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Business Innovation Report
Innovation Strategy, Performance and Measuremen...
© Copyright TrendsSpotting, all rights reserved
2
Contents
III. Innovation Performance P.42
IV. Innovation Strategy P.47
•...
© Copyright TrendsSpotting, all rights reserved
The Need along history
The purpose of this review is to provide a deep und...
© Copyright TrendsSpotting, all rights reserved
The Need along history
5
Innovation is known to fuel organizational growth...
© Copyright TrendsSpotting, all rights reserved
Definition The Oslo Manual (2005)
15
New
Product
Process
Method
In
Practic...
© Copyright TrendsSpotting, all rights reserved
In 2013, cancer immunotherapy was named “Breakthrough of the Year” by the ...
© Copyright TrendsSpotting, all rights reserved
Case Study on Process Innovation: 3D Printing
Originally used mainly for (...
© Copyright TrendsSpotting, all rights reserved
Case Study on Marketing Innovation:
The Dollar Shave Club
This marketing i...
© Copyright TrendsSpotting, all rights reserved
Innovation ‘Value Chain’
Innovation Business Models
36
Definition / Organi...
© Copyright TrendsSpotting, all rights reserved
Firm Innovation Behavior and Strategy
Innovation Strategy
Exploration
vs.
...
© Copyright TrendsSpotting, all rights reserved
Innovators Dilemma
Christensen (1997)
Innovation Strategy
Christensen docu...
© Copyright TrendsSpotting, all rights reserved
Innovation Strategy
• Cisco disrupted the circuit switching of Lucent and ...
© Copyright TrendsSpotting, all rights reserved
63
Companies can be classified into one of three innovation strategy model...
© Copyright TrendsSpotting, all rights reserved
Innovation In Practice
Innovation importance
In BCG 2015 Innovation survey...
© Copyright TrendsSpotting, all rights reserved
Innovation In Practice
In 2015, Top 20 R&D Spenders
were Volkswagen, Samsu...
© Copyright TrendsSpotting, all rights reserved
Innovation Business Success
In their survey, IBM (2012 CEO Study) distingu...
© Copyright TrendsSpotting, all rights reserved
Innovation Business Success
Desai's financial index for innovation
Innovat...
© Copyright TrendsSpotting, all rights reserved
Most Innovative Companies Strategy &, 2015
Innovation in practice / The in...
© Copyright TrendsSpotting, all rights reserved
Ranking Most Innovative Companies
Innovation in practice / The innovation ...
© Copyright TrendsSpotting, all rights reserved
Technology and Innovation
IBM 2015 CXO study
Innovation in practice
IBM 20...
© Copyright TrendsSpotting, all rights reserved
Measurement
Question: What metrics are used in your organization to measur...
© Copyright TrendsSpotting, all rights reserved
Original image
Credit: Fadhirul Fitri Jamsari
Source: http://www.flickr.co...
TrendsSpotting offers Innovation Consulting, Customized & Syndicated Trend
Reports, published at top market research datab...
TrendsSpotting.com is a Trends Research Company.
Using a unique combination of marketing research with design focused user...
TrendsSpotting.com is a Trends Research Company.
Using a unique combination of marketing research with design focused user...
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Business Innovation Report by TrendsSpotting: Innovation Strategy, Performance and Measurement

The purpose of this review is to provide a deep understanding of innovation and its business potential. We will focus on innovation outcomes in terms of performance and present empirical findings linking innovation to business success. We introduce basic definitions of innovation, explore the most common forms of innovation (adding examples and case studies) and discuss disruptive innovation. We identify key innovation strategies developed and tested in academic and business research. We glance into rankings of the most innovative companies to learn on their performance and growth potential. Finally we will study how companies measure innovation and what parameters are critical for them to follow. At the end of the report, we have compiled an insightful “take away” and present extensive case study summarizing key innovation aspects in innovation implementation.

The 140 page PPT report is targeted at innovation stakeholders aiming to promote innovation efforts linked to business success & growth

Business Innovation Report by TrendsSpotting: Innovation Strategy, Performance and Measurement

  1. 1. © Copyright TrendsSpotting, all rights reserved Business Innovation Report Innovation Strategy, Performance and Measurement Research Review and Case Studies TrendsSpotting Trends & Innovation Research May 2016
  2. 2. © Copyright TrendsSpotting, all rights reserved 2 Contents III. Innovation Performance P.42 IV. Innovation Strategy P.47 • Innovation Strategy • Innovator’s dilemma • Disruptive innovation • Investment behavior V. Innovation in Practice P.68 • Innovation intentions • Innovation and R&D • Innovation success • Innovation ranking • Innovation challenges VI. Measuring Innovation P. 104 VII. Conclusions & Takeaway P.117 VIII. References P.127 IX. Appendix – Extended Innovation Case Study: Apple Retail Stores P.131 I. Introduction: P.3 II. What is Innovation? P. 12 • Definitions • Product innovation • Definition and examples • Case study Square • Case study Vscan • Process innovation • Definition • Case study – 3D printing • Case study Nike Flyknit • Case study Immune Therapy • Marketing innovation • Definition and examples • Case study “Dollar Shave Club” • Organizational innovation • Definition and examples • Case study “Citistats” III. Innovation Business Models P. 35 • Innovation Value Chain • The Solvay Business • Open Innovation Business Innovation Report
  3. 3. © Copyright TrendsSpotting, all rights reserved The Need along history The purpose of this review is to provide a deep understanding of innovation and its business potential. We will focus on innovation outcomes in terms of performance and present empirical findings linking innovation to business success. We introduce basic definitions of innovation, explore the most common forms of innovation (adding examples and case studies) and discuss disruptive innovation. We identify key innovation strategies developed and tested in academic and business research. We glance into rankings of the most innovative companies to learn on their performance and growth potential. Finally we will study how companies measure innovation and what parameters are critical for them to follow. At the end of the report, we have compiled an insightful “take away” and present extensive case study summarizing key innovation aspects in innovation implementation. Business Innovation Report Introduction The report is targeted at innovation stakeholders aiming to promote innovation efforts linked to business success & growthFormat: 140 slides Price: $750
  4. 4. © Copyright TrendsSpotting, all rights reserved The Need along history 5 Innovation is known to fuel organizational growth, to drive future success, and is the engine that allows businesses to sustain their viability in a global economy (Gaynor, 2002). For companies pursuing excellence in this era of hyper competition, restructuring, lowering costs, and enhancing product or service quality are no longer sufficient. Academic researchers regard innovation as a ‘life-and-death matter for a firm’, in which the constant need of fighting for survival and the threat of competition encourage firms to innovate (e.g. Baumol, 2002). As such, innovation is a fundamental part of competition, and consequently also the overall growth outcomes realized due to the competition. Peter Drucker succinctly stated that “every organization needs one core competency: innovation!”. The Need for Innovation Introduction / The need
  5. 5. © Copyright TrendsSpotting, all rights reserved Definition The Oslo Manual (2005) 15 New Product Process Method In Practice Innovation Basic requirements for innovation: Innovation (product, process or method) should be implemented, linked to performance and new to the firm Org. Innovation Marketing Innovation What is Innovation
  6. 6. © Copyright TrendsSpotting, all rights reserved In 2013, cancer immunotherapy was named “Breakthrough of the Year” by the journal Science, placing it in the company of the first cloned mammal and the complete sequencing of the human genome. With a handful of therapies already on the market, and dozens more showing promise in all stages of clinical development, these treatments are poised to forever change the way that we approach cancer management. Unlike chemotherapy and radiation treatments, which directly attack cancer cells, immunotherapy agents augment the body’s normal immune machinery, increasing its ability to fight tumors. This strategy involves either introducing compounds that directly stimulate the immune cells to work harder, or introducing synthetic proteins that mimic the components of the normal immune response, thereby increasing the body’s entire immune reaction. Today, more than 25 companies ranging from the pharmaceutical industry’s biggest names to a group of startups, are developing new products based on immunotherapy in variety of cancer domains. Case Study on Product Innovation: Immunotherapy: Using your own body to fight cancer
  7. 7. © Copyright TrendsSpotting, all rights reserved Case Study on Process Innovation: 3D Printing Originally used mainly for (rapid) prototyping, 3D printing technologies have progressively taken a more important part in manufacturing processes. As the technology improved, it became possible to use 3D printers not only to prototype, but also to manufacture tools and moulds used for ‘traditional’ manufacturing. It then became possible and economical, in some cases, to entirely manufacture end-products with 3D printers. Finally, the advent of Personal 3D Printers has made it possible to directly manufacture at home, thereby bypassing the (physical) distribution stage. By closing the gap between a project’s design and manufacturing phases, the technology is accelerating the pace of innovation—boosting efficiency and reducing costs. The 3D printing market, which consists of 3D printers, 3D printing materials, 3D printing services and 3D printing software, reached $4.98 billion in 2015. That market is expected to balloon to $30.19 billion by 2022 with annual growth rate of 28.5%. Nike’s idea to use a soft 3-D–printed material mimicking grass came after Nike’s running performance team traveled to Stanford University and met with track runners at the school. The group was shocked to see the athletes running barefoot on the grass. The Nike team went back to headquarters with the plan to try a 3-D–printed version of grass on future soles.
  8. 8. © Copyright TrendsSpotting, all rights reserved Case Study on Marketing Innovation: The Dollar Shave Club This marketing innovation changes the concept of shaving cost. From “pay per razor and cartridge” to a fixed monthly rate of product that seems much more affordable. The success: In 2014, the startup generated $65 million, triple that of its 2013 revenue, with 2 million monthly and bi-monthly subscribers.
  9. 9. © Copyright TrendsSpotting, all rights reserved Innovation ‘Value Chain’ Innovation Business Models 36 Definition / Organizational MethodInnovation Business Models Hansen and Birkinshaw (2007) The Innovation Value Chain
  10. 10. © Copyright TrendsSpotting, all rights reserved Firm Innovation Behavior and Strategy Innovation Strategy Exploration vs. Exploitation Firm’s investment behavior Firm innovation categories Key strategic dimensions External and internal Cooperation
  11. 11. © Copyright TrendsSpotting, all rights reserved Innovators Dilemma Christensen (1997) Innovation Strategy Christensen documents in his book how market-leading companies have missed game- changing transformations in industry after industry—computers (mainframes to PCs), telephony (landline to mobile), photography (film to digital), stock markets (floor to online)—not because of ‘bad’ management, but because they followed the dictates of ‘good’ management. They listened closely to their customers. They carefully studied market trends. They allocated capital to the innovations that promised the largest returns. And in the process, they missed disruptive innovations that opened up new customers and markets for lower-margin, blockbuster products.” “Disruptive innovations” - are the “changes that toppled the industry leaders”. These are not radical improvements. Disruptive innovations are either so much cheaper that they open a new market, or start in a because it’s too small.doesn’t care aboutniche that the industry However, often the performance of the disruptive technology grows faster than users’ needs, with time catching up to, and surpassing the more high-end or mainstream technologies that are the domain of industry leaders.
  12. 12. © Copyright TrendsSpotting, all rights reserved Innovation Strategy • Cisco disrupted the circuit switching of Lucent and Nortel with disruptive router technology, which was cheaper and initially not good enough to compete in the area of voice. While Cisco was developing and improving the router technology, it made no sense for Lucent or Nortel to pay attention to the disruptive technology. If Lucent listened to their existing customers and asked whether they were interested in router technology, the answer was that they weren’t. But the router kept on improving until the router was fast enough to do voice. The router had improved to the point where it put circuit switching out of business. • Today - Google promises to reinvent cars as autonomous vehicles; Amazon promises to reinvent shopping (again) using drones; 3D printing could disrupt manufacturing. With the rise of Uber, Airbnb and others, the economy is moving away from owning assets to renting them. Fintech companies are about to change money managements systems cutting middle men– challenging banks and insurance companies. Disruptive innovation: examples • In 2008 Apple challenged the music market with “value chain disruption.” Apple’s integration of its iPod device, iTunes software, and iTunes music store disrupted the existing music industry value chain from the record labels to the CD retailers to the MP3 device makers. The key to Apple’s success was that Steve Jobs was able to convince the major record labels to sell its critical asset — individual songs — for 99 cents.
  13. 13. © Copyright TrendsSpotting, all rights reserved 63 Companies can be classified into one of three innovation strategy models: • Need Seekers engage both current and potential customers to help shape new products and services based on superior end-user understanding. These companies often address unarticulated needs and then work to be first to market with the resulting new products and services. • Market Readers closely monitor both their customers and competitors, but they maintain a more cautious approach. They focus largely on creating value through incremental innovations to their products and being “fast followers” in the marketplace. • Technology Drivers follow the direction suggested by their technological capabilities, leveraging their sustained investments in R&D to drive both breakthrough innovation and incremental change. They often seek to solve the unarticulated needs of their customers through leading-edge new technology. Innovation Strategy Firm innovation strategies (Booz & Company 2011)
  14. 14. © Copyright TrendsSpotting, all rights reserved Innovation In Practice Innovation importance In BCG 2015 Innovation survey – 79% of respondents ranked innovation as one of their company’s top-strategic priorities while 57% placed it as 1 of 3 top strategic priorities. A strong majority of respondents (84%)— consider innovation important or extremely important for positioning their company to benefit from an economic recovery (2010 survey). Innovation as top priority in BIC countries: 82% of respondents from BIC countries said that their company considers innovation a top or top-3 priority (China = 92 %—versus 68% per mature economies). 36% of BIC respondents said their company considers innovation its top priority (versus 22% from mature economies) – 2010 survey. Innovation Intentions Innovation PerformanceInnovation in practice / Innovation intentions BCG 2010, 2015 Innovation survey
  15. 15. © Copyright TrendsSpotting, all rights reserved Innovation In Practice In 2015, Top 20 R&D Spenders were Volkswagen, Samsung, Intel, Microsoft, and Roche, which held the same first five positions as last year. Apple makes its first appearance ever in the Top 20 R&D Spenders list in 2015, despite being an efficient innovator and spending only 3.3 percent of its revenues on R&D, compared with an average 12.5 percent for the other 19 companies on the list (Strategy & 2015, Bloomberg) Innovation and R&D Innovation PerformanceInnovation in practice / Innovation and R&D
  16. 16. © Copyright TrendsSpotting, all rights reserved Innovation Business Success In their survey, IBM (2012 CEO Study) distinguished between Outperformers and Underperformers: Outperformers are organizations that surpass industry peers in terms of revenue growth and profitability, according to their CEOs. Outperformers were found to be partnering for innovation more aggressively. But they are also tackling more challenging and disruptive types of innovation. Innovation In PracticeInnovation PerformanceInnovation in practice / Innovation Success IBM 2012 CEO Study
  17. 17. © Copyright TrendsSpotting, all rights reserved Innovation Business Success Desai's financial index for innovation Innovation In Practice Methodology: 270 internationally publicly traded organizations across all major sectors were profiled according to "Innovation Success" criteria - a company must demonstrate innovation that produces at least 5% of company's total revenue within 3 years after commercialization, and grows to at least 15% (with equal or better margin) within 7 years. - $1B+ in Revenue ; in business for 10+ years; 75% of revenue must be from products & services created from within. - Must demonstrate positive top-line and net-earnings for last 3 years continuously - At least 15% of total revenue must be from products created in last 5 years Innovation Performance of innovative companies (IPI) correlates with stock performance 134% increase in stock performance for innovative companies was recorded while DOW, NASDAQ, S&P, CACC40, and NIKKEI all provided either negative or less then 6.5% return over the same period 2003-2009. Even during the toughest economic period of 2008-2009, IPI companies recovered much faster then others - demonstrating agility, nimbleness, and resilience in the culture of these companies. Innovation In PracticeInnovation PerformanceInnovation in practice / Innovation Success
  18. 18. © Copyright TrendsSpotting, all rights reserved Most Innovative Companies Strategy &, 2015 Innovation in practice / The innovation Premium Strategy& examines the world's 1000 leading companies in terms of research & development spend and then ranks their position based on how well this investment has translated into performance Innovation In PracticeInnovation in practice / MeasurementInnovation In PracticeInnovation in practice / Innovation Ranking
  19. 19. © Copyright TrendsSpotting, all rights reserved Ranking Most Innovative Companies Innovation in practice / The innovation Premium In their book The Innovators DNA (Harvard Business Press, 2011), Gregersen, Dyer and Christensen explain how some of the world’s most innovative companies enjoy the Innovation Premium: “Investors pay a stock price based upon two things: One is the cash flow - the money coming from existing products, services and markets. The other is the belief that the company will develop new markets, new services and new products tomorrow.” They found that this belief can add 50 percent or more to their market value. The results of their study were surprising: Companies like Toyota, Sony and Samsung, which frequently feature on other lists of innovative companies, sank to negative ratings. In their place emerged a number of unexpected and relatively unknown companies - firms like Intuitive Surgical (which builds systems for robotically assisted, minimally invasive surgery, Natura Cosméticos (a Brazilian manufacturer of cosmetics made from plants from the Amazon forest), and Keyence Corporation (a Japanese producer of electronic sensors for automated factory systems). Innovation In PracticeInnovation in practice: Innovation RankingInnovation in practice / Innovation Ranking
  20. 20. © Copyright TrendsSpotting, all rights reserved Technology and Innovation IBM 2015 CXO study Innovation in practice IBM 2015 CxOs study (5,247 business leaders, 21 industries,70 countries) Innovation in practiceInnovation in practice / The innovation PremiumInnovation in practiceInnovation in practiceInnovation in practice / The innovation PremiumInnovation In PracticeInnovation in practice / Innovation Challenges IBM 2015 CxO study shows clearly that CxOs today believe technology and market factors are the most meaningful external forces blocking their organizations. CEOs have put technology at the top of the list in recent years. The current study reveals that other members of the C-suite also see technology as the main game-changer). Technology to drive innovation Technology (77%) and market factors (71%) are transforming the competitive landscape
  21. 21. © Copyright TrendsSpotting, all rights reserved Measurement Question: What metrics are used in your organization to measure the value of innovation? 2014 KPMG Tech Innovation Survey Most common metrics KPMG 2014 tech business executives survey Measuring Innovation in firmsInnovation PerformanceMeasuring Innovation Revenue growth is the most common measure for innovation, followed by ROI, number of new customers and market share. Interestingly – Chinese executives use brand recognition as the most common measure. Probably they are using innovation brand impact to compete with western companies.
  22. 22. © Copyright TrendsSpotting, all rights reserved Original image Credit: Fadhirul Fitri Jamsari Source: http://www.flickr.com/photos/sey_alg9/2930523547/ Original image Credit: Jeroen van Deel, flicker, 2005 Netherlands Source: http://www.flickr.com/photos/fotovandeel/3127361451/ Original image Credit: iphone battery icon Source: http://sneakhype.com/accessories/2010/12/iphone-icon-battery.html Original image Credit: Daveyo520 Source: http://www.giantbomb.com/forums/off-topic/31/headphones-on-without-using- them/422062/?page=3/ Sources of images used in this report: Appendix Sources of images used in this report:TrendsSpotting.com is a Trends Research Company. Using a unique combination of marketing research with design focused user experience research we identify key industry trends, develop marketing insights and provide new product development strategy Format: 130 slides Price: $950 Click here to purchase or learn more Buy the Org. Innovation ReportBuy this Bus. Innovation Report Format: 140 slides Price: $950 Click here to purchase TrendsSpotting.com is an Innovation Research company. Using unique Research 2.0 methodologies to follow consumer behaviors, we identify key industry trends, and apply insights into strategic planning.
  23. 23. TrendsSpotting offers Innovation Consulting, Customized & Syndicated Trend Reports, published at top market research databases. TrendsSpotting serves leading TrendsSpotting’s insights are presented at and quoted in the . TrendsSpotting’s are read by thousands and used by leading companies to plan their future. Visit us here: The TrendsSpotting Blog www.trendsspotting.com news media global companies. Annual Prediction Reports TrendsSpotting.com is a Trends Research Company. Using a unique combination of marketing research with design focused user experience research we identify key industry trends, develop marketing insights and provide new product development strategy Sources of images used in this report: Appendix Sources of images used in this report:TrendsSpotting.com is a Trends Research Company. Using a unique combination of marketing research with design focused user experience research we identify key industry trends, develop marketing insights and provide new product development strategy TrendsSpotting.com is an Innovation Research company. Using unique Research 2.0 methodologies to follow consumer behaviors, we identify key industry trends, and apply insights into strategic planning.
  24. 24. TrendsSpotting.com is a Trends Research Company. Using a unique combination of marketing research with design focused user experience research we identify key industry trends, develop marketing insights and provide new product development strategy TrendsSpotting’s Prediction Reports For the last ten years TrendsSpotting has published prediction reports covering trends in tech, mobile and social media. TrendsSpotting’s Influencers Prediction Reports are read by thousands of readers and used by leading companies to plan their future. Online Country Reports: We have recently completed an extensive research series exploring internet and mobile behavior in 16 countries, the most intriguing markets - internet wise. Europe - Germany, Belgium, France, Poland, UK, Turkey, Greece Asia - China, India, Hong Kong, Vietnam, South Korea, Taiwan, Singapore, Indonesia Central and S. America: Mexico (more to come..) Latest Innovation Reports: Innovation Readiness – Methodologies for innovation assessment The future of Health Mobile Accessories: Trends and Innovations Online Shopping Pets Technologies: Communicating with Pets Sources of images used in this report: Appendix Sources of images used in this report:TrendsSpotting.com is a Trends Research Company. Using a unique combination of marketing research with design focused user experience research we identify key industry trends, develop marketing insights and provide new product development strategy TrendsSpotting.com is an Innovation Research company. Using unique Research 2.0 methodologies to follow consumer behaviors, we identify key industry trends, and apply insights into strategic planning.
  25. 25. TrendsSpotting.com is a Trends Research Company. Using a unique combination of marketing research with design focused user experience research we identify key industry trends, develop marketing insights and provide new product development strategy TrendsSpotting is headed by Dr. Taly Weiss, a Social Psychologist and innovation researcher. Taly is a leading authority in technology trends research. She was among the first researchers to use web metric technology for practical research. She advises corporations on emerging technologies, innovation implementation and on NPD. Her academic works contributes to the field of Behavioral Economics. She investigates people’s willingness to join groups and share resources. Reviews on our recent reports: This is a very interesting and timely report. In addition to a comprehensive review of survey data, TrendsSpotting's unique use of web metrics reflecting consumers' online behavior, brings market research into Web 2.0 era. I find TrendsSpotting's business review an important resource for marketers". -- Guy Kawasaki, Best seller author and founder of Garage Technology Ventures. "The report is enormously comprehensive and stunningly interesting. TrendsSpotting.com has pulled it all together to make it highly relevant. I am impressed by the breadth and depth, and timeliness of the content. Wow." -- Marian Salzman, CEO Havas North America. trendspotter. Sources of images used in this report: Appendix Sources of images used in this report: TrendsSpotting.com is an Innovation Research company. Using unique Research 2.0 methodologies to follow consumer behaviors, we identify key industry trends, and apply insights into strategic planning.

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