Innovating China

From “made in” to “imagined by”

In just 30 years, China has moved from being the 15th largest economy to, alongside the United States, the world’s largest. In the wake of this growth, a number of forces are emerging that are beginning to significantly impact Chinese businesses.

For example, expectations of Chinese customers are rapidly changing. They are growing in sophistication as they are exposed to more and more global trends and influences. They are demanding ever-expanding features, experiences and business models. Further, the Chinese economy is structurally evolving. Rising costs in China are driving lower-skill manufacturing activities to alternative low-cost countries. As in many other highly developed economies, economic activity is shifting from traditional manufacturing to services and knowledge activities. On the international front, as more Chinese companies expand beyond their domestic borders, they are constantly being challenged by ever-evolving global competition.

Outperforming organizations have leaders that explicitly promote innovation as a central business objective. Outperforming organizations are open to creating disruptive new business models. innovation objective. Industry model innovation. Innovation objective. Enterprise model innovation. Business leaders provide clear impetus for innovation. 50% outperformers. 33% global. 36% China.

As a result, Chinese companies are recognizing the need to continuously develop new and compelling value propositions to remain competitive. Indeed, one reason why many Chinese companies go global is to learn lessons from other markets to bring back to their core businesses. Companies in China are finding it imperative to develop market-specific offerings for divergent segments and environments.

To navigate these disruptions, organizations in China are rethinking how they do business – and in so doing, recognizing the need to embrace holistic innovation. In response, the Chinese government is already facilitating global competitiveness by developing business champions across strategic industries. Individual organizations also need to reposition innovation at the center of their own activities, and many are taking significant steps do to so. China-based organizations looking to become more innovative can learn valuable lessons from best practices of global innovation outperformers. Our analysis of responses to a global innovation survey of 1,004 executives (including 66 from China) across industries and countries, conducted jointly by the IBM Institute for Business Value and the Economist Intelligence Unit revealed three key areas that separate outperforming organizations from the rest.

  1. Organizational structures and functions that support innovation – The most successful organizations align innovation activities directly with business objectives, pursue “open” innovation structures and create specialized innovation teams.
  2. Cultural environments to make innovation thrive – The most successful organizations maintain a clear focus on innovation across all business activities, encouraging innovative behaviors and finding ways to sustain innovation momentum.
  3. Processes to convert ideas into innovation – The most successful organizations source new ideas from diverse locations, often leveraging big data and analytics; innovation is funded separately and measured rigorously.

For more information about how organizations in China can join the ranks of innovation outperformers, download the IBM Institute for Business Value executive report.

Download the IBM Institute for Business Value Executive Report

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