How Nordic companies innovate by Jørn Bang Andersen and Hans Christian Bjørne

Key findings andinnovation insights
2
Analysis based on the MMI Survey # 1
Kronborg Castle, 3rd of October 2011

Content
Analysis scope and approach
Key findings and insights
Recommendations
3

800 business leaders from 100 Nordic companiesparticipate in the MMI-programme
4
800 participants from 100 companies across the Nordics
Iceland
22 companies
8 small
5 medium
8 large
Finland
21 companies
11 small
5 medium
5 large
Norway
21 companies
8 small
5 medium
8 large
Sweden
21 companies
14 small
7 medium
0 large
Denmark
18 companies
5 small
6 medium
7 large
< 50, small sized company
< 250, medium sized company
> 250, large sized company
Categories based on directives from the EU Commission

In-depth analysis with Capgemini Consulting and Innoption has enabled benchmarking of companies and sectors
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Data and analysis
Scope of the analysis
Online survey #1
To get a holistic perspective of how companies innovate in Denmark, Sweden, Norway, Iceland and Finland
To explore innovation across several dimensions;
Nordic level
Country level
Sector level
Company size
Profit margin
To examine the relationship between innovation strategy, innovation focus approach and effort level
Key findings and innovation insights

The analysis examines Nordic companies’ Innovation Radar consisting of 12 primary dimensions and 4 macro dimensions
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Example of Nordic companies
Offering
Partnership
Offering
Ecosystem
Platform
Solution
Channel
Customer needs
Supply chain
Management
Customer experience
Value Capture
Marketing communication
Process
Operations
Customer
The radar is a tool to identify innovation areas of positioning, and a lot can be learned from looking at the companies that stand out from the crowd.

Real Innovation Radar examples illustrate different innovation focus approach and effort level
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Different agreement levels
Real examples of focus and effort levels
Danish Retail company with a high innovation focus, and a high innovation effort level
High agreement level: The answers from the individual respondents withinthecompanies are aligned
Swedish Service company with a high innovation focus and a low innovation effort level
Finnish Industrial company with a low innovation focus and a high innovation effort level
Low agreement level: The answers from the individual respondents within thecompaniesdiffer significantly
Swedish Industrial company with a low innovation focus and a low innovation effort level
Putting the Innovation Radar to work companies must prioritize on which dimensions to focus its effort.

Content
Recommendations
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The survey indicates undeniably important findings on how Nordic companies innovate
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Overall findings
Key findings
1
Nordic companies are biased towards Offering oriented innovation
A majority of Nordic companies primarily innovate within the Offering dimension
2
Ten of twelve sectors have a majority of participants primarily biased towards the Offering dimension
3
Offering is rated as the most important future radar dimension
4
Nordic companies have an Unfocused innovation approachand put relatively low Effort into innovation
A majority of Nordic countries have an unfocused innovation approach and/or low innovation effort levels
5
Size of companies and competitive landscape matter for innovation focus
6
High effort levels are not common practice across the Nordic companies, with the exception of Finland
A minority of Nordic companies have an Innovation strategy, however companies with innovation strategy have higher innovation effort, higher innovation focus and better internal alignment
7
Only 41 percent of the Nordic companies have an innovation strategy
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Companies with an Innovation strategy have higher innovation effort, higher innovation focus and higher internal alignment
Note: The terminology ‘Nordic companies’ used throughout the document refers only to the Nordic companies participating in the MMI program

Content
Offering oriented innovation
Innovation focus and effort
Innovation strategy
Recommendations
10

Whenassessing all thedimensionsofthe radar, Offering stands out as the most prioritisedprimary radar dimension
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Innovation radar dimensions
All Nordic countriesarebiasedtowardsoffering
Iceland has a strong secondary focus towards Customer Experience, Process and Management
Denmark has a large spread of focus amongst companies, contributing to a round overall radar
There is little focus on Partnership Innovation in all the Nordic countries
Norway
Sweden
Finland
Iceland
Denmark

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Key finding 1 - Offering
Primary macro dimension Nordics
64% are primarily biased towards Offering innovation (offering, platform and solutions)
Only 4% are biased towards Partnership innovation
Partnership
Primary macro dimension by country
All Nordic countries are biased towards Offering, however Denmark is balanced between Offering and Operations
Only Finland scores relatively high on Partnership innovation (17 %)
Partnership
Offering is the primary macro dimension in all of the Nordic countries, however Operations and Partnership innovation have a relatively higher share of focus in Finland and Denmark respectively.

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Ten of twelve sectors are biased towards the Offering dimension
Primary macro radar dimension
Companies per sector:
11
3
4
23
8
14
3
8
4
15
4
4
Partnership
Retail and Tourism stand out by primarily innovating within Customer- and Operations innovation
Telecom is unique by being the only sector that has a large focus on Partnership innovation
Healthcare, Finance, Telecom and IT have no primary focus on Customer innovation
100 % of the companies within Service and Media only have Offering as primary macro dimension
Retail and Tourism are the only sectors that do not primarily innovate within Offering, indicating there are large unexploited areas of positioning within innovation.

Innovation radar examples from the Retail sector and the Media sector illustrate different innovation focus dimensions
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Media company focusing on Offering
Retail company focusing on Operations
Offering
Partnership
Offering
Partnership
Offering
Offering
Platform
Platform
Ecosystem
Ecosystem
Solution
Solution
Channel
Channel
Customer needs
Supply chain
Customer needs
Supply chain
Customer experience
Customer experience
Management
Management
Value Capture
Value Capture
Operations
Customer
Operations
Customer
Process
Process
Areas of focus varies substantially between the Retail and Media sector.

When asked for future primary macro radar dimension, the share of Offering Innovation increases
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Most importantfutureprimarymacro radar dimension
Offering Innovation increases from 64% to 72%, when Nordic companies choose the most important future macro radar dimension
The increase of Offering Innovation is at expense of Operations Innovation
Only 3% rank Operations Innovation as the most important macro dimension for the future, 14% less than in todays primary radar
Partnership
Most important future primary macro radar dimension – by sector
All companies in Tourism consider Customer Innovation the most important future dimension
Eleven out of twelve sectors consequently list Offering as the primary area of centration for future innovation.

Content
Innovation strategy
Recommendations
16

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Key finding 4 – Focus and effort
Innovation effort level
Innovation focus approach
68%
80%
32%
20%
High innovation focus approach
High innovation effort level
Low innovation focus approach
Low/medium innovation effort level
32% have a high innovation focus approach, whilst 68% have a low innovation focus approach
Only 20% of respondents have a high innovation effort level,whilst the remaining 80% experience low levels of effort
Only 6 % of the companies have both high innovation focus approach and high innovation effort level.

Innovation focus vs. size of companies
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Key finding 5 - Focus
Innovationfocus vs. competitivesituations
company
company
company
competition
competition
Focused innovation approach
38% of companies in a low to medium competitive situation have a focused approach to innovation, whilst only 26% of companies in a market with significant or high competitive situation have a focused approach
Unfocused innovation approach
43% of small companies have a focused innovation approach to innovation, whilst only 19% of large companies are focused
Large companies and companies operating in a competitive market should pay an even closer attention to their innovation focus areas.

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Key finding 6 - Effort
High innovation effort levels are not common practice across the Nordic companies, with the exception of Finland
Country vs. Innovation effort level
Low innovation effort level
Medium innovation effort level
Nearly half of the surveyed companies in Sweden and Norway have low innovation effort
39% of Finnish companies have a high innovation effort level

Key finding 6 – Focus and effort
The Healthcare sector stands out as the most innovation focused sector, and the Service sector has the highest innovation effort
The three sectors with the highest innovation focus
100 %
0 %
86% of the companies within Healthcare have a focused innovation approach, making it the sector with the highest innovation focus
Tourism and IT are relatively focused, with a share of respectively 67- and 47% focused companies
14%
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Healthcare
# 1
86 %
33%
Tourism
67 %
# 2
53%
47 %
# 3
IT
The three sectors with the highest innovation effort levels
100 %
0 %
50% of companies within the Service, Telecom and Media sector have high innovation effort levels
50 %
Service
# 1
50 %
25 %
50 %
Telecom
# 2
25 %
# 2
25 %
50 %
25 %
Media
Medium innovation effort level

Content
Innovation strategy
Recommendations
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Key finding 8 – Innovation strategy
Companies with an innovation strategy have higher effort, internal alignment and innovation focus
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Presence of innovation strategy vs. agreement level
Presence of innovation strategy vs. focus
Presence of innovation
strategy vs. effort
14 %
14 %
Equities
Equities
Equities
79 %
79 %
79 %
Low internal agreement level
The survey indicates that companies are more likely to have a high innovation effort level if it has an innovation strategy in place
71 % of Nordic companies with low agreement levels do not have an innovation strategy
The survey indicates that companies are more likely to have a high innovation focus approach if it has an innovation strategy in place
The survey shows that creating an innovation strategy may bring effort, agreement and focus to higher levels.

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Key finding 7 - Innovation strategy
The analysis indicates that more Nordic companies should build innovation strategies to deliver business value
Innovation strategy vs. profit margin and sectors
Innovation strategy vs. profit margin
Innovation strategy vs. sector
Highest share of innovation strategy vs. lowest share of innovation strategy
Innovationstrategy
Innovationstrategy
No innovationstrategy
No innovationstrategy
More than 60% of Energy companies have defined an innovation strategy
None of the Telecom companies answer they have defined an innovation strategy
Only 41 percent of the Nordic Companies claim to have defined aninnovation strategy
Our results indicate that Nordic companies with a high profit margin are more likely to have an innovation strategy.

The survey indicates undeniably important findings on how Nordic companies innovate
24
Overall findings
Key findings
1
Nordic companies are biased towards Offering oriented innovation
2
Ten of twelve sectors have a majority of participants primarily biased towards the Offering dimension
3
Offering is rated as the most important future radar dimension
4
Nordic companies have an Unfocused innovation approachand put relatively low Effort into innovation
5
6
High effort levels are not common practice across the Nordic companies, with the exception of Finland
A minority of Nordic companies have an Innovation strategy, however companies with innovation strategy have higher innovation effort, higher innovation focus and better internal alignment
7
Only 41 percent of the Nordic companies have an innovation strategy
8
Companies with an Innovation strategy have higher innovation effort, higher innovation focus and higher internal alignment
Note: The terminology ‘Nordic companies’ used throughout the document refers only to the Nordic companies participating in the MMI program

Content
Innovation strategy
Recommendations
25

Interestingly, the biggest future business challenge is linked to Operations, and Offering is not particularly important
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Primary future business challenges vs. most important future Innovation focus
0 %
100 %
Future business challenges quotations;
“To create efficient value chains for each business area”
“Managing growth- operational excellence”
“Deliver sufficient quality to a very low price”
“Cutting production costs”
“Deliver complex and
modern production
solutions”
“Improving manufacturing
processes”
“Becoming our customers
1st choice”
Future business challenge
Operations
44 %
# 1
Future Innovationfocus
Operations
# 4
3 %
Customer
26 %
# 2
Customer
21 %
# 2
# 3
Offering
17%
# 1
Offering
72 %
# 4
Partnership
13%
# 3
Partnership
4 %
Why are Nordic companies so biased towards Offering oriented innovation when they list Operations as the biggest business challenge for the future?

After the Innovation Radar deep-dive workshops, 70% of the companies expressed a desire to change their innovation approach
Innovation radar profile Company X
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Change the mindset and innovation culture
Challenge your innovation focus
Develop a culture of innovation
Foster creativity and collaboration
Bring structure and discipline to all phases of innovation
Company X , today
Company X, tomorrow
A change in mindset is needed for companies with a restricted view of innovation, in order to help succeed in capturing great opportunities in the future.

Enhance the competitiveness of your company by creating a strategic approach to innovation management
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Choose your innovation profile
Innovation approach
High
Look for dimensions that differentiate your company from its competitors
Find the appropriate effort and focus levels that match your company profile
Coordinate all internal functions and external partners to innovate around these differentiating dimensions of your business system
Create an innovation strategy that allows your business to benefit from innovation by distinguishing itself in the market
Innovation focus approach
Low
Innovation effort level
High
Low
Build and/or revise your innovation strategy to increase the rate of return on innovation!

Nordic Innovation
Stensberggata 25
NO-0170 Oslo
www.nordicinnovation.org
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How Nordic companies innovate by Jørn Bang Andersen and Hans Christian Bjørne

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