Innovation Leaders 2008 Vienna

2007/8 Innovation Leaders: Identifying Future Growth Front End of Innovation - Vienna 30 January 2008 [email_address]

Innovaro

Europe’s leading innovation strategy and insight firm

Innovaro helps companies across the innovation spectrum, from building new

internal innovation capability to identifying multi $billion future opportunities

Experts in helping organisations to

Identify new growth opportunities,

Define and implement new innovation strategies,

Generate and deliver better ideas and

Renew their organisational capability

Work at the leading edge of innovation practice, identifying the

key issues and helping clients to successfully address them and create value

Undertake the annual Innovation Leaders analysis independent of our consultancy work

Innovation Leaders Analysis

Each year we assess the performance of over major 1500 firms

Eight key areas are researched as input into the assessments:

Organisational culture and supporting structure

Strategic focus on innovation and its role in driving corporate growth

Number of major new product launches and relative success ratios

Growth in revenues, profits and market capitalisation

Average margin per product or customer

Investment in innovation-related activities such as R&D and marketing

Brand value and human capital growth

Peer review from within the sector

Together this provides what we believe to be the most accurate assessment of current innovation impact

Innovation Leaders’ shares have shown consistent growth …

Half the companies identified in January 2005 as Innovation Leaders subsequently

demonstrated an increase in share price of at least 50% over the following two years

The top five performers over 2005/7 all had growth in share prices of over 50%:

Apple - increase in share price of 163%

Google - increase in share price of 139%

Rolls-Royce - increase in share price of 89%

Toyota - increase in share price of 64%, and

Canon - increase in share price of 61%

The Innovation Leaders stock portfolio has outperformed all major indexes for the past 7 years

… and the past year this out-performance has continued

From 1 Jan 2007 to 1 Jan 2008, 2006/7 Innovation Leaders shares continued to rise:

Apple Up 135%

Nokia Up 91%

Google Up 52%

Adidas Up 36%

Reckitt Benckiser Up 25%

PepsiCo Up 23%

Microsoft Up 21%

Overall Portfolio Up 12%

The 25 sectors we assess cover a wide range of businesses

Aerospace

Airlines

Automotive

Banking

Chemicals

Consumer Electronics

Consumer Goods

Energy

Fashion Retail

FMCG

Food and Drink

General Retail

Hotels and Leisure

Insurance

IT Hardware

IT Services

Logistics

Media and Entertainment

Medical Devices

Office Equipment

Pharmaceuticals

Software

Sports Goods

Telecom Equipment

Telecom Operators

Across these sectors the 2007/8 innovation leaders are clear

Most companies now aspire to innovate across the range

Adidas scores on technology driven performance innovation

Apple is #1 for many and is a good business model innovator

BMW is having impact in the high end of the auto sector

Nokia is innovating in all areas of the global market place

Google is using a perpetual beta approach to enable to enter markets

Core money maker still Google Ads

All new offers based in and around Google Search

Search was a late entrant into a maturing market

Most new offers are launched to market as beta

User help configure to maximise impact

Many are disrupting existing markets

H&M use internal process efficiency to deliver fast fashion

Eclipsed Gap, M&S and Zara

Fast fashion at the right price

Store managers are eyes and ears

Highly integrated product mix

Right product in every store

Sophisticated logistics operation

Underpinned by state of the art EPOS

Infosys is making impact in process innovation in IT services

One of India’s largest /fast growth firms

Multiple outsourcing contracts

Now also at top end design for Airbus / GM

Ten years contracts with SLA in place

Requirement to innovate 3 years in

Have set up process innovation labs

LEGO has re-invented the way it develops new products

LEGO Direct led switch to internet

Leading community development

www.LEGOfactory.com

Encourage user participation in design

MINDSTORMS User Panel a success

MINDSTORMS NXT – 100 developers

Leader in fan-base co-development

Reckitt Benckiser are masters of fast incremental innovation

Consistent double digit growth

Strong individual innovation incentives

Innovation central to corporate culture

Customer insight drives everything

Category managers are king

Fast scale up and squeeze of costs

Samsung made a major shift to innovate across the board

1992: Change everything

Now leading consumer electronics brand

#1 or #2 in 20 market segments

Lead user of value innovation approach

Also provides ingredients for competitors

B&O, Sony, Nokia etc all use Samsung

UPS are one of the leaders of the simplicity movement

Steady growth of UPS services

Company behind many firms logistics

Focus on process innovation

Success within 6 month: Fail before

Adopt the most appropriate solutions

Rapidly expanding portfolio of services

Virgin Atlantic is pre-eminent at service + product innovation

All of these innovative companies share some common traits

Strategic Focus – there is a strong strategic focus on the role of innovation within their markets and the contribution that innovation makes to the business.

Insight – they have an excellent understanding of the marketplace, customers and an ability to configure products and services around evident needs.

Collaboration – they clearly understand the core capabilities of themselves and their partners and work together to deliver innovative products and services.

Process – they have simple yet effective approaches to identifying, and then quickly launching, new products and services.

Organisation – roles, responsibilities and culture all support innovation while appropriate metrics are used to measure and reward successful innovation.

These are not unique to these firms – but they are well integrated and leveraged to best effect

In addition, we also see three additional core capabilities