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Transform to the power of digital Innovation Leadership Study Managing Innovation: An Insider Perspective April 2012

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  • 1. Innovation Leadership StudyManaging Innovation: An Insider PerspectiveApril 2012Transform to the power of digital

2. Table of ContentsIntroductionResultsImplicationsDemographicsCopyright 2011 Capgemini Consulting. All rights reserved.2 3. This Innovation Leadership Study provides insight into the formal and informalmechanisms for managing innovation IntroductionResults Implications DemographicsIntroduction (1/3)Innovation Leadership Study Paddy MillerKoen Klokgieters Professor of Managing Vice President People in Organizations Business Innovation Dear Participant, Dear Participant, This Innovation Leadership Study aims to understand how those This joint research by IESE Business School and Capgemini leading and managing innovation in their organizations think aboutConsulting provides insight into both the formal and informal the innovation function.mechanisms for managing innovation. When looking at the informal mechanisms for managing innovation With respect to the formal part of managing innovation, we see we notice that the accountability for realizing growth is the mainthat even though innovation is considered a highly strategic topic it motivational driver for senior executives to be involved in is not organized in such a way. Innovation leaders understand the innovation. Many of the innovation leaders and managers weneed to have an explicit innovation strategy and to support it with surveyed have been tasked with creating a culture of innovation formal innovation governance mechanisms. However, only a but interestingly enough it is the CEO and peers that are consideredminority of respondents agree they have an innovation strategy or the main drivers of an innovation culture within companies. I would an effective governance for innovation. I hope you will find these like to thank you for your contribution to this research. survey results useful for leading and managing innovation. Best regards, Best regards, Paddy MillerKoen Klokgieters Copyright 2011 Capgemini Consulting. All rights reserved. 3 4. The study aims to understand how those leading and managing innovation in theirorganizations think about the innovation function Introduction Results ImplicationsDemographics Introduction (2/3) Study OverviewObjectivesFORMAL MECHANISMS The Innovation Leadership Study aims to understand how those leading andmanaging innovation in their organizations think about the innovation STRATEGY GOVERNANCEfunction.Content It looks at both formal (strategy, governance) and informal (leadership, culture)mechanisms for managing innovation.ApproachManaging It is based on both qualitative (interviews) and quantitative research (survey). Innovation We have conducted in-depth interviews with innovation leaders from variousindustries on how they lead and manage innovation. Subsequently a broad-scale survey targeting innovation leaders has beencarried out to validate our hypotheses and generate additional insights.Process LEADERSHIPCULTURE 25 interviews have been conducted, most between July and September 2011. The online survey, in the field from September 12 to October 12 INFORMAL MECHANISMS2011, generated responses from 260 executives around theworld, representing the full range of industries, regions, functionalspecialties, and seniority. The final report integrating all findings is to be expected in early 2012. Copyright 2011 Capgemini Consulting. All rights reserved. 4 5. Our leader versus laggard methodology allows us to uncover good practices inmanaging innovation Introduction ResultsImplications DemographicsIntroduction (3/3) Innovation Success RateLeader versus Laggard Perspective% of respondents, n = 260Survey MethodologyCould you please estimate your organizations innovation The methodology differentiates between innovation leaders andsuccess rate? laggards based on a self-assessment by survey respondents oftheir innovation success rate. The innovation success rate is determined by the percentage ofinnovation efforts that have a positive material impact on thecompanys business results. 38% 37% We distinguish between 4 categories of innovation successbased on this rate, namely: Less than 25%, 25-49%, 50-74%and Over 75% of innovation efforts having a positive materialimpact on the companys business results.18% The Less than 25% category represents the innovation laggardgroup and the Over 75% category the innovation leader groupof analysis. 7%Survey PopulationLess than 25% 25-50% 50-75%Over 75% The exhibit to the left shows how respondents are distributedover these four categories. Thirty-eight percent of respondents LAGGARDSLEADERSfit the innovation laggard profile, whereas seven percent belongto the innovation leaders group. Copyright 2011 Capgemini Consulting. All rights reserved. 5 6. Table of ContentsIntroductionResultsImplicationsDemographicsCopyright 2011 Capgemini Consulting. All rights reserved.6 7. Forty-three percent of respondents have a formally accountable innovation executiveIntroduction Results ImplicationsDemographics Results: Innovation Function (1/3)Formal Accountability for Innovation Leader versus Laggard Perspective% of respondents, n = 260Does your organization have someone at the executiveLess than 25% 25-50%50-75% Over 75%level who is formally accountable for innovation? +31% 72% 57%59% 55% 49%51% 43% 45%41% 28%YesNo Yes No 43% of respondents have someone at the executive level59% of innovation leaders have an accountable executive who is formally accountable for innovation versus only 28% in the laggard peer groupCopyright 2011 Capgemini Consulting. All rights reserved.7 8. Developing an innovation ecosystem and strategy are considered to be the innovationfunctions main roleIntroduction Results ImplicationsDemographics Results: Innovation Function (2/3) Innovation Functions Role% of respondents, n = 260What do you consider to be the innovation functions main role? Top-1Top-2Top-3Formulating and communicating the innovation strategy31% 15% 11% Monitoring and analysis of the external environment7% 11%9% Optimizing the innovation processes and governance 14% 16% 18%Building and nurturing an innovation ecosystem32%19% 13%Selling of innovation within the organization5%12% 12%Motivating employees to innovate 6% 9%13%Running innovation workshops/events2%4% 7% Developing employees innovation skills 5%14% 17%The innovation functions main role is considered to be thedevelopment of an innovation ecosystem and strategy Copyright 2011 Capgemini Consulting. All rights reserved. 8 9. The absence of a well-articulated innovation strategy is the biggest constraint toreaching innovation targetsIntroduction Results Implications DemographicsResults: Innovation Function (3/3)Innovation Constraints% of respondents, n = 260What most constrains your organizations ability to achieve its innovation targets? Top-1Top-2Top-3 The absence of a well-articulated innovation strategy24%9%13% Lack of understanding of the external environment 13% 15%11% No formal innovation governance structure 7%12% 7% Lack of formal innovation processes 7%9% 12% Inadequate innovation budget allocation11% 10%10%Lack of top management commitment to innovation 11%9%11% No innovation-friendly culture 11% 12% 9%Lack of clarity on what innovation behaviors actually are 9% 12%11%Inadequate innovation skills within the organization6%12% 16% The absence of a well-articulated and/or communicatedinnovation strategy is the top-1 innovation constraint Copyright 2011 Capgemini Consulting. All rights reserved. 9 10. Survey results: Innovation StrategyFORMAL MECHANISMSSTRATEGYGOVERNANCEManaging InnovationLEADERSHIP CULTURE INFORMAL MECHANISMS Copyright 2011 Capgemini Consulting. All rights reserved. 10 11. The majority of respondents do not have an explicit innovation strategyIntroduction Results ImplicationsDemographics Results: Innovation Strategy (1/3) Innovation Strategy Leader versus Laggard Perspective% of respondents, n = 241Does your organization have an explicit innovationLess than 25% 25-50%50-75% Over 75%strategy? +36%71%65% 58% 53%55% 45% 47% 42%35% 29%YesNo Yes No 65% of innovation leaders have an explicit innovation42% of respondents have an explicit innovation strategystrategy versus only 29% of the laggardsCopyright 2011 Capgemini Consulting. All rights reserved.11 12. The innovation strategy most frequently includes statements on alignment withcorporate strategy, technology and markets Introduction Results ImplicationsDemographics Results: Innovation Strategy (2/3)Innovation Strategy Elements Leader versus Laggard Perspective% of respondents, n = 98Does it include statements on any of the following?Less than 25% 25-50% 50-75% Over 75%Alignment with corporate strategy 80%38% Technology 64% 37%Targets+17% Markets 62% 57%Innovation culture58% 55% Innovation processes 55%46%Internal capabilities 47% 18%Partners+9%Targets44%61% Partners40%55%Multiple answers possible; Respondents who answered Other are not shown.Targets and partners are the least frequently includedLeaders are more keen to include statements on targets and elements of an innovation strategypartners in their innovation strategies than laggardsCopyright 2011 Capgemini Consulting. All rights reserved.12 13. It is often developed by a combination of top management and innovation experts, andcommunicated widely inside the organization Introduction ResultsImplications DemographicsResults: Innovation Strategy (3/3)Innovation Strategy DevelopmentInnovation Strategy Communication% of respondents, n = 98 % of respondents, n = 98How is your innovation strategy developed?How is your innovation strategy communicated in yourorganization? Developed by top management 13%Not communicated at all 2%Developed by top management and BU6% headsDeveloped by top management, BU Communicated to top management 30%18% heads, and internal innovation experts layers only Developed by top management, BU11%heads, internal and external innovation Communicated widely inside the 44% Developed by employees, approved by toporganization 2% managementDeveloped by employees, validated by BUCommunicated widely inside the9% organization and used as a daily 15%heads, approved by top managementDeveloped by BU heads, approved by top guideline for innovation 2%management Communicated widely inside and Developed by innovation experts (internal 19% 20%outside the organizationand external), approved by topRespondents who answered Other are not shown.Respondents who answered Other are not shown.The development of an innovation strategy is predominantly19% of respondents communicate their innovation strategy a top-down exercisealso outside the organization Copyright 2011 Capgemini Consulting. All rights reserved. 13 14. Survey Results: Innovation GovernanceFORMAL MECHANISMSSTRATEGYGOVERNANCEManaging InnovationLEADERSHIP CULTURE INFORMAL MECHANISMS Copyright 2011 Capgemini Consulting. All rights reserved. 14 15. Only thirty percent of respondents agree they have an effective organizational structurefor innovation Introduction ResultsImplicationsDemographics Results: Innovation Governance (1/4) Organizational Structure% of respondents, n = 227How strongly do you agree or disagree with the following statements regarding your organizational structure forinnovation?We have an effective organizational structure for 9%36%21%23%7%innovation We have a formal organizational structure for innovation 15%30% 15%25%12%We have a well defined governance structure to manage 12%33%19%24% 11% innovation in our organizationWe have clearly defined roles and responsibilities with 9% 31%24% 25%9%regard to innovationStrongly disagreeDisagreeNeither disagree, nor agree Agree Strongly agreeRespondents who answered Not Applicable are not shown. 45% of respondents do not have a formal organizational structure for innovationCopyright 2011 Capgemini Consulting. All rights reserved.15 16. Thirty-nine percent do not have a formal decision-making process for managinginnovation Introduction ResultsImplications Demographics Results: Innovation Governance (2/4) Decision-making Process% of respondents, n = 227How strongly do you agree or disagree with the following statements regarding your decision-making process forinnovation? We have an effective decision-making process to manage8%31% 26%25% 8% innovationWe have a formal decision-making process for managing10%29%15% 30%14%innovation We have a well defined process to prioritize, and allocate8%33% 20% 26%11%time and funding to, innovation projects We have a clearly defined process for stage gating, and9% 26% 18%30%15%making go/no go decisionsStrongly disagreeDisagree Neither disagree, nor agree Agree Strongly agreeRespondents who answered Not Applicable are not shown. Respondents disagree most with having a well defined process forprioritization and funding of innovation projects Copyright 2011 Capgemini Consulting. All rights reserved. 16 17. A stunning fifty-four percent of survey participants indicate not having a formal KPIsystem for promoting innovation Introduction ResultsImplications Demographics Results: Innovation Governance (3/4) KPI System% of respondents, n = 227How strongly do you agree or disagree with the following statements regarding your KPI system for innovation? We have an effective KPI system to promote innovation 15%41% 21% 17% 4%We have a formal KPI system for promoting innovation 15%39% 14%24% 6%We have well defined targets and scope for innovation 11%34%17%29%7%We have a clearly defined performance measurement and 13%39% 20% 19%7%rewarding of innovation successStrongly disagreeDisagree Neither disagree, nor agree Agree Strongly agreeRespondents who answered Not Applicable are not shown. Only 26% percent agree they have clearly defined performance measurement and rewarding of innovation successCopyright 2011 Capgemini Consulting. All rights reserved.17 18. Fewer than a quarter of the respondents have an effective organizational alignment ofinnovation efforts Introduction ResultsImplicationsDemographics Results: Innovation Governance (4/4) Organizational Alignment% of respondents, n = 227How strongly do you agree or disagree with the following statements regarding your organizational alignment ofinnovation?We have an effective organizational alignment of 9% 36% 27%19% 5%innovation effortsWe have a formal organizational alignment mechanism for 9%35% 21% 24% 7% our innovation effortsWe have a well defined process for alignment of our 8% 32%19%30% 7%innovation efforts with corporate strategy We have clearly defined how to align innovation efforts 8%37% 22%25% 4% across the organization and utilize internal capabilitiesStrongly disagreeDisagreeNeither disagree, nor agree Agree Strongly agreeRespondents who answered Not Applicable are not shown.Respondents are most positive about the alignment of innovation effortswith corporate strategyCopyright 2011 Capgemini Consulting. All rights reserved.18 19. Survey Results: Innovation LeadershipFORMAL MECHANISMSSTRATEGYGOVERNANCEManaging InnovationLEADERSHIP CULTURE INFORMAL MECHANISMS Copyright 2011 Capgemini Consulting. All rights reserved. 19 20. Accountability for realizing growth is the main driver for senior executives to be involvedin innovation Introduction Results Implications Demographics Results: Innovation Leadership (1/2)Executive Motivation for Innovation Leader versus Laggard Perspective% of respondents, n = 241What do you think motivates senior executives to beLess than 25%25-50% 50-75%Over 75%involved in innovation leadership?46%Accountability for realizing growth40% +19%46% 51% 65% 15% Intrinsic creative motivation 11%15%19% 18%17%Feel responsible for advancing innovation 28%22% in the organization23%12% 15% Innovation is considered a high status area17%14% 7%6%Respondents who answered Other are not shown.Accountability for growth is the main driver for seniorOur leader group stresses accountability for growth as theexecutives to be involved in innovation driver for senior executives to be involved in innovationCopyright 2011 Capgemini Consulting. All rights reserved.20 21. The exciting nature of innovation work, the desire to improve things, and teamworkaspects motivate employees most to be involved in innovationIntroduction Results ImplicationsDemographicsResults: Innovation Leadership (2/2)Employee Motivation for Innovation% of respondents, n = 241How strongly do you agree or disagree with the following statements with respect to what motivates employees to beinvolved in innovation?Strongly Agree / Agree Disagree / Strongly Disagree Innovation is considered to be exciting work91%4% Desire to improve things89%5% Like being part of a team or task force for something 87%5%newAn opportunity for self-realization75% 7% Like being pulled out of everyday 53%17%Interesting travel and conferences26% 35%Respondents who answered Neither disagree, nor agree or Not Applicable are not shown. Employees are particularly involved in innovation work because of itsexciting nature, the desire to improve things and its teamwork aspects Copyright 2011 Capgemini Consulting. All rights reserved. 21 22. Survey Results: Innovation Culture FORMAL MECHANISMS STRATEGYGOVERNANCE ManagingInnovation LEADERSHIP CULTUREINFORMAL MECHANISMSCopyright 2011 Capgemini Consulting. All rights reserved.22 23. Two-thirds of our respondents have been tasked with creating an innovation cultureIntroduction ResultsWay ForwardDemographicsResults: Innovation Culture (1/3)Innovation Culture Leader versus Laggard Perspective% of respondents, n = 236Have you been tasked with creating a culture of Less than 25% 25-50% 50-75% Over 75%innovation in your organization? 86% 66% 65%65% 57% 34%43%35% 35% 14%YesNo Yes No 66% of respondents have been tasked with creating a Innovators with a success rate of 50% or higher are moreculture of innovationoften tasked with creating an innovation culture than less successful innovatorsCopyright 2011 Capgemini Consulting. All rights reserved.23 24. Openness, innovation as a core value, and the sharing of information are most oftenmentioned as the elements that constitute an innovation culture Introduction Results Way ForwardDemographicsResults: Innovation Culture (2/3)Innovation Culture Elements% of respondents, n = 236Which elements do you think constitute a culture of innovation? Openness (to others ideas, to change, to exchange) 84% Innovation considered a core value of the company74%Sharing information, ideas and results69% Listening to ideas, pushing them forward, making sure theyre followed59%Acting quickly even outside plan to capture opportunities 56% People throwing out ideas, discussing them, excited about them54%Facilitating and guiding ideas 54%Code of trust41% People are aware they have to have new ideas and bring them up33% Going in directions you believe in28%Multiple answers possible; Respondents who answered Other are not shown.Our leader versus laggard comparison revealed that innovation leaders are more concerned with facilitating and guiding ideas than others Copyright 2011 Capgemini Consulting. All rights reserved. 24 25. The CEO is considered the main driver of an innovation culture within companies Introduction Results Way ForwardDemographicsResults: Innovation Culture (3/3)Innovation Culture Source% of respondents, n = 236Where does an innovation culture come from?CEO69% Peers, people you work with 59%Managers in general51% Learning and development, training36% Innovation managers33%Chief Innovation Officer and innovation office32%Executive sponsor30%Internal social media collaboration24%Multiple answers possible; Respondents who answered Other are not shown.In addition to the CEO, peers and managers in general are most oftenmentioned as the source of an innovation culture Copyright 2011 Capgemini Consulting. All rights reserved. 25 26. Table of ContentsIntroductionResultsImplicationsDemographicsCopyright 2011 Capgemini Consulting. All rights reserved.26 27. What does all this mean for executives responsible for leading and managinginnovation?Introduction Results ImplicationsDemographicsImplicationsDrivers for InnovationINNOVATIONSTRATEGY ORGANIZATIONAL INNOVATIONINNOVATION FUNCTIONDESIGNLEADERSHIP CULTURE The innovation function Traditional strategy Limited organizational Real innovation Innovation culture is a is in the spotlight todevelopment no longer design for innovation isleadership requires highly important improve the suffices in the pursuit ofimpairing growth at large executives to reduce themechanism to enable organizations ability to sustainable growth underorganizations.level of disconnect agility and be able to achieve its innovationhigh uncertainty therebetween themselves andsurvive in a continuous There is no one size fits targets by formulating ais a need to move employees.change environment. all when it comes to org well-articulatedstrategy development to design for innovation but Our leader versus laggard Our research on innovation strategy and the outer peripheries of the correlation between perspective shows the innovation culture shows improving its the company. having a formalized relation betweenthat among other understanding of the innovation governance company size andthings openness to external environment. and the reportedreported innovation others ideas, to innovation success rate success rate, suggestingchange, to exchange, and suggests that there isthat it is easier to driveacting quickly even much to gain by innovation in small outside the plan to improving the formalorganizations.capture mechanisms foropportunities, are managing innovation considered important elements of a culture. Innovation should be in the DNA of the company as well as in its leaders and employeesCopyright 2011 Capgemini Consulting. All rights reserved.27 28. Table of ContentsIntroductionResultsImplicationsDemographicsCopyright 2011 Capgemini Consulting. All rights reserved.28 29. Two hundred and sixty respondents contributed to this surveyIntroductionResultsImplications Demographics Demographics (1/3) PositionRole% of respondents, n = 260# of respondents, n = 260Respondents position within their organizations What is your role in the organization? Chief Executive Officer24 9% Chief Innovation Officer 2320% Chief Operating Officer 310% Vice President of Innovation 11C-Level Vice President of Strategy8VP Vice President of R&D 4Director Director of Innovation 3613% Manager Director of Strategy422% Analyst Director of R&D 4Other Manager of Innovation41 Manager of Business Development 9 Manager of Marketing827% Other85 Many respondents are directly responsible for leading and 60% of respondents are at the director level or higher managing innovation Copyright 2011 Capgemini Consulting. All rights reserved. 29 30. Innovation and corporate strategy functional areas represent 60% of the respondents Introduction ResultsImplications DemographicsDemographics (2/3)Functional AreaCompany Size% of respondents, n = 201% of respondents, n = 201What is your functional area?What are your companys annual revenues? 18% Innovation18%1% 37% Corporate Strategy 4% R&D7% MarketingLess than 500m8% Operations43%500m - 1b IT8%1b - 10 billion HR24% More than 10 billion 23% Sales 15% Finance Supply Chain 16% Other (please specify) 18%15% 60% of respondents work within innovation or corporateThere is a 50/50 split between big and small companies strategy represented Copyright 2011 Capgemini Consulting. All rights reserved. 30 31. The survey results represent the full range of industries and geographical regionsIntroductionResultsImplications Demographics Demographics (3/3)Geography Industry% of respondents, n = 201 % of respondents, n = 201Respondents per geographical region In which industry segment does your company operate?3% 6%Professional Services 19%2%High Tech 13% Life Sciences 13% North AmericaConsumer Products13% 40% South AmericaFinancial Services12% EuropePublic Sector 9%Telecommunications and Media 9% AfricaEnergy, Oil & Gas7% AsiaAutomotive7% Australia 46% Healthcare Providers 6%Transportation and Logistics5%3%Retail 4%Utilities3%Other19%37 countries are represented in this study with mostThe majority of respondents work in professional respondents based in Europe and North Americaservices, high tech, life sciences or consumer productsCopyright 2011 Capgemini Consulting. All rights reserved.31 32. For more information regarding this study, please contact: Koen Klokgieters Vice President Capgemini Consulting Mob: +316 5112 3259 [email protected] Paddy Miller Professor IESE Business School Mob: +34 93 253 4200 [email protected] 32