What differentiates a truly innovative company, one that consistently and successfully brings new products to market, and one that is not? Do you know? If not, don't worry, because researchers don't either.
This was the conclusion of a
"The survey focuses on product development in a very general sense: we're looking at consulting companies and banks, travel agencies and tech companies, and so on," said Max Von Zedtwitz, a professor at Kaunas University of Technology in Lithuania, one of the study's co-authors. "We ask: Do these companies hit their financial targets, their revenue targets, their product development targets? Are they successful in comparison with others? Therefore, if a company is the Best by PDMA criteria, it is financially profitable and is competitive. Overall, such companies meet their expectations as far as products and programs are concerned. In other words, these simply are the best companies."
Each time, researchers have failed to find a single unique practice shared between the most innovative companies and this time was no exception. While 213 companies were characterized as the best (32.3%) and 416 as the rest (67.7%), similar to previous surveys, the researchers could not point out a single unique practice that would separate the two.
Not that there aren't broad commonalities. Overall, having a more innovation-focused strategy was found to be strongly associated with being one of the firms rated as best, which means they focus more on radical innovation projects versus incremental or even significant projects. They also tend to take more risks, think more long-term, and strive for growth through new markets and new technologies. Firms in the best category also tend to spend more on all kinds of different projects, investing in innovation even in a crisis like the pandemic. While this can give a general impression of the kinds of companies that are especially innovative, even the researchers agree this isn't enough to pin down specific practices common to all successful companies.
"Other than strategy's importance, no one other factor seems to be required for higher innovation performance," said the paper. "Consistent with advice from all previous BP studies, firms need to constantly improve their [new product development] capabilities and practices just to remain on par with competitors. Rather than excelling in a single NPD star practice, the Best become masters at orchestrating multiple capabilities, where none in and of themselves is uniquely decisive for top performance, but together they add up to a fortune of innovation power."
The researchers noted that the success rate of new product development has remained remarkably consistent over the years; the current 59.6% rate has not changed materially in 30 years. While the differences between the best and rest companies are statistically significant, the researchers noted the absolute differences are not very large.
"Numerous new tools and practices such as stage-gate, concurrent, water-fall, and agile product development processes, Voice-of-the-Customer research, virtual team management, and electronic communication techniques and advanced digital development tools, have been implemented by firms, and they have improved the efficiency and effectiveness of NPD programs," said the paper's conclusion. "Together, these results imply that all firms must continually evolve their NPD capabilities just to 'stay in the game' as circumstances and the environment change."
