The Innovation Imperative: Why Does Innovation Matter?
Innovation has become an imperative for society at large. Whether it be entrepreneurs starting new ventures, large established corporations trying to defend their market position, or countries facing increased global competition, everyone is attempting to innovate. What does this mean? It means they turn new ideas into widely used practice.
The reasons are clear: the benefits from innovation are highly promising.
At a macro-economic level, the capability to innovate fuels countries’ global competitiveness. According to academic research, between 2010 and 2020, roughly a quarter of US productivity will be generated by innovation. And, as the economist William Baumol points out in his book The free market innovation machine “virtually all the economic growth that has occurred since the eighteenth century is ultimately attributable to innovation”.
There is strong consensus among policy makers that innovation is a main driver of economic progress and social well-being. It is a powerful tool to tackle societal challenges from resource scarcity and global warming, to poverty and health. Indeed, innovation has become a central pillar of national and regional economic policies. Horizon 2020 is an example. The European Union settled nearly EUR 80 billion of funding over seven years to boost research and innovation across different industries. This will undoubtedly help strengthen Europe’s global competitiveness.
And if innovation is important for countries’ competitiveness, it is an imperative in the corporate world. From mature and regulated sectors to young and volatile industries, every company needs to engage in some form of innovation. In 2014, The Boston Consulting Group (BCG) surveyed more than 1500 global senior executives, and 75% of them reported that innovation is among the top three priorities for their companies.
There are many reasons behind this trend.
Innovation is a key source of current and long-term competitive advantage. Evidence shows that those companies who pursue innovation are likely to survive longer and provide higher returns to shareholders. Through different forms of innovation, companies can put competitors at bay, increase barriers to entry and better fulfill customers’ present and future needs.
Innovation poses big challenges
Given all the potential benefits, it does not come as a surprise that innovation has become an imperative. The bad news is that innovation is not easy: making it a replicable process is challenging and many companies struggle to make it work. According to the BCG 2014 Innovators report, three in four companies rate their innovation capabilities as average at best. Companies aim to innovate but they lack the capabilities.
One could argue that innovation has always been challenging. Since the Industrial Revolution, companies have been forced to think and reinvent the way they create new products and services in order to survive. The trouble with today’s innovation is that the overall context in which the game is played keeps changing. Shifts in how knowledge is produced, in how markets are virtualized or how consumers are engaged are posing further challenges to companies pursuing innovation.
Sharing best practices to spur innovation forward
Given the imperative to innovate in today’s world and the challenges around it, sharing best practices, trends and unique insights on innovation becomes highly valuable to advance innovation and fully capture the value from it.
The innovation section of Cisco’s blog will fulfill this need. We will share our views, collective experiences and unique insights on innovation. You’ll find best practices from our company, from IT and other industries that will support your work and inspire you as a leader and innovator!
Enjoy the reading!
Director, Corporate Strategic Innovation