The Boston Consulting Group (BCG) recently released its tenth annual global survey of the ‘50 Most Innovative Companies in the World’ and the state of innovation worldwide in 2015. Here are some highlights from this interesting survey.

•Apple, Google and Tesla Motors have been ranked as the top three innovative companies in the world.

•The top 50 list includes 29 companies from the US, 11 from Europe, and 10 from Asia. Three companies from China — Tencent, Huawei and Lenovo — feature in the list. Only one Indian company has made it to this elite list of innovators — Tata Motors.

•Science and technology emerges as an increasingly important underpinning of innovation, and is also a common factor across most companies in this list.

•Thirty-eight out of the 50 most innovative companies are from traditional or non-tech areas, yet most of them leverage science and technology smartly. These include companies such as Bayer, Johnson & Johnson, Marriott, Walt Disney Corporation, Roche, Nike, Visa, 3M and Mastercard.

•This survey sounded out over 1,500 senior executives representing a wide range of industries. And 79 per cent of all respondents have ranked innovation as either the topmost priority or a top-three priority at their company — this is the highest percentage in the recent past, highlighting the rapidly growing importance of innovation in a fast-changing, highly competitive world where companies are constantly searching for sources of differentiation.

Four ways innovation shows up This survey has also identified four key attributes that are critical drivers of making a company highly innovative. The first is an emphasis on speed, of quickly experimenting with and adopting new technologies, and getting new products to market quickly. The second is lean, efficient, focused and productive research and development (R&D) processes. A third factor is the company’s pursuit of new technology platforms, such as digital platforms or big data analytics, which can be leveraged repeatedly to deliver innovation and impact. And finally, the fourth factor is the expansion into adjacent markets, which opens fresh new avenues for innovation and growth, while leveraging some existing competencies.

All these four factors that lead to “high innovativeness” require organisation-wide effort, cutting across multiple functions and teams — including teams that are focused on technology, new product formulation, research and development, business strategy, marketing, finance and people capability. However, given that the most impactful innovations are based on existing or latent consumer needs, the marketing team has a particularly important role to play in triggering this entire process. Even as I reflected on the four attributes highlighted , several specific areas where corporate marketing teams have to contribute strongly to enabling and driving innovation came to the fore. Some of these areas are summarised below.

Need for speed The marketing function has to emphasise, throughout the organisation, the rising need for innovation speed, particularly to catch consumer trends in their early days, and then to ride the wave of these emerging trends. Speed is also perhaps the best weapon to consistently leave competition far behind. R&D teams, which often tend to work at their own creative pace, will never be seized of such need for extreme speed, unless this is driven home to them by folk who are constantly in touch with the pressures of the marketplace. Marketing teams can also help quickly test new prototypes with customers, even if these are imperfect products, and relay to the company insights, reactions or feedback that such testing may throw up. This will also enable fast innovation.

Meaningful differentiators Lean and productive research and development efforts require smart decisions about which bets to make, which efforts to pursue, and which other efforts should be terminated. Companies that desire to be highly innovative also have to make a few big bets on which R&D efforts should be prioritised and resourced. Here again, the marketing team plays a critical role by determining areas, features and attributes that are important to customers, and by helping nail down which of these attributes can help meaningfully differentiate the company’s offerings. For instance, only 15 per cent of the technical specifications of a car actually result in meaningful differentiation for consumers. For the R&D department to focus its attention on the right 15 per cent, marketing folk need to understand consumer priorities and this understanding has to then help define the R&D team’s priorities. Such proactive studies by the marketing team will ensure that R&D efforts are not frittered away on a wide range of areas, some of which may not be important at all.

Demand spaces The BCG report points out that world-class innovators are moving to “demand-centric” segmentation, where the customer’s life context, as well as the customer’s functional and emotional needs, drive innovation targets. The marketing department can help highlight such demand spaces, through incisive customer analysis. One example which illustrates this point (and is also quoted in the BCG report) is the story of Hilton Hotels, which moved away from segmenting its consumers by conventional hotel metrics such as “leisure versus business” or “long stay versus short stay.”

Instead, using simple consumer interviews, the marketers of Hilton asked people to describe what they wanted in a hotel, when and why they would want this. This led to the untapped opportunity of the “recharge and refresh” space, which subsequently became a high-growth area for Marriott, and also led to many product and service innovations catering to this specific need.

Technology platforms Marketers should understand what potential impact technology can have on their industry and category. This should include digital technology to enhance products, big data and analytics platform to understand consumers, mobile technology to improve marketing efficacy, and such. A good understanding of these dimensions can lead to technology-inspired innovations, including business model innovations built around digital platforms. As the BCG report says, advances in technology platforms are the most important factor driving innovation today — as exemplified by the use of digital sharing platforms by Uber and airbnb, or the use of 3-D printing platforms by General Electric. To trigger innovation in this space, marketers must develop easy familiarity with key streams of technology and an understanding of what these technologies can achieve. Marketers who love technology are likely to win the future. But marketers unfamiliar with technology may become increasingly obsolete.

Appetite for risk Great innovation requires a big appetite for risk, given inherently high failure rates of innovations. Marketers have a key role to play in building this appetite for risk within their organisations, including convincing relatively risk-averse teams such as Finance or the supply chain, because marketers are typically the custodians of growth, and finding new sources of growth very often requires innovation. Marketers will have to steer their companies into developing new products and services which may look quite different from the current portfolio and which, therefore, pose greater degrees of strategic and execution risk. With active support from their business leaders, marketers have to be evangelists for such risk-bearing innovation, provided they have, in the first instance, the required conviction in the new initiative at hand.

Finally, marketers have to spur innovation in companies by constantly catalysing the pursuit of new ideas. Ideas that result in customer acquisition and retention are the core currency of marketing, and this pursuit should therefore be uppermost in our minds.

(Harish Bhat is author of Tata Log: Eight modern stories from a timeless institution. These are his personal views. bhatharish@hotmail.com )

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