According to a study in 2012 by the Economist Intelligence Unit with Oracle, most companies struggle with innovation. It is difficult, says the report, to come up with new ideas continually, particularly ones that people will pay for.
To promote innovation, many researchers suggest executives cultivate a mindset that is more open, nimble and resilient, and willing to fail. Global companies that are furthest along the innovation path have put in place processes or cultural norms to foster good ideas and implement them quickly. By monitoring and analyzing how initiatives develop, leading firms spot trends and create opportunities for innovation.
The Economist Intelligence Unit conducted a global survey of senior executives, sponsored by Oracle, to explore the characteristics of companies that are adept at promoting innovation. The principal research findings are included in this summary.
The IT department is identified in the survey as a key area of missed opportunity. According to 51% of respondents the predominant role of their IT department is to implement, rather than generate, innovation. The survey found that some executives are underestimating the role played by IT, with 13% of respondents saying the IT function is not involved in innovation at their firm. Significantly, this figure falls to 6.7% for C-suite respondents.
Respondents’ opinion of what the role is of the IT department in cultivating business innovation (% respondents)
C-level respondents similarly identified the importance of involving customers in innovation cycles. 54% of respondents in this group actively collect customer feedback and analyze customer data for clues to innovate effectively. This interaction allows companies to create specialized products for different markets, the survey found. Companies with annual revenue of US$500m or less are more likely to involve customers in product design and testing as part of their innovation efforts, according to the survey. Companies with annual revenue of US$1bn and above, also utilize customer feedback, but are more likely than smaller companies to tap into social networking in search of customer-focused innovations.
Means Of Focusing Innovation Efforts On The Customer (Select all that apply; % respondents) | |
Means To Focus | % of Respondents |
Collecting customer feedback via surveys or interviews | 54% |
Analyzing customer data for trends | 53 |
Involving customers in product testing | 44 |
Designing different products for different markets | 43 |
Involving customers in product design | 37 |
Locating product development in specific markets | 32 |
Gathering customer ideas using social media | 29 |
Other | 5 |
Source: EIU, November 2012 |
Among the more recent disruptive technology trends, respondents identified big data (massive amounts of data from various structured and unstructured sources) as being the most useful overall. Executives said they favored big data for:
Lack of analytical talent topped the list of concerns around big data.
Technologies Best Suited For Company’s Business Units To Innovate Effectively (% Respondents) | ||||
Best Technology For | Cloud Computing | Mobile Services | Social Media | Big Data Analysis |
Developing new products or services | 23% | 17% | 22% | 38% |
Improving business process | 30 | 24 | 7 | 38 |
Developing new pricing models | 12 | 16 | 12 | 60 |
Developing new channels to market | 13 | 25 | 44 | 18 |
Improving customer experience | 14 | 30 | 43 | 13 |
Source: EIU, November 2012 |
One of the surprising results from the survey, and one of the biggest missed opportunities, is how few organizations seemed to be learning from their mistakes. More than one-half of respondents reported that their organization either did not have a program to re-examine failed ideas (49%), or they did not know whether such a program existed at their company (13%). Lack of a follow-up program means respondents’ companies invested time, money and other resources in a failed innovation without finding out what went wrong. At a minimum, companies with no program to re-examine failed ideas run the risk of reinventing the wheel and failing again in the future.
The report concludes that there are a number of ways in which companies across all industries can increase business-led innovation. Respondents to the survey suggest a series of principles for business leaders to bear in mind when seeking to build a culture of business-led innovation:
A growing number of companies are identifying areas within the business to support their innovation efforts, notes the report. Departments historically tasked with developing new ideas, such as research and development, are finding fresh thinking coming from sales, customer service, IT, manufacturing, distribution, finance and human resources. By encouraging participation from more departments, leading global companies foster a culture that supports collaborative innovation.
Teams Involved in Bringing Innovative Ideas to Market (% of Respondents) | |
Discipline | % of Respondents |
Product development | 47% |
Marketing | 45 |
R&D | 44 |
Sales | 25 |
Customer service | 24 |
IT | 19 |
Manufacturing | 12 |
Distribution | 8 |
Finance | 7 |
HR | 7 |
Source: EIU, November 2012 |
Please visit Oracle here to access more information about the study.