Innovating for growth

A spiral approach to business model innovation

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The innovation spiral

For the most innovative companies today, innovation is not a linear process.

Innovation is a continuous cycle with ups and downs, inputs from different places, repetitions, failures and many steps back and forth.

Innovation enablers

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These are internal factors necessary for the innovation spiral to work. At the top are leadership mindset and culture: organizational leaders must be innovative and take risks to achieve competitive advantage. Once innovation is embedded in the culture, seven other factors need to be aligned to allow innovation to flourish:

  • People and skills
  • Technology
  • Infrastructure
  • Organization and governance
  • Risk management
  • Measurement and KPIs
  • Funding

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External collaboration

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The most innovative organizations collaborate throughout the process to access diverse internal and external expertise. This involves working with:

  • Customers
  • Investors
  • Suppliers
  • Governments
  • Financial services
  • Competitors
  • Academics
  • Other companies

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Innovation process

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Innovation has, up to now, typically followed a three-step process – idea creation, development and exploitation. Our research reveals a major shift in how leading companies go about innovation today, which includes:

  • Intuition
  • Socialization
  • Ideation
  • Development
  • Exploitation

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Areas of innovation

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Organizations typically innovate in three areas:

  • Products and services
  • Processes
  • Business model

Our research shows that although product and service innovations certainly help businesses obtain a competitive edge, business model innovation tends to confer more lasting benefits.

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Competitive advantage

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Innovation in business has become a determining factor in achieving a sustainable competitive advantage. Companies that are able to capitalize on the opportunities, manage the different areas of the innovation spiral, and align all this towards achieving specific business outcomes, can build a true competitive advantage that goes beyond individual brands, products and time.

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External environment

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The major market and economic circumstances that affect business. These include:

  • Technological advance
  • Regulatory uncertainty
  • Macroeconomic trends
  • Ecological concerns
  • Demographic shifts

These elements increase global exposure to risk, but they also offer major opportunities that can transform whole industries. Innovative companies know how to capitalize on the external environment to turn even adverse conditions to their advantage.

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Business outcomes

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Companies innovate to achieve five business outcomes:

  • Profitable growth
  • Customer engagement
  • Business sustainability
  • Productivity
  • Business agility

The challenge is to focus on all of these outcomes together, rather than favoring one over another, which compromises the ability to anticipate change and drive growth.

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Innovation enablers External collaboration Innovation process Areas of innovation Competitive advantage Business outcomes External environment
Innovation is not a strategy, it's a way of being.


Highlights from business innovation webcast
EY - Maria Pinelli moderating a discussion

Watch excerpts from session hosted by Maria Pinelli (Global Vice Chair, Strategic Growth Markets) and featuring leadership strategist Navi Radjou and Christina Lampe-Önnerud, founder of Boston-Power.


Watch the full business innovation webcast
EY - Maria Pinelli moderating a discussion


As Dr. Brian Junling Li, Vice President in the CEO’s office at China-based online marketplace Alibaba Group, puts it, “Innovation doesn’t come from organized plans. It comes from our preparedness to deal with the uncertainty of the future.”

The CEO of an electric-car network operator describes his company’s innovation process as “a back-and-forth activity, looking at the world without limitation and imagining what you could do, then looking at the results of that imagination and trying to engineer your way toward it.”

He adds, “You have to go back and forth between the two, so you have to raise your head above the clouds while keeping your feet on the ground. That’s why it is a spiral. You are running out to the imagination part and going back to the engineering part. Then you get to a point where the imagination and engineering meet.”

The spiral approach is a loosely structured, circular process that allows companies to connect with the various points of the spiral in different ways and at different times, ultimately reaching an innovative breakthrough.

By adopting this approach, the most innovative companies can:

  1. Take advantage of changes in the external environment
  2. Refresh your business model to achieve competitive advantage
  3. Build the right mindset and culture
  4. Innovate to obtain specific business outcomes

We also look at three steps you can take to move closer to innovation as well as the latest online discussions happening on the topic of innovation.


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EY - Growth through innovation - A spiral approach to business model innovation

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Contact

  • Maria Pinelli
    Global Vice Chair
    Strategic Growth Markets
    +44 (0) 207 980 0960

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