The world is constantly changing. There are new complex challenges to tackle every day as global markets are becoming increasingly competitive. How can we compete in the 21st century? What does it take to overcome the unique challenges of our time?
Well, let’s take a look at the past 150 years. How did Thomas Edison invent a light bulb? How did Larry Page and Sergey Brin found Google?
While the invention of light bulbs and Google required a strong foundation in mathematics, science, and literacy, they also required a skill that is increasingly being sought after by the top CEOs of the world: innovation.
What exactly is innovation? The Webster dictionary defines it as “the introduction of something new.” Innovation is how revolutionary ideas are discovered, and it has the power to create many more ground-breaking ideas in the future.
As the global competition is becoming increasingly competitive, corporate leaders are constantly employing new strategies that focus on encouraging entrepreneurship and innovation.
According to the BCG Perspectives article “The Innovation Wave in Emerging Markets,” 85 percent of the CEOs of the world’s most innovative companies ranked innovation among their top three priorities, and 40 percent ranked it as the top priority for their companies.
Some of the most creative and successful ideas today are from emerging markets. Take Airbnb, for example, an American sharing-economy firm that is currently the largest hospitality exchange service in the world, with locations in virtually all countries around the globe. It has become very popular among frequent travelers, as hotel rates have been rising steadily since 2009.
Despite its benefit in both emerging markets and established firms, innovation has costs: not everyone can be innovative even if they want to. When the economy is slow, budgets for R&D are not always guaranteed, and it is therefore risky for businesses to launch their creative ideas. So why should companies invest in new ideas? Why is innovation such a big deal in emerging markets?
First of all, when tough times call for many budget constraints, having a sustainability-focused strategy can help your company maintain a growth rate and profit margins significantly above the average figures for your industry.
Second, there is only so much room for easy growth. At some point, a company will have to find another competitive advantage. This is evident in countries like China and India. Their advantage has traditionally been their low cost structures, but as that is shrinking, they are starting to heavily depend on innovation to find their next strong suit.
Third, the mindset in emerging markets strongly depends on innovation. The executives and entrepreneurs in China and India, for instance, are very open to investing in new ideas that they think could spur growth.
Being innovative will not solve all the problems, however. For innovation to equate to success, there must be a strong foundation of leadership and efficiency within an organization. A strong leader must be willing to encourage creativity, allow room for failure, challenge the status quo, and set clear goals and priorities. While being open-minded is important, leaders must be able to say no when appropriate.
As the economy improves, many companies are under pressure to cut costs while increasing output and efficiency. These goals can be achieved by focusing on innovation — exploring new ideas and taking advantage of current ideas.
An innovation-based strategy that balances creativity, leadership, and sustainability will help companies stay strong in emerging markets and become strong global competitors.