Innovation is not just about generating a great idea — it's about systematically nurturing and growing that idea into something that makes a big impact on the business. And these days, it’s also about being able to do it on a regular basis. In a technology era when ideas can be copied quickly by competitors and become table stakes, sustained innovation is key to staying ahead.
So how do the best companies ensure that innovation efforts are not just a one-time success but a continuous growth engine? Let's explore the three critical questions business leaders must answer to achieve sustained innovation.
1. How do we systematically and sustainably vet and mature new ideas?
To systematically and sustainably develop new ideas, it's crucial to have a well-defined innovation process with strategic portfolios, planned pipelines, and innovation governance.
The companies best at innovating standardize their approach to managing and prioritizing innovation initiatives, ensuring that only the most promising ideas are pursued and that they are allocating resources efficiently. They ensure an overhead, portfolio view of all innovation projects. That way, they can better assess and balance the types and risks of various innovation projects, track progress, and evaluate success. Most importantly, they can ensure a diversified approach to innovation that aligns with the broader business strategy. For each idea, they also provide a clear pathway that guides it from initial conception through various stages of development, evaluation, and implementation, with building blocks for each step.
Organizations that succeed at innovating carefully define each stage from ideation through development, testing, and final implementation, with decision-making processes in place to oversee progress and outcomes.
2. How do we gain greater returns from our ideas?
The companies that maximize returns from their ideas take a strategic approach to project selection and acceleration. They analyze market data and trends and prioritize the ideas that align with business goals and that can scale.
Companies that are great at innovating choose the projects with the highest potential impact but invest their resources judiciously during development. They rapidly prototype and quickly test them in real-world scenarios. They involve customers early in their development processes, ensuring ideas meet market needs and expectations. They leverage partnerships to expand market reach. They maintain robust pipelines focusing on uncovering and advancing high impact opportunities. And the best companies at innovating regularly assess progress and quickly adapt to new technologies.
3. How do we measure sustained innovation?
One of the reasons the companies that are best at continual innovation are successful is because they continually measure how they’re doing. They use a shared framework that promotes consistent decision-making and evaluation. They agree on metrics for monitoring the health of the innovation pipeline, such as tracking the number of ideas generated, developed, and implemented over time. To highlight the internal commitment required for sustained innovation, they keep track of employee engagement as well.
Market response metrics like customer acquisition or revenue growth often become key performance indicators. Financial analysis provides insight into the total economic impact and long-term value creation of innovation efforts. Here, metrics can be as simple as determining return on investment (ROI) or as complex as calculating customer lifetime value (CLV). Some companies examine R&D spend efficiency to evaluate how effectively funds tagged for innovation have been used. Many leading companies focus on the innovation revenue ratio — the proportion of revenue generated from new offerings over different time horizons. Some companies zero in on market share as their key growth metric. Ultimately, measuring whether sustained innovation is working comes down to the consistency of business impact.
Answering these three questions is just the beginning of your journey towards sustained innovation. We have ten more you need to ask yourself in our ebook, 10 tough questions: Test your readiness for enterprise-level innovation. Download it now to see how your organization measures up.