Lessons From Leaders: The Best Innovator Competition

The Best Innovator competition began in Germany in 2003, partly in response to rising concern among Western European incumbents that more sophisticated—and lower-cost—competitors from emerging nations were threatening their long-range profitability, and perhaps their survival. Contest organizers wanted to spotlight great innovators to show how innovation is done.

Now held in nearly 20 countries including many Western European countries, the United States, Russia, Brazil, and China, the competition has yielded a wealth of insights into how to excel in innovation management. This annual benchmarking against the best in innovation management focuses on the how-to of innovation and takes a deep look at what leading companies are doing to achieve better yield with their innovation strategies.

Every entrant begins with an online questionnaire. In this self-assessment, applicants describe their innovation strategies and the level of active support for realizing it, starting with top management. They also have an opportunity to provide more information about innovative approaches within the company or business unit.

A panel of judges analyzes the questionnaires and assesses innovation using both qualitative and quantitative criteria. The assessment measures crucial factors such as whether a culture of innovation is embedded within the organization. It is centrally concerned with the rigor and impact of processes for managing the innovation life cycle. Above all, it inquires whether innovation is continuous and successful.

From these initial entrants, those with the highest scores are short-listed for site visits by A.T. Kearney partners, which often include eye-opening discussions with CEOs and their innovation-management teams. After the site visits, winners are chosen using a structured assessment system based on both the questionnaire and the site visit. Winners are chosen by a panel of prominent judges drawn from industry, academia, and government. (To ensure no conflict of interest, A.T. Kearney is not part of the panel.) Win or lose, a confidential analysis of the innovation mechanisms is delivered to each contestant at the end of the competition.

Racing Ahead At Ferrari

Any company that says the first pillar of its innovation strategy is Formula 1 racing is going to attract attention. What makes a Ferrari one of the most sought-after automobiles in the world are the company's two other innovation pillars: brand and product.

“It's a self-fostering virtuous cycle,” says Roberto Fedeli, senior vice president of Ferrari R&D. “Clients will always expect innovation in a new Ferrari. Without innovation, the product pillar goes down in terms of sales. Without innovation, we die.”

The core value of Ferrari's innovation strategy is simple: the buyer's experience of the product, first and foremost.

“We sell emotions,” Fedeli says. “All our innovations target that. To increase the driving experience, drivers must feel the innovation.”

That places an emphasis on what Fedeli calls “know-how transfer from Formula 1.” It also stresses time to market, the speed with which Ferrari brings innovation to drivers. It marries know-how from its Formula 1 program with research already launched and already generating preliminary results, often drawing on research from other industries.

“The objective is to bring knowledge ‘on road' as soon as possible,” Fedeli says. “We are determined to bring an innovation from idea to the product within one to two years. This is possible only by aligning our innovation program with our cycle plan and defining which will be the first product to first use an innovation.”

This requires a complex operating model. Ferrari's processes, Fedeli says, are “well-defined, although not formalized, based on flexibility. We never freeze decisions or solutions until the very end of the process.” Consistency with product architecture and time to market is ensured by a hybrid organization balanced between research and development functions and project teams, which stay current with open options and new components in development.

“If there is an issue with a solution, it does not impact the product,” he says, “because we always have an alternative, a backup solution. We don't have a benchmark. We are the frontline of sports-car innovation. This is a differentiating aspect with respect to followers. It's culturally different.”

Perpetual Innovation is STMicroelectronics Competitive Differentiator

STMicroelectronics is the largest semiconductor company in Europe. Its innovation strategy is driven by two powerful facts: even at $8 billion annually, it competes against a wide range of companies in North America and Asia, some of which are much larger. And it competes in markets that are well-established (automobiles, computers and IT infrastructure, set-top boxes, and mobile phones), recent (sports- and fitness-related applications), and even nascent (medical applications). In all of its markets, the innovation life cycle is mercilessly short. Perpetual innovation is ST's only competitive choice.

ST knows that succeeding at its innovation strategy is beyond the scope of what it can do alone. When the company received the 2007 Best Innovator award in France, senior managers attributed ST's success to “a common work culture with all the players throughout our value chain, from research laboratories to suppliers, manufacturers, customers, as well as competitors.”

ST was formed out of the 1987 merger of Italy's SGS Microelettronica and France's Thomson Semiconducteurs. From its earliest years, ST tied the execution of its innovation strategy to long-term partnerships with key customers and suppliers, leading universities and research institutes, and even competitors. Today, almost 20 percent of its employees work in R&D and product design in one of the company's 10 advanced R&D centers across the globe.

ST has also been involved in key European R&D collaborative efforts, including the intergovernmental organization EUREKA and two public-private partnerships: the European Nanoelectronics Initiative Advisory Council (ENIAC) and Electronic Components and Systems for European Leadership (ECSEL).

“While costs for the industry were rising sky high,” says Jean-Marc Chery, ST's chief operating officer, “our deep-rooted culture of cooperation in R&D programs has enabled us to remain one of the leaders in technology process development and manufacturing in the industry.”

Innovation Driving Growth At Whirlpool

Whirlpool Corporation is a $19 billion appliance maker. Headquartered in Michigan, Whirlpool's products are sold in nearly every country on earth. More than a quarter of its worldwide revenue comes from its Latin American operation.

As an organization, Whirlpool is distinguished by attention to key performance indicators. The performance of every business unit head, for example, is measured against an expectation that 25 percent of a division's sales will come from recent innovations. In Latin America, that includes several products from Brastemp, the leading appliance brand in Brazil. Among Brastemp's innovations is the Smart Cook, the first stove to connect to smartphones, and its Ative washing machines that calculate the weight of the clothes and automatically measure soap and fabric softener.

Whirlpool Latin America is run from São Paulo. Among the observations of the Best Innovator judges in 2010, the year Whirlpool won its Best Innovator award, was that Brazilian companies are becoming steadily more international in the way they conceptualize innovation.

Whirlpool, for example, runs four technology centers in Brazil, each focused on one of the company's core product groups: refrigeration, laundry, cooking, and air conditioning. These are in addition to three manufacturing plants. According to Brazil's National Institute of Industrial Property, Whirlpool is the fourth-largest patent holder in the country. Of its 14,500 employees in Brazil, 700 are exclusively dedicated to Whirlpool's product research and development.

You can read more about innovation from A.T. Kearney in a column published in the May/June issue of SCMR, along with a Q&A with Kai Engel, one of the co-authors of Masters Of Innovation, and a book excerpt.

For more information, click on the link.

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