#18 Key Question: Does innovation pay off, and how does it work?

Innovation is one of the top three growth drivers on the agenda of CEOs of international market leaders. Innovation as a corporate growth engine means creating offerings, processes, and customer experiences as a result of a systematic process that are perceived as new by the demand side. The continuous change in markets and their determining factors along with the high degree of product interchangeability makes innovation a fundamental strategic driver for growth and value creation.

Innovation leaders are capable of continuously differentiating themselves competitively from their rivals through new developments and offerings for increased customer value. The strategic and financial performance of leading innovators increases in comparison to competitors due to above-average sales development along with superior utilization of experience curve effects internally and higher pricing power externally in the market. Innovation leaders accept 40% higher costs and 30% more development time for innovations than comparable competitors, however they achieve a four times higher return on investment through innovations.

Innovation leaders almost annually succeed in asserting their innovation strength against general market competition. They follow the same eight success factors of innovation management:

  1. Innovation is installed as a superior value of the strategic corporate target system.
  2. Innovation development is implemented as a self-propelling system throughout the company under C-level responsibility.
  3. Innovation-centered development and adaptation of business models.
  4. Systematic creativity sourcing.
  5. Return-focused investment and portfolio management.
  6. Investment in talented highly qualified employees.
  7. Involvement of external development partners and research institutes.
  8. Maximum input and effort in the lounging phase of innovations to market regarding human and financial resources, marketing impact and speed.
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