What drives successful companies over the long run? Determination, size, and skill certainly help, says Michael Ringel, managing director at Boston Consulting Group (BCG). But none of that matters if you don’t have integrated processes and technology to build on them for continuing success.
It turns out that innovation, perhaps more than anything else, is the real engine of success for businesses. And it pays large dividends. Research by BCG found that over the last 14 years the most innovative companies outperform the broader markets on shareholder return by 5.6%.
And in today’s highly turbulent environment, the ability to rapidly innovate rapidly and continuously over time offers a decisive competitive advantage. Yet maintaining leadership in innovation is really tough, BCG says, with only 8 of the original Top 50 companies managed to stay on their list over the 14 years of their research.
The reason for the churn? Part of the problem is that companies are stuck with aging business systems or use spreadsheets that make it hard to get access critical data or the right bill of materials (BOMs) that allow them to bring new ideas to market quickly. Hampered by fragmented data, scattered BOMs, and the lack of process integration, companies suffer from slower time to market, product quality issues, and slim margins. The result is an “innovation gap” that can leave your company lagging behind fast-moving industry innovators.
To jump start innovation – and keep driving it over time – the most successful companies unify their data and processes on a single “platform for innovation”. This integrates the entire value chain, from idea capture and product development to supply chain planning, manufacturing and maintenance to post-delivery customer service and success. In short, you translate the right ideas into value sooner.
Let’s look how continuous innovation drives success across five areas of your product and service lifecycle – develop, plan, source, make, and serve.
Ideas for great products or services can come from anywhere. But for innovation to be continuous and profitable, you need to have a framework for identifying and selecting great ideas that align with business strategy. But innovations don't start and stop with great ideas. You also need to develop them quickly and cost-effectively while ensuring they meet customer requirements, regulatory compliance, and market demand.
This can be a challenge when your product lifecycle management (PLM), supply chain, and manufacturing systems are outdated and managed in separate silos. These disconnected legacy systems weren’t designed to meet the digital requirements of today’s development processes. Often they’re engineering-centric, do a poor job of managing the complexities of global product launches, and aren’t built to support complete service offerings such as “product as a service.” To adopt a continuous innovation approach, you should consider a collaborative, end-to-end system that shares real-time data and standardizes development processes for faster decision-making.
When that data is tied together with built-in analytics, IoT, artificial intelligence (AI), and digital twin capabilities, you can make better product development decisions and go to market faster while ensuring the highest quality of your offerings. Now you can eliminate the time you spend integrating disconnected data and manual processes and turn your focus on what matters most: developing profitable innovations that meet customer requirements.
These days, balancing supply and demand has never been harder for planners. Market disruptions, shorter innovation and product cycles, and inefficient collaboration between product and supply chain teams have made it difficult to anticipate and meet shifting customer demand. Often these challenges can create barriers to innovation.
Top innovators have found that better planning can help them anticipate market demand and help development teams meet that demand with the right products and services. This requires you to closely align your supply chain planning with product development and design. A single platform with built-in analytics can help you do that, allowing you to deliver real-time insights and share accurate master data from the initial concept through to the rest of the supply chain organization.
These teams get a head start on identify the right parts and suppliers, at the right price, and match inventories to meet demand forecasts. IDC recently estimated that companies that institute a single, collaborative supply chain platform can improve innovation productivity by 10% and reduce product lead times by 42%.
Suppliers are increasingly playing a strategic role in the product development process in order to achieve design goals. However, many organizations are only involving their suppliers when it comes time to purchase goods and materials as opposed to including them early in new product development. This can lead to higher product costs and lost savings, reduced quality, latency and selecting suppliers that don’t align with your social or ethical standards. Unifying procurement and product development on a single integrated platform enables organizations to accelerate the pace of product development by improving the supplier qualification process and enables organizations to select the best suppliers.
By using a single and centralized system in the cloud that extends the product record across internal teams and external suppliers, companies can reuse existing items to reduce waste, monitor competitive supplier bids to achieve cost savings and have early visibility into innovations throughout the value chain to minimize risk and ensure sustainability. Now, sourcing raw materials for new products is streamlined and standardized, transparent information is shared throughout the product lifecycle to increase collaboration with your suppliers and mitigate potential supply disruptions.
Agile product planning can help innovation leaders bring their products to market faster, seizing first-mover advantage. But to keep customers coming back, you need to keep quality high and produce volumes that can scale quickly to meet demand. Even better is when you can rapidly create personalized and configured products for customers that further differentiate your offerings and propel revenue.
Top manufacturers are employing IoT and AI technologies to bring together and analyze feedback from customers, factories and even the products themselves (via IoT sensors), to maximize efficiencies and continually innovate the production process. These companies are also using technologies to help automate their production processes and analytics to gain predictive insights that can avert unexpected downtime and costly equipment failures.
Increasingly in many industries, companies are not just selling products, they’re selling “products as a service”. The traditional sell-and-forget sales model is being outpaced by the growing adoption of subscription services, pay-as-you grow, and consumption-based revenue models. According to a recent MIT survey, four out of five companies are currently evaluating these approaches.
Leading innovators are building new “anything as a service” business models around centralized cloud-based “insight engines” that continually collect and analyze the voice of the customer, the voice of the factory and the voice of the product. This enables you to prioritize innovations across the value chain and ensure a better customer experience.
Innovation often starts with your customers: Understanding what drives them to your products and discovering innovations that can keep them coming back for the next big thing. But that’s just the start of an end-to-end journey that engages every link in your value chain, from your development and supply chain teams, to your factories, field service teams, to your ongoing customer services and feedback loops. All of which supply the data and analytics you need to start your next cycle of continuous innovation, whether it’s creating new products or services, or enhancing your current portfolio.
Stay tuned to this blog series as we dig deeper into the benefits of innovation and how your organization can get started.
 Boston Consulting Group, “Serial Innovators Outperform in Times of Recovery,” June 22, 2020
 Through the end of 2019