Collaboration has been highlighted by technology, media and telecom (TMT) companies as key when it comes to gaining an advantage over their competitors.
This is according to a PricewaterhouseCoopers report, Learning from Innovation Leaders: Winning practices of the most successful technology, media and telecom innovators, which showcases the strategic and operational decisions that leading TMT companies make about innovation, and how these choices translate into more favourable returns.
Elmo Hildebrand, PwC Associate Director for Advisory Services, says: “The top 20% most innovative TMT companies follow strikingly consistent patterns when it comes to finding the right mix of innovation and maintaining flexibility to incorporate innovation into their existing business model”.
“Our research and analysis shows five main actions that set innovators apart from others in the TMT sector – these traits tend to result in opportunities for higher revenues and overall growth that others may miss out on.”
The report refers to the top 20% innovative companies as ‘innovation decathletes’ who excel at multiple innovation disciplines. They excel at multiple innovation disciplines rather than focusing on a single area of expertise.
The top five areas include:
* Intelligent risk-taking – the survey found that between 30% and 45% of the typical TMT company’s portfolio of innovation efforts are made up of radical and breakthrough innovation. However, the proportion of breakthrough and radical innovation is much higher in the portfolios of the leading TMT innovators. Leading innovators focus their breakthrough and radical innovation on technology, followed closely by products and systems and processes.
* Versatility – a large majority of TMT companies (90%) are finding new ways to innovate their existing products or services. The pursuit of these areas of business model innovation separates the top performers from the average TMT companies,” adds Hildebrand.
The ability to innovate business models assists companies in avoiding commoditisation. For instance, in the telecoms industry, traditional business models are under threat with monthly recurring charges for services gradually being replaced by alternative pricing models. Selling their core offering in new ways enable telecom services companies to enhance relationships with customers.
* Game plan – the leading TMT innovators are more likely to manage innovation formally, while the less sophisticated innovators manage their approach to innovation informally, according to the report. The majority of TMT innovators (88%) say they drive innovation across their entire organisation to ensure consistency of innovation efforts across business units and territories.
“This kind of well-orchestrated approach supports greater alignment between different teams and functional areas. It also promotes greater sharing of best practices and resources, and fosters greater discipline when developing and evaluating the commercial potential of innovative ideas,” adds Hildebrand.
* Endurance – investing in the right innovation infrastructure is vital for generating returns on innovation investment. When asked about the innovation operating models they think will drive the most growth for their business, there was a much higher instance of corporate venturing among the leading TMT innovators – 21% said that their practice would drive growth for their company, compared with only 13% of the TMT average.
* Collaboration – in a rapidly-changing market where competitive pressure is intensifying and R&D budgets are being squeezed, most companies cannot afford to undertake all of their innovations on their own. Collaboration and partnering have become standard practice for companies looking to generate breakthrough and radical innovations.
Collaboration was cited in the research as the key differentiator between TMT innovation leaders and laggards. Partnering and collaborating have their benefits; innovation leaders cited enhanced brand value and additional revenue streams in new markets as after effects.
Collaborating is also more structured and formalised, the report says. Most of the 20% most innovative TMT companies have a plan in place to collaborate with strategic partners (99%), customers (97%), suppliers (78%) and academics (74%).
Yet all of this innovation will have little effect if there are not well-orchestrated and coordinated internal structures in place, states the report. The most successful TMT innovators apply a more structured innovation approach which ensures the best ideas are gathered and organised into commercially-viable propositions.
This differs from the least innovative TMT companies, which take a much more informal, ad hoc approach toward innovation that has little connection to corporate goals and processes.
Hildebrand says: “Identifying the traits and habits of leading innovators and instituting a framework of innovation discipline have a direct correlation to higher revenues, larger market share and overall growth for TMT and all companies. Even companies that discover the ‘next big thing’ do not succeed unless they have a longer term, formal process to repeat and sustain innovation over time.”