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
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
Tech, Telecommunications and Travel Companies Are the Most Satisfied with
- 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
- 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
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