Innovation spending ultimately has to drive business value and financial performance. But for that to happen in a consistent way, innovators must understand and help define future business models that can support the innovations they create.
Random acts of innovation rarely pay off. For any initiative to deliver true value, the effort must clearly align with a company’s business strategy. Yet, over half of innovating companies struggle to bridge the gap between innovation strategy and business strategy, flagging it as their greatest strategic challenge when it comes to innovation. That’s more than twice as many that point to any other strategic challenge.
This issue holds true across all industries, especially as a company invests more of its resources in innovation. Sixty-five percent of companies investing 15% or more of revenue in innovation say that aligning business strategy with innovation vision is their top strategic issue. In short, too many companies are flying blind (or semi-blind), with a lot of money on the line.
“We look horizontally within the company, across the various industries, and ask, ‘What can we take from the various trends in each of these verticals and bring them together to create an opportunity?’ It's all about the horizontal place.”
Bringing people from the business-strategy side of an organization into the innovation sandbox from the start — at the ideation phase of any new, potential innovation — is critical to making innovation pay off in the long term. That requires knocking down silos within a company.
“For the venture community, we need to focus on reimagining and experimenting with new business models," says GE Ventures’ CEO Sue Siegel, who has no intention of flying blind. “Emergent technologies are very powerful, but what we have to figure out is, what is the sustainable business model that we could potentially either partner up with or use within our organization to drive growth? We've been able to experiment to translate these major trends and technology enablers and apply them to business model innovation. That is incredibly important to how we stay ‘tip of spear’ at GE.”
Director, Global Lead for Innovation Benchmark, PwC US