Keys trends in innovation management
In 2030 the global innovation management market is expected to grow to a staggering USD 2.6 billion, a more than 100% increase from its value of USD 1.1 billion in 2020.
Clearly, innovation is a vital component of any business strategy, as 84% of executives acknowledge its immense importance for their growth strategy.
2023, has certainly been an interesting year for innovation. The meteoric rise in popularity of the use of AI technologies has put a sharp spotlight on technological innovation, while the ongoing expansion of the startup ecosystem has been attracting corporate interest.
At Skipso, we have observed several trends that have taken centre stage over the past few years, as corporate innovation maturity levels have been increasing. We break down some of these key trends.
As the popular saying goes, "The customer is always right," and increasingly, corporate innovation leaders are recognizing the potential of customers to have the right ideas to help them innovate.
Today, companies are increasingly emphasizing customer-centric innovation. This approach to innovation revolves around gaining a deep understanding of customer problems and pain points in order to develop solutions that effectively address them. Accenture outlines that around 65% of high-growth companies today plan to collaborate with customers during the innovation process.
Some key customer-focused innovation methods include:
- Customer research: Companies have always used customer research to understand their customer needs, but today increasingly they are using this type of research method to understand the ways in which they can innovate.
- Customer feedback: Gathering customer feedback consistently is a critical component of ongoing improvement and constitutes another vital means of utilizing customer insights to drive innovation.
- Co-creation: Involving customers in the product development process is another direct technic companies are harnessing to drive innovation through customer engagement.
- Customer journey mapping: Innovative companies create maps of the customer journey to identify areas where the customer experience can be improved.
The concept of open innovation has been in existence since the late 1990s and early 2000s. However, in recent years, we have witnessed a significant increase in the number of companies embracing open innovation. Notably, companies are actively seeking ways to collaborate with startups to accelerate their innovation endeavours.
Currently, approximately 87% of executives consider startups as integral to the innovation process, with roughly 75% of companies already having a formal process in place for partnering with startups.
Why do corporations see startups as so crucial for their innovation strategies?
Startups play a pivotal role in driving innovation across various industries. Due to their inherent size large corporates are often stagnant in their innovation process because of several structural barriers that exist within these organizations. Startups are different, they are more agile, more quick to innovate and therefore have the greater potential to develop innovative business models that are capable of disrupting marketing quickly.
That's why increasingly choose to work with startups to breathe life into their innovation initiatives and give them a competitive advantage.
Today, a new innovation term has gained prominence: Decentralized Innovation.
What exactly is decentralized innovation? Decentralization differs from the traditional open innovation model. Open innovation focuses on more of a centralized approach where the process of innovation is driven by a single entity working with multiple stakeholders. Decentralized innovation takes on a different form, instead of a centralized approach, it is driven by an interconnected network of entities and organizations. These entities are often connected through platforms. Think for example of industrial association innovation initiatives as an example of decentralized innovation.
Decentralization aims to remove hierarchies, shifting decision-making processes in innovation from a central location to involve all relevant parties in the innovation process.
Data has become king within organizations across the globe. Around 75% of companies today say they use data to drive innovation. From using data to identify customer needs, to developing new product and service ideas, data has the potential to completely transform the innovation landscape.
AI serves as a prime illustration of how data can enhance innovation. Artificial Intelligence (AI) and Machine Learning (ML) are pioneering technologies that leverage data to automate tasks, enhance decision-making processes, and, ultimately, create tailor-made products and services that cater to the specific needs of customers.
Before it was all about disruption but increasingly corporates are moving towards more incremental forms of innovation.
While disruptive innovation is something all companies should aim for, it has become increasingly evident for organizations that in reality putting all their buckets into disruptive innovation can be short-sighted.
As a rule of thumb to gain maximise returns, innovators need to be dedicating around 70% of their resources to driving core or incremental innovation.
Incremental innovation helps drive the company forward at an even pace.
The rise of innovation hubs
In 2021, there were more than 2000 innovation hubs established globally. These hubs are experiencing significant growth across various key regions.
Today, cities such San Francisco, New York, Beijing, Shenzhen, London, and Tel Aviv, have witnessed the emergence of thriving innovation hubs, that are being recognised all over the world.
An innovation hub is a collaborative space that serves as a focal point for creativity, bringing together a diverse community of individuals, startups, established companies, researchers, and experts in various fields to collectively work on innovative projects. They offer support to emerging businesses as they navigate the changes of growth.
By supporting innovation they not only help these companies grow but they help support the community of the local region they are in.
Adoption of innovation management software
According to PWC innovation software solutions exist to help companies:
- Interconnect the firm with parties of your own innovation ecosystem;
- Enable the distributed collaboration between parties of the ecosystem;
- Engage the parties of the ecosystem on initiatives of open innovation of different nature (such as Call4ideas, external continuous innovation, Hackatho, etc);
- Involve external parties in processes of evaluation of the ideas;
- Search within the ecosystem the adequate competencies to develop the innovation;
- Map the life cycle of the relationships with the parties of the ecosystem;
- Monitor the achievement of the results, or outcomes, of the implemented innovation initiatives.
Today, the global innovation management software market is expected to grow from USD 897.07 million in 2022 to USD 5574.72 million by 2028, at a CAGR of 35.59%.
Over the last few years, the adoption of Innovation Management Software has been steadily rising as corporate innovation teams have seen they need one single tool to manage all their innovation.
Long gone are the days of using CRM tools or Excel spreadsheets to manage innovation, it is estimated that companies that utilize an innovation software solution to manage their innovation initiatives see improvement in terms of the quality of the innovation management and the ability to transform ideas into solutions, helping to reduce the time needed to manage innovation by up to 40%.
As the landscape of innovation management is changing so is the landscape of innovation management. Today several key trends are emerging in the market of innovation. In this dynamic environment, adaptation and the embrace of cutting-edge models of innovation and tools are paramount for sustained success in the innovation space. We can’t wait to see whats next!