Fast-Growth Companies Boast A Competitive Edge In Innovation.

Growth companies that have made innovation an enterprise-wide priority claim they are better at it than their strongest competitors. And, as a byproduct of their focus on innovation, they say they have also been blessed with improved business methods or financial performance. Among the greatest beneficiaries, however, are those that have linked innovation to success metrics for their business. Over the next 12 months this group is expecting revenue growth that’s a whopping 26 percent above the others that have also made innovation a priority.

Three-fourths of fast growth CEOs say their company makes innovation an organization- wide priority. And, among these, 73 percent rate their own business as better at innovation than their one or two strongest competitors: 42 percent say much better, and 31 percent somewhat better. Just 22 percent suggest they are about equal to their strongest competitors, and only five percent feel overmatched.

“New and better ideas move businesses to the front of the pack,” said Steve Hamm, managing partner of middle market advisory services for PricewaterhouseCoopers. “While it is clear that innovators are tough competitors, those making a high commitment to innovation are even tougher. Among the 75 percent of growth companies making innovation a priority, 36 percent have done so extensively, while the other 39 percent have made a lesser commitment. An amazing 84 percent of those making the greater commitment said they’re better at innovation than their strongest competitors: 58 percent said much better, and 26 percent somewhat better. Just 14 percent cited parity, and only two percent viewed a competitor as better.”

Innovation’s Legacy

Three-fourths (76 percent) of fast growth CEOs who have made innovation a priority report this commitment has improved the way they do business or their company’s financial performance: 36 percent say it has had an important impact; 40 percent see a moderate impact. “Breakthrough ideas create win-win scenarios,” said Mr. Hamm. “They enable workers to be more efficient in their jobs, and allow businesses to charge a premium for their products or services.”

CEOs giving a priority to innovation cite improvements in: efficiency of their organization (77 percent), earnings or profit margins (77 percent), revenue growth (71 percent), development of new products or services (68 percent), customer service (68 percent), business processes (66 percent), number of customers (60 percent), employee skill sets (58 percent), and delivery of products or services (55 percent).

“Again, those who have embraced innovation in a big way have reaped the greatest benefit,” said Mr. Hamm. “For this group, 83 percent say their emphasis on innovation has improved the way they do business or their company’s financial performance, with 51 percent saying it has had an important impact, and 32 percent a moderate one.”

Linkage of Innovation to Success Metrics

A strong minority of innovators (41 percent) has made an effort to link innovation to the success metrics of their business. Those making such a linkage concentrate on four success factors:

“CEOs linking innovation to success metrics for their business are expecting 12-month revenue growth that’s an eye-popping 26 percent above the others that have made innovation an enterprise-wide priority,” said Mr. Hamm.
Potential Barriers to Innovation
CEOs involved in innovation cite two potential barriers that could limit its contribution to their business:

“Ongoing advances in technology and business methods make innovation an essential element in individual companies, and our economy as a whole,” said Mr. Hamm. “To tap into innovation, businesses must have ready access to creative people, and foster a corporate culture that brings the best out of everyone.”

For more information at http://www.pwcglobal.com