It’s not surprising that companies want to invest more in innovation as the market heats up. Being known as “innovative” is what helps businesses stand apart as leaders. Consider who ranked highest in BCG’s report – for the fourth straight year – on the list of the top 50 most innovative companies: Apple and Google. Apple, a company essentially synonymous with innovation, was the hands-down leader.
Being known as a leader in innovation is not just important for winning customers and besting the competition in the marketplace. It’s also what allows companies to secure top talent, attract investors and keep shareholders happy. The correlation between innovation and shareholder return is quite impressive: BCG’s report revealed that on an annualized basis, innovators outperformed their peers by 12.4 percent over three years in total shareholder return.
The most innovative companies in the world rely on enterprise social networking to collaborate, share and test ideas, identify new opportunities for growth and build stronger relationships with customers. Social business software (often referred to as enterprise 2.0 or enterprise business networking software) is also generating significant ROI for many of these companies, according to survey results published by analyst firms such as Abderdeen, Constellation, Forrester, Gartner and IDC. Figure 1, based on some of those findings, illustrates the types of social business ROI innovative companies are experiencing.
However, make no mistake that innovation – the kind that translates into market leadership and financial returns – is not just about idea generation. Having the right enterprise social strategy to execute effectively on great ideas is also essential. Today’s businesses need to allow employees to collaborate transparently and socially so that the best ideas can surface, be debated, and then voted on. But to succeed, they also must ensure the ideas they choose to build on are vetted by customer and expert validation before these businesses invest in productizing them.
A great example of how companies can benefit from customer validation of ideas is in software development. In the past, the best practice followed by product management in developing new software was to create a lengthy product requirements document, which would then be reviewed by peers before becoming the plan of record. In today’s connected world, product management teams can leverage online social networking in the enterprise to connect with customers and receive direct and real-time feedback on product enhancements or new features. The benefits of such agile customer learning include improved customer loyalty thanks to the unprecedented transparency of the process, the ability to predict which customers (based on their comments) would be open to future upgrades, and the opening of new opportunities to gain intelligence in the sales and product planning cycle.
Social platforms can also be highly effective in helping fuel the idea generation process, but to realize ideas fully and take them to market successfully also requires an enterprise social strategy. For example, some companies run structured idea jams that proceed over a period of time (say three days to three weeks) to develop the best ideas. Others have community managers who consciously create and implement strategies to improve participation of key stakeholders. But generating ideas in an idea jam isn’t worthwhile unless there is also a process to bring them to market in a new or modified product or service offering. This can mean taking ideas that bubble up through the organization and matching them with the right experts, presenting them to the right product teams and, finally, executing with speed. Even more than that, it’s about bringing new or modified products or services to market at exactly the right time.
This kind of dynamic and collaborative approach to idea generation is a key element of business agility and is one of the visionary traits that truly innovative companies have in common.
Milind Pansare is Senior Director for Enterprise Social Networking at Saba.