Innovation matters. Especially in a crisis.
In fact, from 2020 to 2021, there has been a tremendous shift in emphasis and investment in innovation as organizations grapple with unfamiliar challenges. Earlier this year, BCG released the Most Innovative Companies 2021 report to identify today’s leaders and help others understand what they have in common.
At the highest level, our research suggests that innovative companies are better positioned to recover and thrive in increasingly dynamic markets. The data shows that innovation isn’t just a critical source of competitive advantage. It’s the key to survival. Less imaginative incumbents can’t keep up.
As the world continues its battle with the coronavirus, companies find themselves having to adapt their business models and ways of working to meet today’s challenges and prepare for the uncertainties of tomorrow. Perhaps that’s why 75% of the businesses we studied reported that innovation is one of their top three priorities in 2021, and 63% have increased their R&D and development budgets accordingly.
The financial move makes sense, given innovation’s importance, but that doesn’t mean throwing money in this direction guarantees outperformance or that it is even entirely necessary.
Apple, Alphabet, and Amazon topped this year’s list of the most innovative companies. The reality is that each of these players spends approximately 15% of sales on innovation—allocating, on average, a proportion that is aligned with many other businesses. The reason they see three times the returns, then, comes down to their operating practices, investment choices, customer engagement models, and improved decision-making abilities. But by applying some of the lessons that can be learned from them—and identifying an innovation agenda that will support business-specific goals—others can start to reap similar benefits while increasing their returns. We’ve laid out the five most important dimensions for CEOs to consider on their innovation journeys.
Not every company can reach the same heights as these tech giants. But by applying some of the lessons that can be learned from them—and identifying an innovation agenda that will support business-specific goals—others can start to reap similar benefits while increasing their returns. We’ve laid out the five most important dimensions for CEOs to consider on their innovation journeys.
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