In an earlier blog, I warned about thoughtlessly following the practices of successful companies, hoping the magic would rub off on you. Buying in to the latest management fad. What I called “cargo cult management”. But human nature is human nature, and when I talk about the practice of innovation, the question that comes up often and early is “how do the most successful innovators do it?”. People want to talk about ideas they feel have evidence behind them. Ideas that have a track record from companies with a track record.

This is a question that needs cautious treatment. Blindly copying the methods of admired companies does not mean you will get the same results. Just because a successful business uses a specific approach, it does not follow that is why it is successful. Correlation is not the same as causation.

Learning from others is always worthwhile, but you need to make sure that the ideas you pick up fit your strategic objectives, your business context, your capabilities and your culture and values. Or adapt them until they do.

With that warning firmly in mind, what can we learn? I looked at books and articles from innovation experts and asked: “what are the common characteristics of an innovative business?”. Not the characteristics of an innovative individual, but a company. An organisation that brings together the talents of many people to create something new.

40 studies, 257 characteristics of success in 8 clusters

40 studies of what makes for successful innovation yielded 257 specific characteristics that the authors claimed led to outstanding performance.

Eight clusters covered 164 characteristics, accounting for two-thirds of the reported features. These clusters are a consensus view on what makes for successful innovation.

  1. Strategic Focus – Innovation should be at the heart of business strategy, and business strategy should drive innovation. Innovation should serve the purposes of the business. It is vital that the business understands the strategy and the role that innovation plays. There should be clarity of purpose for the innovation programme, and effective communication of the strategic goals of innovation throughout the organisation.
  2. Customer Focus – This is a key characteristic of innovative companies. Not thinking deeply enough about customer needs is a common mistake of innovators. Customers can help you find fresh ideas and sift out the best ones. Changes in customer demographics and expectations can inspire you. Observing people trying to meet their goals lets you spot unmet needs. You can involve the customer in early idea generation and throughout the innovation process.
  3. External focus – There are far more people innovating outside your organisation than inside. Learn from different sectors and cross-pollinate ideas. Use open innovation and innovation ecosystems to access theose external creators. Actively search out external viewpoints and bring them into your innovation process. All this will expand the range of your ideas and stops you being too inward looking.
  4. Collaboration – No company has all the relevant knowledge and capability at its fingertips. Strong and open collaboration helps to extend your reach through external networks. It is not only technology, you can find partners for manufacturing, supply chain, marketing and channels. Through outside partners you can co-create new products and services with ‘pro-sumers’ and companies in other sectors.
  5. Rapid Prototyping – Whatever sector you are in, if you can find a cheap and rapid way to check out a new idea with the target market, you can make faster progress and fewer mistakes. This leads to the phrase “learn fast, fail fast and fail cheap”. Sometimes you can put a test product directly into the hands of the customers. Sometimes you must do the best you can with mock-ups or simulations. However you approach it, avoiding heavy investment until you have done everything possible to make sure your idea will work for the user is a powerful idea.
  6. Supportive Culture and Processes – Successful companies have a mindset and culture that supports, encourages and rewards innovation. Usually with senior team commitment to innovation, and communication of that throughout the organisation. Innovative companies provide a safe environment for experimentation which can tolerate and celebrate failures. Giving status and recognition to innovators.
  7. Risk-Taking and Risk Management – Innovation and bringing new products and services to market is intrinsically risky. Successful companies show the confidence to take risks and to accept that some failure is inevitable. They also manage the risk using portfolio tools to map the expected risks and rewards of each innovation project.
  8. Innovation Processes and Metrics – A business should have methodical ways of selecting and executing innovation projects, and clear measures of success. Agreed processes and metrics are more important than what the specific processes and metrics are. A well-known metric is that in 3M 30% of a division’s sales must come from products less than four years old. Being clear about what an innovation project must deliver to the business, and how to kill it off if it is not delivering, helps everyone to make better decisions.

Successful innovators provide inspiration, not canned answers

By all means, look at successful companies for inspiration. Read their stories and understand how they tackle innovation. But think hard about how their strategy, culture, market context, and capabilities map onto your own. Copying and pasting foreign ways of working into your own business is unlikely to be successful. Creativity, flexibility, and experimentation are needed to adapt and blend these ideas into your own situation.

What are the Characteristics of Innovative Companies?
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