I recently had the opportunity to read CB Insights’ 2018 State of Innovation report on the perspectives of nearly 700 senior strategy executives, globally. As the person in charge of strategic development at a company that specializes in Development and Innovation (D&I), I found the report quite interesting.
I’d like to share some of their findings...
The survey identified nearly 85% of strategy executives believe innovation is very important to the future performance of their companies. Not surprising. In addition, more than four out of ten executives reported their companies’ are either highly at risk of disruption or very at risk of disruption. Despite this acknowledgement of the importance of innovation to future performance, and the prevalence of anxiety over the risk of being disrupted by a competitor’s innovation, very few companies are swinging for the fences.
According to the survey, companies invest 78% of their innovation budget into incremental improvements of existing products and processes. Is this a calculated strategy to drive incremental profits, in the immediate fiscal period? (e.g., For many companies, $1 in incremental net profit from wringing savings from COGS ≈ $5 in incremental sales.) Or is this decision being driven by other factors?
One contributing factor may have to do with confidence. Even with the “High Performer” companies identified in the survey, only 9% described their company as being effective at Design and Development. Thirty percent reported they were good at idea generation, but after that, their confidence in their Development and Innovation process breaks down.
The fact of the matter is, the Development and Innovation process is not widely understood or mastered. Going back to CB Insights, 57% of companies reported they do not follow a formal innovation process, yet 71% report having metrics in place to measure innovation. The problem here is of the companies that do track performance, on average they’re tracking 2.9 metrics. That’s not going to drive a lot of epiphanies.
The Development and Innovation process isn’t taught, it’s learned. This is especially true in medical device development. In our industry, the multitude of inter-related, inter-dependent variables, governed by guidance rather than steadfast rules, that evolves over time, demands confidence. Confidence that comes through a demonstrated mastery of the D&I process. If innovation is mission critical to future performance, companies will be well served to adopt a strategic approach to D&I.
Terry Murray, Vice President of Strategic Development