Remember growth? The corporate über-goal every senior management team spent days worrying about in strategy meetings before the global recession? Well, it’s back in fashion. But how do companies achieve growth again in the New Normal? Global management consultants McKinsey and Co. have been trying to find out.
In a new survey from the corporate front line, titled “Innovation and Commercialization 2010,” the vast majority of senior management respondents rank innovation as a critical priority for future growth. In fact, innovation is cited as “very” or ”extremely” important by 80% of executives seeking to expand their core businesses, and by more than 90% of executives at companies in the early stages of expansion.
Of course, there may be little choice left for many manufacturing executives in the current economic climate. After cutting everything in the organization to the bone over the past two years — by closing unprofitable plants, divesting non-core businesses, firing a small army of staff, and reducing travel budgets to the cost of a repair kit for the corporate bicycle — there’s only one thing left to do: Expand.
The McKinsey innovation study shows that the current corporate focus is clearly on organic growth in existing markets, through new products and services (68%), and through the pursuit of new customers (63%), rather than growth fuelled by entering new markets or M&A.
But while companies are hoping that innovation will help drive this organic growth, their management of innovation hasn’t changed, McKinsey says. Nor, it seems, have the barriers. Looking back over the last few years, McKinsey points out that companies ”have made little progress in surmounting” the core barriers to successful innovation.
Time for a rethink, then, perhaps most obviously in how companies approach collaboration. For example, in the survey, only 44% of respondents say their companies have tried partnering more successfully with suppliers and technology firms; even fewer, 39%, have integrated customer insights into the innovation process.
Worse, only 30% of respondents report that their current partnerships and open innovation strategies have been ”extremely” or ”very” effective.
Clearly there’s lots of room for improvement here. Collaboration can deliver exceptional results, but an enlightened approach to the real challenges in such relationships is now needed more than ever to overcome the obstacles to success.
