Tuesday, June 27, 2023

Fwd: Rev your innovation engine

--- Forwarded message ---------
From: Boston Consulting Group

BCG's 2023 Most Innovative Companies
BCG - The Boston Consulting Group
Leadership by Design
June 2023

What Innovation Leaders Do Differently
What You Can Learn from Innovation Leaders

The Premise
The connection between innovation and both growth and advantage is becoming stronger than ever. The winners understand this and invest in their innovation engines accordingly. The laggards struggle to make headway beyond incremental improvements.

How can a company become a successful innovator?
BCG - The Boston Consulting Group
The Solution
01. Recognize the value of innovation
The evidence is mounting: companies that both prioritize innovation and ensure they are ready to act are widening the gap over less capable competitors. Winning firms are consistently delivering new products, entering new markets, and establishing new revenue streams. The big story, though—this year and for most of the past decade—is that innovation drives performance. Since 2005, our portfolio of the 50 most innovative companies has outpaced the broader market in shareholder returns by a significant margin: an average of 3.3 percentage points per year.
Read more →
02. Understand the critical elements of innovation success
Innovation leaders learn how to allocate resources based on the outcomes they want to achieve—for both internal and external initiatives and for both short-term gains and long-term growth. To overcome barriers that could stand in the way of successful innovation, companies must strategize (setting a vision and linking goals to strategy), create and scale (building an ecosystem for expanding ideas into real businesses), and accelerate (using technology, people, and governance to expand innovation-related capabilities).
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03. Don't let a downturn deter you
During the 2009 downturn, only 58% of companies planned to increase spending and almost 15% expected to cut innovation investment. But what's going on in 2023? This year, 79% of companies see innovation as a top-three priority—15 points more than in 2009—and 66% plan to increase spending, 42% by more than 10%. As growth has slowed in core markets, the importance of new products and services that carry companies into new markets with new business models has increased. Digital opportunities and the sustainability imperative are two key forces driving the change.
Read more →
04. Bet big—but carefully—on AI
The question isn't whether AI can have an impact. It's more a matter of whether companies are using AI properly and for use cases that have the potential to drive real business value. The varying results that companies are achieving so far with AI further increase the distance between organizations that have well-functioning innovation engines and those that do not. Indeed, given AI's transformational potential (which anyone can experience by taking ChatGPT for a spin), failing to master the technology could ultimately prove fatal to a firm's innovation program.
Read more →

The best innovators develop a self-reinforcing, virtuous cycle. Once the innovation cycle starts, it creates its own momentum and produces transformative competitive advantage.
Michael Ringel
Managing Director and Senior Partner
Further Reading
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Thursday, June 01, 2023

Fwd: Change Your Trajectory: The Transformation Imperative in Uncertain Times

---- Forwarded message ------

This bold approach can make companies more resilient and cost-smart.
BCG - The Boston Consulting Group
Change Your Trajectory
May 2023

Business Transformation
When the Going Gets Tough, the Tough Transform

In an uncertain economy, some companies may be tempted to hunker down. That's understandable, but it risks putting them at a competitive disadvantage. In a downturn, the gap between winners and losers only widens. Instead, companies need to adopt a mindset of change in both good times and bad.  

Embrace the Uncertainty 
There's no question that executing a successful transformation today poses challenges: the level of uncertainty in the macro-environment coupled with the pace of change required makes driving change more difficult. In fact, BCG research shows that only 30% of transformations meet their goals.

But launching a transformation despite uncertainty can create real benefits. It creates a clear set of rules that everyone in the organization can use to operate. It also helps teams deal with uncertainty by giving them clear goals. And it builds new skills in terms of resilience and problem-solving.
success rate
Success often comes down to leadership commitment, focusing on culture and executional excellence
How do you know when a transformation is working?
  • It's when leadership sets clear goals and maintains consistent communication.
  • It's when company culture is prioritized, and employees feel engaged and empowered to embrace new ways of working.
  • It's when people are encouraged to think more critically and to challenge their way of thinking.
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Look Beyond Costs
Cost efficiency is the main objective of most transformations. But moving away from a cost-cutting mindset and considering a company's full potential is a much better path to financial and operational resilience.

For example, one retail company wanted to reduce costs in its supply chain. But a more expansive view showed that costs—while critical—were only part of the answer. Cost savings from that process (more than $100 million in year one alone) funded two other initiatives: reinvigorating the brand and revamping its operating model to strengthen customer connections.
in annual savings from a cost-led business transformation
That kind of holistic approach—call it cost savings plus—leaves companies more resilient and better equipped to face future challenges.
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Reinforce the Balance Sheet
A resilient balance sheet can help companies manage tough operating environments. It provides breathing room to operate under stressful conditions and withstand the scrutiny of shareholders, creditors, and regulators. It also enables them to pursue opportunities, such as M&A and share buybacks. In BCG's experience, strengthening the balance sheet can boost EBIT by 10% to 20%.  
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"When organizations create the right environment for transformation and spend time helping the doers, results follow in the financials—and in improving the culture, employee engagement, and in upskilling people."
Kristy Ellmer
Managing Director & Partner
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Boston, Massachusetts 02210, USA

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