BCG Study Finds Executive Frustration With Innovation Rising Around the Globe



    Leaders Recognize Innovation Is Critical, but Many Feel Benefits Are
    Elusive; Risk-Averse Culture and Lack of Speed Seen as Biggest Obstacles

    Most-Satisfied Companies: Technology, Telecom and Travel/Hospitality
    Least-Satisfied: Financial Services and Retail
    Highest-Spenders: Automotive

    BOSTON, MA, Aug. 2 /CNW/ - The Boston Consulting Group's (BCG's) fourth
annual global survey and report on innovation illuminates deepening executive
frustration with innovation returns. It also shows continued recognition that
innovation is an imperative for performance and growth.
    Of the nearly 2,500 executives BCG surveyed worldwide, only 46% said they
were satisfied with returns on innovation spending, compared with 52% in 2006.
Two-thirds (66%) said they considered innovation a top-three priority, versus
72% the prior year, and 67% said they plan to increase innovation spending,
versus 72% the year before.
    "Most companies consider innovation important, often critical, to their
business. Yet they're increasingly frustrated," said BCG Senior Partner James
P. Andrew, the lead author of Innovation 2007. "They feel they should be
getting more from their innovation efforts: more and better new products and
services; stronger internal processes; improved customer experiences and more
effective business models. Yet, in many cases, these benefits remain elusive."
    Andrew leads BCG's Innovation practice and co-authored the recent
best-seller, Payback: Reaping the Rewards of Innovation (Harvard Business
School Press, January 2007) with Harold L. Sirkin, one of the report's
co-authors. "Based on the 2007 survey," Andrew continued, "companies seem to
believe it's getting harder to innovate. That's not the case. Innovation has
always been hard. Creating an innovative company takes a lot of work - often
rewiring the DNA of the organization. It's worth the effort; successful
innovation is the surest way to build asset value and shareholder return."
    Innovation 2007 is a report on and analysis of findings of a survey,
completed earlier this year, of nearly 2,500 executives worldwide. Insights
from the survey are expanded upon in a companion report, Measuring Innovation
2007. The survey was conducted in conjunction with BusinessWeek, which
published a ranking of the most innovative companies.

    
    Following are selected findings and insights from Innovation 2007:

    Nothing Helps a Company Like Successful Innovation

    -   Leading global innovators - the companies survey respondents said are
        most innovative - outperform their peers by nearly 400 basis points
        per year in terms of stock price.

    Executives Care More About Innovations for Existing Customers Than
    Breakthroughs to New Markets

    -   Nearly all executives (92%) said the kind of innovation they think is
        most important is "new offerings for existing customers," followed by
        "offerings that allow expansion to new customers" (85%).

    The Biggest Obstacles to Innovation: Risk-Averse Culture and Failure to
    Focus on Speed

    -   When asked what's preventing better innovation returns, executives
        most often cited "risk-averse corporate culture" (38%) and "overly
        lengthy development times" (36%).

    -   Most executives (54%) said their companies did a poor job moving from
        idea generation to initial sales quickly enough. This view was
        particularly true among industrial and manufacturing executives
        (65%), energy companies (64%), and consumer products makers (61%).

    Frustration May be Linked to Not Having the Right Innovation Metrics -
    Ones That Could Prompt Better Innovation Performance

    -   Among the measures companies use to gauge innovation effectiveness,
        the least popular, i.e., least used, ones could be the metrics that
        would drive better performance: time to market (used by only 18%) and
        return on innovation investment (used by only 22%). The most popular
        metrics are customer satisfaction (57%) and overall revenue growth
        (51%).

    Tech, Telecommunications and Travel Companies Are the Most Satisfied with
    Innovation Returns

    -   More than half (51%) of technology, telecommunications, and
        travel/hospitality executives were satisfied with their companies'
        innovation efforts; the least satisfied were financial services
        executives (41%) and retailers (43%).

    Asian and European Companies Are Most Likely to Increase Innovation
    Spending

    -   76% of Asian companies and 74% of European companies anticipate
        innovation spending increases. Only 64% of North American companies
        said they'll spend more on innovation.

    In Terms of Industries, Automakers Will Spend the Most

    -   76% of automotive companies said they'll increase spending, followed
        by entertainment and media (73%); energy (71%), and healthcare
        (including biotech and pharmaceuticals) and manufacturing (70%).

    Companies Are Ratcheting Up Innovation Investments in China, India and
    Other Rapidly Developing Economies (RDEs)

    -   38% of executives said their companies are increasing innovation
        spending in RDEs - mainly for the purpose of product development.

    The Most Innovative Companies, According to Global Executives

    -   For the third year in a row, executives said Apple is the world's
        most innovative company. It's followed by Google, Toyota, General
        Electric, Microsoft, and Procter & Gamble.
    

    "The most innovative organizations excel not just at idea generation -
although they're strong there - but also in the capabilities necessary to
transform those ideas into profits," added Andrew. "In our experience, the
vast majority of companies have an abundance of ideas. But only a handful are
capable of consistently generating profit from those ideas. Companies that can
do that are the true innovators."

    About The Boston Consulting Group

    Since its founding in 1963, The Boston Consulting Group has focused on
helping clients achieve competitive advantage. Our firm believes that best
practices or benchmarks are rarely enough to create lasting value and that
positive change requires new insight into economics and markets and the
organizational capabilities to chart and deliver on winning strategies. We
consider every assignment to be a unique set of opportunities and constraints
for which no standard solution will be adequate. BCG has 64 offices in 38
countries and serves companies in all industries and markets.




For further information:

For further information: Dorenda McNeil, (416) 300-0269,
mcneil.dorenda@bcg.com

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