company that would become Bosch Software Innovations.

Since then, Bosch Software Innovations has planned and executed 250 international IoT projects that have been measured against strict benchmarks to ensure an ROI. And the good news? Customers aren’t the only ones benefiting from its innovations.

The company is also using its team to pilot more than 100 IoT innovations in its factories -- transforming the way it works. Being change-oriented is paying off: Bosch saw revenues grow by a CAGR of 12% between 2012 and 2017, and sold 38 million connected products in 2017, ranging from smart ovens to home security products.

And they’re looking ahead to an even more ambitious goal. By 2020, Bosch intends to have all of its electrical product classes connected to the internet.

How outcome-led innovation enables higher financial performance

The second component outlined in the approach to innovation is outcome-led. High-growth companies expect to apply innovation more comprehensively compared to others. Notably, 76% of C-level executives from those companies report they have plans to adopt innovation practices that enable them to master more than one of the seven characteristics we examined.

As high-growth companies apply more innovation across the business and master more characteristics, their expectations for profit growth rise.

Case in point? Nike, who’s been making sneakers for decades -- and getting better and more profitable at it.

Here’s how they did it: When the sports brand wanted to speed up and simplify the process for creating a pair of sneakers, it invested heavily in its network-powered supply chain. Working in tandem with Flex, a global automator, Nike invested in technology to help automate its shoe-making process. Using advanced robotics and digitization, Nike can now produce a pair of uppers in just 30 seconds. What’s even more incredible? The uppers are made with 30% fewer steps and up to 50% less labor than the original pair.

A continual focus on tech and changing market needs has also kept Nike hyper relevant and engaging with customers. It has created a design-to-delivery organization that consolidates Categories, Design, Product & Merchandising to anticipate the evolving needs of customers. Its bolstered Nike+ digital platform also improves the brand’s ability to gather and analyze customer data.

Lastly, Nike is focused on being an inclusive, responsible business. Nike Grind—a palette of premium recycled materials—is used in 71% of Nike footwear and apparel products, in everything from yarns and trims to soccer kits and basketball shoes, showing how they can innovate and be good corporate citizens at the same time.

Their distinct approach to innovation is paying off. Nike has outperformed the S&P 500 over the past five years: between April 2013 and October 2018, the valuation of the S&P 500 has grown by 64%, but Nike has more than doubled in market capitalization, having grown by 110%.

Why 47% of high-growth companies allocate 60% or more of their innovation investment to disruptive innovation

What’s next in the age of innovation? Softbank, the Japanese internet group, is out to discover the next disruptor before anyone else.

The company’s technology-propelled Vision Fund is targeting “meaningful, long-term investments in companies and foundational platform businesses that seek to enable the next age of innovation.” It’s also another example of how corporate venture capital can help drive successful innovation across a range of emerging technologies, including robotics, AI and computational biology.

This is disruption-minded, the third component that’s distinctive of how high-growth companies approach innovation and unlock trapped value.

Take Vision Fund’s $500 million investment in Improbable. Improbable’s platform, SpatialOS is an operating system often used for running large-scale simulated worlds, such as in gaming. But, it also has more practical, real-world applications, like helping companies build and improve massive simulations in the cloud, or even run a simulation of the Internet’s entire underlying structure to depict what can happen during a cyberattack.

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