All companies in the UK and Ireland face the impacts of converging disruptive forces, with no industry sector immune to their effect. The unexpected impact of COVID-19 has only served to heighten the intensity with which all organisations are being disrupted. But a minority of companies that understand what it takes to innovate successfully are forging ahead. They are taking actions to respond to the pandemic now and creating new products and services for customers and making organisational changes to embed innovation across their business in order to be prepared for what comes next. These Innovation Champions are showing the way forward.
One of the key characteristics UK and Ireland Champions display is an innovation mindset which is focused on driving value (to be an Innovation Champion, companies must earn higher revenues and profits from innovation). UK and Ireland Champions are never complacent in the face of rapid technical and social change and are investing more to address volatility. By continuing to exhibit the qualities and behaviour that position them as leaders, these champions are likely to have weathered the COVID-19 crisis better and also emerge stronger from it.
- Innovation Champions are investing in different things to others, such as machine learning, blockchain and autonomous vehicles.
- Only 2% of UK and Ireland businesses have transformed their core business to a new business, and only 20% are using innovation to unlock value in a new business.
- 58% of UK and Ireland companies say that they have only just started, or have yet to begin, their transformation to the new.
What makes them different?
#1 Innovation Champions make the changes they need to identify and release trapped value
Trapped value arises because companies are not able to move rapidly enough to capture opportunities from new products and services. They persist with business and operating models that, while contributing the majority of their revenues today, have already started to plateau.
Innovation Champions have grown revenues and profits faster than their peers in the past five years and expect to do so for at least the next four years, as well. They have a comprehensive awareness of the state of innovation in the UK&I market. They are capitalising on this through an innovation mindset – being the disruptor rather than the disrupted – and this is driving higher returns from innovation.
#2 Innovation Champions make the changes and adopt the behaviour that enable them to innovate more successfully
Their performance across seven key Innovation Practices are what make Innovation Champions different. Innovation Champions are: hyper-relevant, network-powered, technology-propelled, asset-smart, inclusive, talent-rich, and data-driven.
Champions ‘Innovate by Design’. Rather than seeing innovation as an ad-hoc ‘creative’ process, they recognise that sustainable innovation requires a persistent effort, well-defined processes and commitment. To that end, Champions have successfully created a smooth, reliable, and repeatable innovation process which focuses on defining an innovation strategy, creating a culture that rewards innovation, and building a formal innovation architecture.
#3 They invest in innovation – and make a more determined pivot from core to new
Champions make their core business more efficient and divest assets in order to release the capital and capacity required to build new businesses, products and services that will enable them to get on the front foot and fight back against disruption.
Not only do Innovation Champions invest more in innovation, they have a sharp focus on the financial commitments required to become a Champion. They prioritise funding from government compared to their peers and they make corporate venturing a priority.
Mastering the innovation effort
The impact of the COVID-19 pandemic coincides with a time of diminishing returns, higher costs and increasing volatility; industries in the UK&I now also need to defend against new entrants. But rather than simply waiting to be disrupted, to survive in this new landscape, businesses need to be proactive and think about how they will disrupt their own businesses and operating models.
Some companies have managed to deal with disruption, forge a new path and capitalise on an innovation mindset to outperform their industry peers. They have understood and harnessed changes in their industry to inform and accelerate their progress, and when and how to focus their innovation efforts to release trapped value.
To lead in the new, companies must master four areas, perpetually and concurrently: