Booz & Company’s latest annual study of global innovation, The 2010 Innovation 1000: How the Top Innovators Keep Winning, surveyed more than 400 executives at companies worldwide to find out the characteristics of the most innovative firms. Here are the top 10 most innovative companies:
- Procter & Gamble
Not so surprising, right? “Of course those companies are innovative—they’re huge with budgets to match,” you might grumble. Well, hold on, because there are plenty of lessons that even the smallest business can learn from these big innovators. Reporting on the study in Forbes, study co-author Barry Jaruzelski shared some of the findings.
One finding that might surprise you: Money does not equal innovation. Seven of the top 10 innovators were not in the top 10 spenders on innovation. In fact, many companies identified as top innovators spent well below the average for their industries on R&D.
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So if they weren’t throwing money at innovation, what were the top innovators doing? The report found that most companies take one of two primary approaches to innovation.
1. Technology drivers: These companies develop cutting-edge products. They are skilled at spotting opportunities presented by emerging technologies and understanding product life cycles.
2. Need seekers: These companies innovate by finding unmet customer needs and creating products or services to fill them. They excel at understanding their customers and gaining insights into their needs and wants.
As for the actual innovation process, there are four things top innovators had in common—and they’re four things a small business can easily do.
1. Top innovators understand their customers and their tools. During the conceptualization stage of innovation, the top companies excelled at gaining insight into customer needs and understanding how to use emerging technologies to be more innovative. As a small business, you’re close enough to your customers to understand their needs—and you’re likely to be familiar with new technologies as you explore them to grow your business.
2. Top innovators test their ideas. Once concepts entered the product development stage, top companies actively engaged with their customers to test their ideas and evaluate the market potential of the new concepts. For a small business, especially one where the owner is the “face” of the company, engaging with customers at every step and getting honest feedback is often easier than it is for bigger companies.
3. Top innovators are prepared. In the commercialization stage, top innovators worked with pilot users to launch products “carefully, but quickly.” They also ensured the launch effort was coordinated across the whole company. For a small company with fewer layers of management, coordinating a rollout effort can be pretty simple.
4. Top innovators focus. Booz & Company found that the most innovative companies “know what they're good at, how those capabilities create value, and … the markets where those capabilities can earn them a right to win.” In other words, the best innovators know how to niche. Niching—isn’t that what small business is all about?
You can download the full report here for more insights.