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A Playbook for the New Chief Innovation Officer

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As shareholders continue to demand year-over-year percentage-point growth, our largest public companies are facing diminishing returns on cost-saving and margin-enhancement initiatives. In this continuous struggle to satisfy shareholder demand, many companies are committing to consistently deliver meaningful growth from innovation— a promise few are prepared to deliver. Without a clear innovation strategy and roadmap, these companies, and those held accountable for their results, are doomed to fail.

Enter the Chief Innovation Officer, the fastest growing executive role in recent memory. While there are many new CIOs, there remains a great deal of ambiguity to the responsibilities of this position. This presentation introduces a four phase transformation journey that arms CIOs and CEOs with a scalable toolkit of structures, strategies, capabilities, and processes.

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A Playbook for the New Chief Innovation Officer

  1. 1. A PLAYBOOK FORTHE NEW CHIEF INNOVATION OFFICER B I L L P O S TO N
  2. 2. 39% 64% 8% Source:Apple, IBM & Royal Dutch Sell 2012 Annual Reports Growth Expectation Assets + Free Cash Flows Growth expectations as percent of total market value NYSE Valuation [2012]
  3. 3. Source: Leslie Known, Wall Street Journal 2012; Samsung & Siemens 2012 Annual Report ‘’Our latest figures confirm our power of innovation” 33,528 “Technology innovation… accounts for our growth & stellar performance” “Our constant innovation and desire for positive change…”
  4. 4. 8.3% 4.8% 4-YearAverage R&D Spend as a Percent of Revenue [2008-2011] Cross-Industry Average 73%M o r e HIGH-TECH SPENT Source: Booz&co.TheGlobal Innovation 1000: Comparison of R&D Spending by Regions and Industries I D E A S I N P R A C T I C E High-Tech Industry Average
  5. 5. 0.73% -12.52% 18.57% 8.93% 9.22% -17.16% 15.52% 9.25% -20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 2008 2009 2010 2011 HIGH-TECH Year-Over-YearAverage Revenue Growth [2008-2011] 4.2% 3.9% BUT CROSS-INDUSTRY 8% L e s s REVENUE G R E W 73% M o r e HIGH-TECH S P E N T Source: Booz&co.TheGlobal Innovation 1000: Comparison of R&D Spending by Regions and Industries I D E A S I N P R A C T I C E
  6. 6. Source: Booz&co.TheGlobal Innovation 1000: Comparison of R&D Spending by Regions and Industries WHAT’SYOUR R&D EFFECTIVENESS RATIO? 8.3% 3.9% R&D Spend as % of Revenue0.47 HIGH-TECH INDUSTRY R&D EFFECTIVENESS RATIO YoY Average Revenue Growth = I D E A S I N P R A C T I C E Poor R&D Effectiveness
  7. 7. US Industrial R&D Spend by Size of Enterprise [1981-2011] Sources: National Science Foundation, Science Resource Studies, Survey of Industrial Research Development, 1991, 1999, 2001, 2013. 71% 68% 41% 35% 13% 10% 14% 17% 6% 6% 9% 8% 6% 8% 14% 17% 4% 9% 23% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1981 1989 1999 2011 Less than 1,000 1,000–4,999 5,000–9,999 10,000–24,999 25,000 or more
  8. 8. Lack of a strategy Lack of alignment Overloaded pipeline Rampant incrementalism 1 3 Seven Chronic Problems 4 5 Short-term orientation 6 Accountability for results Lack of skills 7 Seven Chronic Problems
  9. 9. Source:Capgemini Consulting Survey 43% o r s i m i l a r i n p l a c e A CHIEF INNOVATION OFFICER ROLE, OF 260 LARGE COMPANIES SURVEYED HAD
  10. 10. Primary Responsibilities
  11. 11. Close Strategic Gaps Improve & Expand Capabilities Accelerate Change SUSTAIN Adjust Strategy Optimize Measure & Monitor Results Plan Linkages Learn Cultivate Talent TRANSFORMGET READY GET STARTED Define the Challenge Build A Cross- Functional Coalition Articulate Imperative Structure the Org Optimize Portfolio CleanOut Pipeline Take Stock, Focus on Results Develop Roadmap Formalize Strategy
  12. 12. Innovation Strategy Fuzzy Front End Business Strategy Innovation Leadership Consumer & Customer Insights Brand Technology NPD Portfolio Management In-market Portfolio Management Idea Concept Portfolio Management Launch Management Product Lifecycle Management New Product Development & Commercialization Results Analysis Are your innovation capabilities sufficient to transform your organization?
  13. 13. RESULTS INNOVATION RHETORIC INNOVATION VS. Join the conversation at www.thechiefinnovationofficer.com

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