How are the world’s global companies faring in their quest for innovation? To answer this question, the Economist Intelligence Unit, on behalf of Accenture, surveyed 601 senior executives in late 2007.
Most of the companies surveyed are pursuing business strategies that depend on a stream of innovation. Eighteen percent say that they intend to totally transform their businesses over the next few years. Another 44 percent say they use innovation to drive high growth rates and continually renovate the core business. Simply having a vision for innovation and naming an innovation head is not enough. Companies need to address the long-term problem of a “quick-fix” approach and diffused thinking. While innovation is a top priority, the survey uncovered significant organizational barriers for implementing a successful innovation agenda.
Despite its prominence on the corporate agenda, organizations are faced with increasing challenges of executing and sustaining innovation that deliver results.
- Frequency, pace and speed of innovation were commonly cited as areas of weakness.
- Changing the organizational culture and reducing time to market represent significant challenges for organizations in realizing their innovation objectives.
- Overall satisfaction with the ability to reach consistent, repeatable and high-impact innovation performance was low.The role of the CEO with respect to innovation is ever-more important and needs to evolve from vision and direction setting to enabling and driving execution.
• Mid-and high-level managers have reported significantly lower satisfaction from their organization’s innovation performance and capabilities as compared with CEOs who responded to the survey.
• Therefore, CEOs face the risk of increasing the gap between their vision and objectives for innovation and their organization’s ability and trust in realizing the objectives.
One way in which CEOs are addressing the innovation execution challenge is by driving innovation through a dedicated senior level executive, a chief innovation executive or a C-level executive with innovation responsibility.
• Organizations that indicate a higher importance of innovation to their success are more likely to designate a single executive-level point of accountability for innovation.
• Those organizations with a single point of accountability for innovation reported higher innovation performance and capabilities as compared with their peers at a ratio of 2:1.
Innovation will remain a top priority on the corporate agenda across most industries. More than 60 percent of survey respondents indicated that their organization’s strategy is either totally or largely dependent on innovation.
• In comparison with the overall sample—retailing, IT/technology, and media, publishing & entertainment place significantly higher emphasis on innovation while logistics and aerospace & defense industries rank innovation lower in importance.
The survey also highlighted two strategic imperatives that must be addressed in order for companies to shift from a vision of innovation to a high performance innovation organization:
• It is not sufficient for organizations to create a vision for an innovation culture—CEOs must create ownership and accountability for execution.
• To deliver results companies must treat innovation as any other business discipline by aligning resources, tools and processes with a clear set of performance goals and metrics.
Bridging the execution gaps:
In addition, the survey revealed additional gaps all organizations must contend with to bridge the chasm between plans and results:
- The innovation organization must be legitimized and professionalized—the accountable innovation owner must connect with line managementand make transparent the CEO’s vision for innovation along with the commitment for execution.
- A robust innovation process must be established to support the organization to facilitate the frequency, speed and consistency of innovation results.
- The innovation organization will need to keep an open mind as new ideas will increasingly come from overseas operations in emerging markets as the multi-polar world continues to mature.