Archive for January, 2007

This Year, 72 Percent of Companies Will Increase Spending on Innovation, Research from The Boston Consulting Group Shows

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(Republished January 2007, from the Creative Sage™ Creativity and Innovation Notations Blog)

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Nearly Half of Companies Remain Dissatisfied with Their Return on Innovation Spending; Three out of Four Executives Believe That Breakthrough Innovations Are Essential for Success in Their Industry; Apple, Google, and 3M Ranked “Most Innovative”

Boston (originally released: July 19, 2006) — Seventy-two percent of companies worldwide will increase spending on innovation in 2006-07, and 41 percent will increase spending significantly, according to a recent survey of senior management conducted by The Boston Consulting Group (BCG). The study’s full set of findings, based on responses from more than 1,000 senior executives from 63 countries and all major industries, is summarized in two new reports, Innovation 2006 and a companion piece on metrics, Measuring Innovation 2006.

The survey also revealed that, despite widespread plans to raise spending, nearly one out of two companies is unhappy with its return on innovation spending.

“These findings highlight the paradox we see all the time in practice. Innovation is such an important priority for companies, and although they continue to spend ever-increasing amounts on it, half of all companies remain unsatisfied with the returns they generate,” said Jim Andrew, a senior vice president at BCG and worldwide leader of its Innovation and Commercialization topic area. “This is a critical issue because the costs are even greater than most companies realize. The costs include not only the money invested, but also the opportunity cost of not generating the growth and returns from innovation that are possible and that companies need to meet the demands of the stock market.”

Other highlights from this BCG research include the following:

Innovation Is a Rising Strategic Priority for the Majority of Businesses

* Consistent with the rise in spending, executives are placing ever-greater strategic emphasis on innovation. Innovation is the number one strategic priority at 40 percent of companies (versus only 19 percent in 2005) and a top-three priority at more than 70 percent. More than 90 percent of executives say that organic growth through innovation is necessary for success in their industry; nearly three out of four feel that breakthrough innovations are required

Companies Spend the Greatest Portion of Their Innovation Dollars on Improvements to Existing Offerings

* While executives say that developing new products or services for existing customers is the most important goal of innovation, companies actually spend most heavily on making incremental improvements to existing offerings

Executives Consider Globalization Both a Major Opportunity and a Major Challenge

* Many companies are accelerating innovation investments in China , India , and other rapidly developing economies (RDEs). Most companies are doing so at a measured pace, however. So far, relatively few have made an aggressive commitment. The primary reasons companies are investing in these countries are to achieve cost savings and gain better access to the local markets

* There are few signs yet of a major shift of higher-value-added jobs—those that pay the highest salaries and are of greatest concern to government policymakers—to RDEs

Apple Computer Is Considered the Most Innovative Company

* For the second straight year, and by a wide margin, executives ranked Apple the most innovative company. Google and 3M were ranked second and third, respectively

Measuring Innovation Is a Significant Challenge for Many Businesses

* Innovation is widely undermeasured, and few firms are confident that their measurement efforts are sufficiently accurate or thorough. Indeed, the majority of companies (63 percent) use only a handful of metrics—five or fewer—to monitor and assess their innovation performance

* The metrics that executives consider most important are time to market, new-product sales, and return on investment

“Innovation is harder to measure than cost reductions, I’ll give you that,” Andrew said. “But a large number of companies don’t even measure it at all. And that means that innovation, a key priority for almost every organization, can’t be managed by many firms. This situation isn’t necessary. There are well-established practices that work. Not measuring is like driving without having your headlights on in the dark: you can’t see where you’re going or even if you’re still on the right road.”
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Developing innovation leaders can be crucial to corporate competitiveness, growth

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(Republished January 2007, from the Creative Sage™ Creativity and Innovation Notations Blog)

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Originally Released: Friday, July 21, 2006—University Park, PA—A leader’s ability to identify and diffuse innovations is critical to adapting to changing technologies and customer preferences, enhancing employee creativity, developing new products, supporting their organization’s market competitiveness and sustaining economic growth, according to a Penn State researcher.

“Commitment to innovation as a culture is prevalent in organizations as it is commonly woven directly into mission statements. However, leaders still lack the ability to plan, measure and implement innovative programs, products and services. These challenges are enhanced by the pressure to juggle several different and often conflicting roles,” said David G. Gliddon, who recently received his doctorate in workforce education from Penn State and completed the research as part of his doctoral dissertation. His thesis adviser is William J. Rothwell, professor of workforce education at Penn State.In a three-year study, Gliddon identified the competencies that underpinned these roles and developed a competency model of innovation leaders.

The competency model can be tailored to any organization as part of a competency-based human resource development initiative.Once tailored to a specific client, the model can be used to enhance job descriptions of the positions in which the identification and diffusion of innovations is critical, focus succession planning efforts for innovation leaders, discover gaps in an innovation leader’s competence, develop competency-based training to fill these competence gaps and incorporate the innovation leader’s competence requirements into the organization’s performance appraisal system.

“The aspect of innovation that is most difficult for professionals to grasp is that it is seen as inseparable from risk. Business success is linked to organizations that can overcome the potential risk and become true innovators. These organizations have a corporate culture that nurtures innovation leaders who take risks and think creatively,” said Gliddon, who now is a faculty member at Colorado Technical University.

It is not necessarily the innovation leader who must generate new ideas; rather, they must understand what creative employees value. They must encourage new ideas by seeking active input from their employees.

Innovation leaders collaboratively interact with their employees and support high levels of teamwork, providing opportunities to share innovations. Once an innovation has been shared, employees should be empowered to then adopt the innovation if it is useful. Employees then can support the innovation leader by initially adopting the innovation, and encourage the diffusion of the innovation throughout organization’s social system, Gliddon said.

Innovation leaders also must take personal responsibility for and be dedicated to projects that require innovations. Therefore, innovation leaders must establish a trust culture and maintain relationships based on trust. They must display initiative, set challenging project goals, and link those goals to the needs of the customer, department and enterprise, according to his study.

“Innovation has been linked to the growth of existing enterprises and development of new enterprises. As new products, programs, services and technologies are created, new opportunities for employment can arise. Innovation can support the creation of new jobs in an economy,” said Gliddon.

The key sources of innovation include: research and development, systemic innovation, knowledge management, integration, new business venture strategies and new business models. The innovation leader can support the success of this economy and the organizations, products and employees it encompasses.

“Our current economy is characterized by a focus on knowledge, change and globalization. It is fast and unpredictable and driven by innovative knowledge-based firms who are trying to innovate with scarce resources and skill shortages,” said the Penn State graduate.

The competency model of innovation leaders directly addresses these issues and provides an exciting opportunity for economic growth for organizations that seek to maintain competitiveness through innovation. Progress in innovation can be made when organizations provide innovation leaders the opportunity to learn and develop their competence and creativity, according to the study.

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Kicking off a new blog with Web Content Awareness Day 2007

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Don’t Miss Web Content Awareness Day 2007: An Information Celebration Right in Your Email Inbox! Get instant access to trusted service providers, advice from top web marketing experts, great offers and more. Runs Jan 9 to Feb 9. Learn more—sign up at: http://WebContentAwarenessDay.com today. As the creator of our sister blog, The PR and Marketing Mentor, I’m one of the participating trusted advisors and service providers. As an added bonus, check out my Web Content Awareness Day 2006 articles, which I’ve imported to the “Planning PR Campaigns” category. I expanded that article and broke it into two parts, for your convenience—“Getting the Most Out of Online and Offline PR,” Parts 1 and 2. You’ll also find my new articles there, for Web Content Awareness Day 2007, within the next few weeks. Loads of great information—learn and enjoy!

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Copyright 2006-2011 Cathryn Hrudicka. All rights reserved worldwide. No content on this site may be copied or excerpted on another web site or in print without prior permission of the author. If a quote, blog post, article or other content is placed on another site, blog, printed periodical or other format, credit must be given to Cathryn Hrudicka/Creative Sage™/Cathryn Hrudicka & Associates, with a link back to this blog.

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