I’ve recently completed my annual Global Innovation Trends research report. I interviewed 100 corporate innovation executives from companies including PepsiCo, Anheuser-Busch, the NBA, Volkswagen, Santander, Coca-Cola, Barclays, Deutsche Bank, Uber, and Starbucks, as well as a host of other organizations representing a diverse set of sectors around the world. The companies included in my study represent more than $4.8 trillion in revenue, employing over 3.7 million people.
“Innovation” is a hot buzzword right now. All the fancy management consulting firms are preaching it as if it’s something new. It’s not new, of course – innovation has been the heart of business success for a long time. But the innovation imperative seems particularly acute in today’s high-velocity marketplace as every executive is aware of how innovative entrants ranging from Google to Uber to Airbnb have disrupted entire sectors in recent years.
Notably, most high-profile innovation has come from startup companies, not incumbent corporations. Creating genuine disruptive innovation within large existing organizations is hard.
So, is it even possible to reliably create disruptive innovation within large organizations? Or have we simply entered a new normal where companies turn over every generation? Will Uber eventually be Ubered, itself?
Harvard Business School professor Clayton Christensen wrote, in his groundbreaking 1997 book The Innovator’s Dilemma, that the biggest advantage startups have is that they “can do things that it doesn’t make sense for incumbent companies to do”.
And that was probably the most common theme I heard from the corporate executives I interviewed for this research project: the role of a corporate innovation group is to do things that don’t make sense for the rest of the company to do.
Other key findings from this years’s Global Innovation Trends report:
Methodologies: Design Thinking is used and preached by 46% of the organizations I surveyed. Other frameworks are being used as well (see chart) – most innovation execs I interviewed believe that proper methodology can turn innovation into predictable process. As one exec at a Berkshire Hathaway company told me, “Warren Buffett doesn’t make ‘lucky’ investments and neither does our innovation group”. Properly-used methodology wins the day.
Macro Trends: Innovation always happens within the context of larger trends in the marketplace, and some of the trends that the interviewees discussed included the Rise of the Millennials, Consumer Privacy, and Products becoming Services (one F500 exec I talked to said “We are now entering the era of Everything as a Service”). But the biggest trend mentioned by my interviewees (58%) was “Consumers’ expectations of NOW!” (see chart).
Technologies: Not all innovation is technology-driven, of course. But we certainly live in an era where technology is very much driving the world around us. Eighty-percent of the executives I interviewed said that AI and Machine Learning are relevant to their work developing innovative new products and services today, and more than half mentioned Blockchain and IoT. Other technologies mentioned were Chatbots, Big Data, and 5G (see chart).
Not just for commercial enterprises: As part of study I also talked with officials from the US State Department, USAID, as well as leaders of NGO’s and Social Enterprises about how they are using Design Thinking and other innovation frameworks to solve social problems ranging from poverty alleviation to hunger. Food production (AgTech), in particular, is a sector that is seeing tremendous innovation.
There’s a lot going on in 2019. We live in a world where innovators win – Joseph Schumpeter’s creative destruction is relentless. Meanwhile, last month at the Davos meeting of the World Economic Forum it was predicted that the era we are now entering – the Fourth Industrial Revolution – will unlock $3.7 trillion in economic value by 2025.
The stakes are high. The innovation executives I interviewed provided great insights on how organizations today are capturing value by creating sustainable innovation from within. You can download a full copy of my Global Innovation Trends 2019 report here. I’d love to hear your thoughts.