Hannover Messe

Every business leader understands that innovation is essential to their success. However, re-imagining how products and services are created at scale is more difficult than it appears. We discovered that few organisations triumph, most struggle, and some are completely disappointed after interviewing 1,350 global senior executives in major industrial sectors. This is especially true if businesses shift their focus from improving operational efficiency to creating new value for customers.

According to a survey, industrial organisations spent just over $100 billion deploying digital technologies to deliver new experiences and savings between 2016 and 2018. Despite this, 78 percent of the industrial enterprises in our sample struggled to meet their expected earnings. Only 22% of the industrial enterprises studied saw a return on their digital investments that was higher than expected. This small group of industrial enterprises, which we refer to as «Champions,» is mastering the digital shift and rising above the competition.

Our findings demonstrate that these organisations take a completely different approach to the organisational difficulties associated with innovation than their competitors. A rising number of industrial organisations are implementing digital technology across core business operations, ranging from artificial intelligence to robotics. In comparison to their sector counterparts, Champions achieve better than average returns on their digital investments, according to our analysis. Companies can extract the most value by resolving alignment issues and shortcomings in technological architecture, for example, with a potential of nearly tripling their profits.

Four alignment challenges every champion must overcome: 

• Digital value is being pushed down from the top.
• Stuck-in-the-middle-of-nowhere innovation
• Legacy technology architecture and future-focused talent
• Insiders struggle to keep up with outsiders' agility.

Four ways to scale innovation like a Champion and  maximize scale-up: 

• Define the value that will serve as a compass for your innovation activities.
• Internal organisational reform and outward digital value should be prioritised.
• Create in-house innovation factories that have a specific influence.
• Find out what makes each business function more innovative.

While the majority of the Champions in our study made decisions that put them in the position they are in now, other businesses can still become Champions. Identifying and defining the value spaces or market possibilities that would-be Champions seek to grab will likely benefit them almost immediately.