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Thursday, 27 September 2012 13:42

Innovation returns best when paired with right ‘ecosystem’

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Mengel Mengel
WEST MICHIGAN — The notion sounds fairly simple: The more you pay attention to innovation, the more you innovate and grow your business.

But it’s not necessarily that easy, says Jeff Mengel. Just because a company pays more attention to innovating new products and services, doesn’t mean it’s actually accomplishing a lot.

To do it right and generate a sound return, Mengel said, companies need to look at innovation strategically and embed it as part of their corporate culture, rather than just add staff, increase a budget line and run it as a “skunk works” operation.

Many companies pursue innovation in what he calls “a semi-conscious state” and hope for results instead of establishing specific goals and processes.

“You can’t do it just by budgeting,” said Mengel, a partner at Plante Moran PLLC who led the firm’s annual Midwest Innovation Quotient Survey. “You have to have the right environment.”

Results from the 2012 survey, conducted with the Holland-based training academy NewNorth Center for Design in Business, supports the principle that the more strategic and deliberate a company’s approach to innovation, the more likely that it will drive growth in the business.

“It wasn’t that they were going to put more money into a budget. It was: ‘How is this going to be important to our business?’ It really drove down to their mission,” Mengel said of the top innovators who answered the survey.

In its report on the results, Plante Moran notes that more businesses in the Midwest have turned to innovation to drive growth as they emerged from a tough economic period.

The financial crisis and the meltdown in the housing market ushered in a period of “disbelief and uncertainty (that) seemed to paralyze business leaders,” Plante Moran PLLC Managing Partner Gordon Krater wrote in a report on the survey. 

In writing about the 2012 survey results, Krater stated “it didn’t take long for (business leaders) to grasp the impact of the situation and begin working toward answers that would sustain their operations and prove the value of their organizations to customers.”

“Our data points out that leaders have always considered innovation essential to the sustainability of their organizations, but the impact of the Great Recession reawakened their innovative spirits. Through our process of discovery, it became clear that many of our respondents have been implementing changes in strategy and orga­nizational structure as well as developing new marketing concepts,” Krater said.

Survey respondents expect innovation to help them meet revenue and cost-cutting goals in 2013 and 2014, survey results say.

The 550-plus Midwest companies responding to the survey, about half of which were based in Michigan, attributed 16.1 percent of annual sales to new products or services introduced in the last three years. Seven out of 10 survey respondents fit into one of four categories.

On the bottom end of the scale, so-called “accidental innovators” — defined as those companies that “jump from one idea to the next” — on average generated 11.1 percent of their sales through new products or services.

On the opposite end, new products and services from “superstar” innovators that “develop an ecosystem of support allowing them to go for breakthroughs” drove an average of 23.3 percent of revenues, according to survey results.

The difference in the results that respondents generated through innovation comes down to building the right systems and processes and having the right corporate culture and strategy, Mengel said.

“Those who achieve ‘superstar’ status have innovation-hungry cultures we can all learn from,” he said.

Creating that environment should come with a plan that sets down “clear and measurable” expectations and monitors progress and allows for changes when needed — and provides for abandoning a project when it’s not meeting expectations, Plante Moran recommends. Businesses need to create a clear commercialization process for ideas that can get lost because of limited training, investment and patience. They must also dedicate teams across various departments to the process.

“You have to be organized differently. You have to organize your departments so they’re all in on it,” Mengel said.

Those that do innovation well can generate an additional benefit to sales growth: They become a lure for young talent that is more apt to want to work for companies they perceive as innovative, Mengel said.

“They all want to be part of a team that does something,” he said.

Read 4158 times Last modified on Thursday, 27 September 2012 14:28

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