Innovate to Thrive in the Next Decade

Innovation allows companies to achieve higher levels of growth, profitability, employee engagement, and success.

By Lisa Anderson, Founder and President, LMA Consulting Group

Innovate to Thrive in the Next Decade

Innovation allows companies to achieve higher levels of growth, profitability, employee engagement, and success.

According to the Global Innovation Index (GII), Switzerland ranks first in the world with the United States edging out Sweden for the second position. China continues to ascend and is in the eleventh position and the only middle-income economy within the top 30. India also rated number one in the lower-middle-income category. It is apparent that innovation, growth, and success seem to go hand in hand. This insight rings true in the business world as well. The most innovative clients have the highest levels of growth, profitability, employee engagement, and success.

New Product Development

One of the most visible forms of innovation is developing new products and submitting patents. No manufacturer can thrive long term without a keen eye to research and development, designing new products, and upgrading existing products. The World Intellectual Property Organization (WIPO) reported that the demand for patents hit record levels in 2022. It is no accident that India’s patent applications shot up by 25% as it emerges in the manufacturing realm. China filed the most international patent applications, followed by the United States and Japan.

New products can drive success. For example, at a lighting manufacturer, the CEO put a heavy emphasis on designing new products to enter new markets and maintain their top position in their industry. He was one of the only executives investing in people at the height of the Great Recession. Excellent talent was available, and so he hired when the competition cut and invested resources into research and development. Fast-forward a few years and the company had developed new products, got architects to spec their products into plans, and it was growing steadily in the new market.

Supply Chain Innovation

Innovation does not come just in the form of new products. You can reconfigure, repackage, develop new services, and find ways to meet unmet needs. These forms of innovation can be far more important, as few people develop the new sticky pad. Even the iPhone was an iteration of the iPod, which was simply a better Sony Walkman. Supply chain innovation can be a critical ingredient to success in the next decade. During the pandemic, executives learned that supply chain should be integral to their strategy to drive profitable growth. Start with your ideal customer and find the best way to grow and innovate with them.

For example, in a piping insulation manufacturing company, providing high-quality products and rapid service was a cornerstone to growing the business. The company had built a distribution network to position product closer to its customers to provide short lead times and quick turnaround service; however, since it didn’t store all items at these distribution centers, it also experienced increased freight costs to supplement customer orders and ship direct from the manufacturing facility when needed. Service suffered because the right product was not in the right place at the right time, and storage costs increased with this model and due to the bulky nature of the product. Thus, a focus was put on innovating the supply chain model to find a new solution to provide short lead times and high service levels while minimizing costs and inventory.

The executives invested in supply chain consultants, supported innovation with trials/pilots of new replenishment strategies, rolled out advanced ERP and planning system functionality, reviewed and upgraded processes, and designed inventory analytics to support improved service at lower costs and inventory levels. Not only did service levels dramatically improve from the high 30-percents to the 90-percents for on-time-in-full (OTIF), but costs and inventory levels were reduced. As improved and predictive information became available with business analysis and reporting, the company was also able to make key pricing, product rationalization, and service policy decisions sooner and created a resilient supply chain.

Operational excellence is no longer enough. Innovation has become cornerstone to success. There will be more opportunity than ever before during the next decade, but only for those companies continually innovating and improving with changing circumstances. Those that innovate will be ready to take advantage of market opportunities and will pivot with evolving conditions. Will you innovate and grow or decline and die?