Innovation is a clear goal for most - strategies and approaches are still works in progress

As expected, the percentage of organizations with innovation goals varies by size. Nearly all (95%) large organizations (more than $10 billion in net revenue) have clearly defined goals, while just 50% of smaller organizations ($500 million to $999.99 million) currently have such goals.

Goals are only part of the innovation formula. To achieve near- and long-term success, there must be a strategy to achieve those goals. Here, on average and as expected, the numbers fall off a bit. Overall, 54% of organizations have a perceived clear innovation strategy and just over 40% are currently developing one. This is not surprising – innovation should be viewed as reimagining the business and creating potential new processes and opportunities until the focus shifts to drive business value. Strategy does not have to be the catalyst for innovation.

The numbers vary by organization size, with 76% of large companies having a clear innovation strategy, yet only 26% of smaller organizations having one.

The key takeaway: Organizations must differentiate between goals and strategy, and better define what those two categories mean to the business, since achieving goals (what you would like to achieve) is often confused with developing a strategy (how you will achieve it).

When it comes to the areas of innovation on which companies are focusing, efforts are geared more toward the optimization of current systems, products and processes. However, a significant amount of their efforts are also dedicated to building resilience and generating growth in revenue and new markets.

CIOs, CTOs and IT leaders should collaborate with the board and their C-suite colleagues to define how and where innovation activities should be engaged as well as the desired goals, as part of the organization’s broader business strategy.

Innovation breaks down to creating and reimagining products, services, solutions and operations. However, innovation without a defined strategy can be risky in any number of ways – for example, outcomes not achieved, budget overruns or lack of executive buy in. Although 79% of organizations have clear innovation goals and 54% have a clear innovation strategy, there is the possibility that most organizations only have notional objectives of what they want as opposed to a fully developed and actionable strategy.

Research, exploration and testing are important parts of driving innovation. For many organizations, that translates to either creating a test environment (a lab) or putting together a group of experts (a think tank) to investigate innovation. Most large organizations (86%) are pursuing those options, while only one in five smaller organizations are doing so.

There are several factors that have an impact here, including budgets, staffing and the level of innovation required. That said, organizations should not innovate blindly. Instead, they should consider pilot projects, testing and applying the appropriate expertise (either from inside or outside the organization). Organizations should also consider implementing new concepts and ideologies such as design thinking and agile or lean methodologies to accelerate the potential of innovation.

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As important as innovation is, companies are still facing challenges moving ahead with these projects. The most significant of these challenges is regulatory and compliance requirements, by a notable margin. Security risks are among the top challenges as well.