To say that manufacturing is in a state of flux would be an understatement.
From insurgents like Amazon and Alibaba entering the parts space to entirely new business models amid the global pandemic, manufacturers have been faced with a harsh reality over the last few years: innovate or die. But in an industry that is renowned for being slow-moving and deliberate, the rapid need for widespread innovation has created several interesting wrinkles and prevailing trends among its constituents.
And manufacturing is not alone.
Recently, as part of our annual 2021 Innovation R&D and Innovation Agenda study, which polled 300 senior innovation decisions makers at companies with annual revenues of at least $1 billion, including 60 within the manufacturing and durable-goods categories—we uncovered several emerging trends that are dominating the innovation-management space in manufacturing and beyond.
Here are some key takeaways from the research that the manufacturing and durable goods industries should keep in mind.
COVID to translate into bigger innovation budgets
The COVID-19 pandemic has been one of the most disruptive periods in business history. Demanding “on the dime” innovation, organizations throughout the business world—including in manufacturing and durable goods—were forced to revamp their Innovation Ops in order to keep up with evolutions occurring on-the-ground. With that, per the study’s findings, 60% of respondents said that they planned to see their innovation budgets jump in the wake of the pandemic—with many saying they expected a significant bump.
Additionally, 57% of respondents said that they were aiming to be leaders and disruptors in innovation rather than following the pack—thus signaling growing innovation ambitions across the board.
Outdated measurement threatens innovation gains
Despite sophisticated metrics in other business divisions, measurement continues to be a problem for many Innovation Ops teams today. For starters, many teams are relying on metrics and measurement techniques that are not appropriate gauges of innovation success at all. For example, 43% of respondents said that a straight project-by-project financial reckoning was among their most common innovation measurement metrics.
Moreover, nearly a fifth said it was their only meaningful innovation measure. In order to drive innovation success, manufacturers and durable-goods businesses need to move away from the traditional measurement rubrics they use elsewhere in their organizations and adopt fit-for-purpose metrics that will enable them to create robust, repeatable and scalable innovation programs.
Conflicting innovation priorities
Settling on priorities is proving to be a major stumbling block for Innovation Ops teams, as well. While a majority of respondents said that they buy into their organization’s innovation vision and strategy, priorities quickly diverge—whether for bureaucratic reasons, disorganization or other factors—once things get to the implementation. The results separate innovation winners and laggards.
Companies that experienced high growth as innovation leaders cited priorities such as capturing new markets or novel whitespace (76% of respondents) and introducing disruptive innovations (59% of respondents) as important or very important to their innovation programs. However, these two outcomes were the least important among all other companies, particularly companies lagging in their industry.
Granted, no two organizations are truly alike when it comes to innovation goals and strategies. But it is imperative that there is alignment on best practices and goals within each organization itself, from the C-suite to innovation teams.
We have only seen the tip of the iceberg when it comes to how COVID-19 has impacted corporate innovation. Ambitions and buzz around innovation are at an all-time high. Yet, if corporations do not take steps to rectify some of the longstanding issues that have plagued their Innovation Ops for decades, many could experience a very costly false-innovation dawn.
By Robert Lowe, CEO and founder of Wellspring
