4.4 The Big Picture: The Cycle of Satisfaction

To the casual observer, innovation seems to appear out of nowhere. In reality, that seldom happens. Innovation comes from a creative, but disciplined design process. From 2005 to 2018, Strategy& asked the question, “What leads to R&D success?” To get an answer, Strategy& conducted an annual survey of the 1,000 largest corporate R&D spenders to uncover the secrets of “high-leverage innovators.”1 A consistent story emerged. Here are your key takeaways:

1. Spending. How much money you spend on R&D does NOT determine success. How you spend it does. The remaining points focus on how; that is, they share best practices!

2. Strategy. Based on its innovation strategy, your company might be a Need Seeker, Market Reader, or Technology Driver.

• Need SeekersCompanies that go straight to customers to identify new product ideas. go straight to customers to generate ideas.

• Market ReadersCompanies that monitor the market to quickly identify popular products. They then copy the best ideas, making incremental improvements. are fast followers—they monitor the market and incrementally improve the cool ideas.

• Technology DriversCompanies that rely on their technological expertise to drive new product ideas. rely on their technological expertise to drive both incremental and breakthrough innovations.

High-leverage innovators align innovation strategy to business strategy.

3. Deep Customer Insight. You have to know what your customers want—even if they can’t articulate their needs. Big data and digital reality are beginning to give decision makers key insight into why customers behave the way they do. Deep customer insight helps you make the key trade-offs inherent in creating new products.

4. End-to-End Process. Innovation is cross-functional. It requires top leadership involvement and company-wide support. Better visibility and control is needed to understand what is going on throughout the NPD process, especially in early stages of project selection and evaluation.

What does the research really mean? High-leverage innovators invest in and carefully manage an end-to-end, collaborative idea infrastructure (see Figure 4.7). Let's take a closer look at the core elements of an effective NPD process.