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Example Cases
Learn valuable lessons from these organisations:
Gentex Corp
Innovation Strategy Leads to a Significant Net Profit Margin
Gentex Corporation believed that innovation processes were learnable skills and achieved extraordinary levels of profitability due to its product innovation and technology leadership work. An in depth study of the manufacturing businesses systems for delivering innovation results was carried out by the Centre for Automotive Research and this revealed that Gentex:
- Had mastered all the innovation disciplines;
- Was strongly focused upon the central role of innovation in its business strategy;
- Had developed very disciplined systems for product development , and this included close integration between R&D and production departments;
- Had a culture which emphasised the value of collaboration, communication and sharing of information;
- Measured innovation results with these results being linked to employee performance evaluation and compensation.
In 2004 Gentex achieved an enviable net profit margin of 22.7%. (Cleveland, 2004)
Colgate-Palmolive
Innovation Strategies and Customer Intelligence Gathering
Colgate’s passion for investigating and understanding customer needs led it to conduct millions upon millions of interviews in stores, homes, and other places enabling potential buyers and/or users to be reached in order to accumulate valuable, competitive, and proprietary customer information. Colgate followed the changing needs of consumers and took note of the differences between consumer needs and preferences in various countries. The company established regional new product innovation centres to analyse customer intelligence and from this information developed new, high-growth products. As a result the percentage of Colgate’s revenues coming from new products rose from 25% to 38% over the five years 1997 – 2000, and significant new product launches were made every year. (Litman & Lohrmann, 2002)
Bristol-Myers Squibb Co.
Innovation Strategy in a Pharmaceutical Company
Bristol-Myers Squibb (BMS), a global pharmaceutical firm, involved its employees in constantly seeking innovative new ideas. The company instituted a series of “ideation” campaigns which generated ideas from many sources. The company installed “tip-lines” on its intranet which enabled employees to easily submit ideas. In a typical campaign some 4000 individual ideas were generated. (Tucker, 2003)
Proctor and Gamble (P&G)
Innovation Strategy Leads to a Significant Increase in Earnings
Both internal and external innovation strategies were used to accelerate P&G’s R&D output. By competing on multiple fronts and simultaneously using technology, and innovation strategies P&G was able to deliver new products across multiple markets at higher frequencies than previously. The organisation emphasised perceived customer value rather than traditional technical product performance. P&G sought to create experiences for consumers using `holistic innovation` practices. The components of holistic innovation included:
- The product technology to achieve the desired performance;
- The manufacturing technology to deliver the product at the right price point and;
- The conceptual/aesthetic aspects of the product’s performance, appearance and packaging.
P&G also integrated some 35 % of its internal R&D work with R&D organisations. Computer modelling was used to facilitate a fast cycle learning methodology, both for development work, and for customer testing activities. P&G’s innovation strategies contributed to a 19% increase in sales, and a 25% increase in earnings at the time of writing. (Teresko, 2005)
Maytag Corporation
Innovation Strategy’s Six Characteristics
Six innovative characteristics were employed by US company Maytag in the creation of innovative kitchen appliances. These were:
- A keen focus on the customer and the customer’s voice throughout the organisation. Ethnographic visits to kitchens yielded invaluable user insights. Focus groups tested 10 prototypes derived from some 200 sketches leading to the design of kitchen appliances with unique aesthetics.
- A dynamic innovation process lead by a multidisciplinary team of eight people (separated from the company’s normal operations) with backgrounds in engineering, marketing, operations, sales, and strategy.
- Leadership-sponsorship and endorsement at the highest levels with innovation stewardship throughout the organisation.
- Continual focus on improvement and incremental innovation with an eye on disruptive opportunities. Radical technical innovations were sought and numerous incremental innovations were made.
- Willingness to seek outside insights through research and surveys. Many competitive benchmarks were surpassed.
- An appreciation for creative thinking i.e. to stimulate the creative-spark. (Rollins, 2004)
IBM - Corporate HQ
New Product Design Strategy Engages Customers as Partners
IBM networked both internally and externally to tap into all available innovation services in a bid to develop customer valued products. The strategy involved three main principles:
- Engaging customers as partners - IBM`s researchers spent 25% of their time with clients, and scientists from an innovation services group and spent up to 50% of their time with customers seeking to transform IBM`s inventions into innovative solutions.
- Sourcing and marketing anywhere - IBM sourced inventions externally e.g. Stanford University, and licensed its intellectual property to partners and even rivals earning some US $10 billion in royalties since 1993.
- Anticipate as well as respond to changes - external collaboration with clients helped IBM to harness valuable technology and business insights that were fed back into IBM`s R&D, software, hardware, and services groups for the development of new inventions and innovations. (Radjou, 2005)
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