Innovation Matters Because It Leads to Higher Financial Performance and Creates Competitive Advantage

Research shows that an organization’s ability to innovate is highly correlated with both its market positioning and financial performance. Innovation is tangible. Organizations that possess strong innovative cultures with high levels of ideation gain sustainable, competitive advantage in their respective industries.

Innovation is highly correlated with performance. Organizations with strong innovation cultures lead their industries. For example:

growth100 The top 25% of companies (as measured by top line financial performance) have innovation orientation scores that are up to 22% higher than bottom quartile performers. (InnovationOne/Strategian F1000 Survey, 2013)
bcg-logo100 A Boston Consulting Group survey revealed [2009] that 64% of senior executives agreed that innovation is a top strategic focus for their firms. They believed that innovation provides strategic value and is a key differentiator because it increases revenue, employee engagement and customer satisfaction. It also decreases costs, financial risk and competition.
boozlogo100 Organizations that focus on innovation capabilities report higher profit margins by up to 22%. (Booz and Company Global Innovation Study, 2010)
EBIT100 Companies with a passion for innovation experience an increase in EBIT of 4% and more than 10 times higher returns from their innovation investments. (Arthur D. Little Innovation Survey, 2005)

The 2012 top innovators earned a 6.3% total shareholder return premium (stock price appreciation and dividends) over 3 years. Companies that have been on the top innovators list since 2004 delivered a 4% premium over 10 years.

(InnovationOne/Strategian F1000 Survey, 2013)

Innovation is tangible.  It is measurable and manageable.

Organizations become innovative through their employees and external ecosystems!

The key to innovation resides in leadership’s ability to define, instill and reinforce a culture of innovation and ideation in their organization.

A culture of innovation flourishes under the right circumstances, when leaders:

  • Inspire purpose, vision and strategic focus
  • Broadly disseminate intimate knowledge of customer wants and needs
  • Facilitate free exchange of ideas among employees and the external ecosystem
  • Create planned surfacing of innovative solutions and quickly decide among alternatives
  • Align the organization to deliver solutions to customers

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