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Innovation Leadership Study
Managing Innovation: An Insider Perspective

April 2012

Transform to the power of digital

Table of Contents

Introduction
Results
Implications
Demographics

Copyright © 2011 Capgemini Consulting. All rights reserved.
2

This Innovation Leadership Study provides insight into the formal and informal
mechanisms for managing innovation
 Introduction Results Implications Demographics

Introduction (1/3)

Innovation Leadership Study
Paddy Miller Koen Klokgieters
Professor of Managing Vice President
People in Organizations Business Innovation

Dear Participant, Dear Participant,

This Innovation Leadership Study aims to understand how those This joint research by IESE Business School and Capgemini
leading and managing innovation in their organizations think about Consulting provides insight into both the formal and informal
the innovation function. mechanisms for managing innovation.

When looking at the informal mechanisms for managing innovation With respect to the formal part of managing innovation, we see
we notice that the accountability for realizing growth is the main that even though innovation is considered a highly strategic topic it
motivational driver for senior executives to be involved in is not organized in such a way. Innovation leaders understand the
innovation. Many of the innovation leaders and managers we need to have an explicit innovation strategy and to support it with
surveyed have been tasked with creating a culture of innovation formal innovation governance mechanisms. However, only a
but interestingly enough it is the CEO and peers that are considered minority of respondents agree they have an innovation strategy or
the main drivers of an innovation culture within companies. I would an effective governance for innovation. I hope you will find these
like to thank you for your contribution to this research. survey results useful for leading and managing innovation.

Best regards, Best regards,
Paddy Miller Koen Klokgieters

3

The study aims to understand how those leading and managing innovation in their
organizations think about the innovation function

Introduction (2/3)

Study Overview
Objectives
FORMAL MECHANISMS  The Innovation Leadership Study aims to understand how those leading and
managing innovation in their organizations think about the innovation
STRATEGY GOVERNANCE function.
Content
 It looks at both formal (strategy, governance) and informal (leadership, culture)
mechanisms for managing innovation.
Approach
Managing  It is based on both qualitative (interviews) and quantitative research (survey).
Innovation  We have conducted in-depth interviews with innovation leaders from various
industries on how they lead and manage innovation.
 Subsequently a broad-scale survey targeting innovation leaders has been
carried out to validate our hypotheses and generate additional insights.
Process
LEADERSHIP CULTURE  25 interviews have been conducted, most between July and September 2011.
 The online survey, in the field from September 12 to October 12
INFORMAL MECHANISMS 2011, generated responses from 260 executives around the
world, representing the full range of industries, regions, functional
specialties, and seniority.
 The final report – integrating all findings – is to be expected in early 2012.
4

Our leader versus laggard methodology allows us to uncover good practices in
managing innovation

Introduction (3/3)

Innovation Success Rate Leader versus Laggard Perspective
% of respondents, n = 260
Survey Methodology
Could you please estimate your organization’s innovation
 The methodology differentiates between innovation leaders and
success rate? laggards based on a self-assessment by survey respondents of
their innovation success rate.
 The innovation success rate is determined by the percentage of
innovation efforts that have a positive material impact on the
company’s business results.
38% 37%  We distinguish between 4 categories of innovation success
based on this rate, namely: ‘Less than 25%’, ‘25-49%’, ‘50-74%’
and ‘Over 75%’ of innovation efforts having a positive material
impact on the company’s business results.

18%  The ‘Less than 25%’ category represents the innovation laggard
group and the ‘Over 75%’ category the innovation leader group
of analysis.
7%

Survey Population

Less than 25% 25-50% 50-75% Over 75%  The exhibit to the left shows how respondents are distributed
over these four categories. Thirty-eight percent of respondents
LAGGARDS LEADERS fit the innovation laggard profile, whereas seven percent belong
to the innovation leaders group.

5

Table of Contents

Introduction
Results
Implications
Demographics

6

Forty-three percent of respondents have a formally accountable innovation executive
Introduction  Results Implications Demographics

Results: Innovation Function (1/3)

Formal Accountability for Innovation Leader versus Laggard Perspective
Does your organization have someone at the executive Less than 25% 25-50% 50-75% Over 75%
level who is formally accountable for innovation?

+31% 72%

57% 59%
55%
49% 51%
43% 45%
41%

28%

Yes No Yes No

43% of respondents have someone at the executive level 59% of innovation leaders have an accountable executive
who is formally accountable for innovation versus only 28% in the laggard peer group

7

Developing an innovation ecosystem and strategy are considered to be the innovation
function’s main role


Innovation Function’s Role
What do you consider to be the innovation function’s main role?

Top-1 Top-2 Top-3

Formulating and communicating the innovation strategy 31% 15% 11%
Monitoring and analysis of the external environment 7% 11% 9%
Optimizing the innovation processes and governance 14% 16% 18%
Building and nurturing an innovation ecosystem 32% 19% 13%
‘Selling’ of innovation within the organization 5% 12% 12%
Motivating employees to innovate 6% 9% 13%
Running innovation workshops/events 2% 4% 7%
Developing employees’ innovation skills 5% 14% 17%

The innovation function’s main role is considered to be the
development of an innovation ecosystem and strategy

8

The absence of a well-articulated innovation strategy is the biggest constraint to
reaching innovation targets


Innovation Constraints
What most constrains your organization’s ability to achieve its innovation targets?

Top-1 Top-2 Top-3

The absence of a well-articulated innovation strategy 24% 9% 13%
Lack of understanding of the external environment 13% 15% 11%
No formal innovation governance structure 7% 12% 7%
Lack of formal innovation processes 7% 9% 12%
Inadequate innovation budget allocation 11% 10% 10%
Lack of top management commitment to innovation 11% 9% 11%
No innovation-friendly culture 11% 12% 9%
Lack of clarity on what innovation behaviors actually are 9% 12% 11%
Inadequate innovation skills within the organization 6% 12% 16%

The absence of a well-articulated and/or communicated
innovation strategy is the top-1 innovation constraint

9

Survey results: Innovation Strategy

FORMAL MECHANISMS

STRATEGY GOVERNANCE

Managing
Innovation

LEADERSHIP CULTURE

INFORMAL MECHANISMS

10

The majority of respondents do not have an explicit innovation strategy

Results: Innovation Strategy (1/3)

Innovation Strategy Leader versus Laggard Perspective
Does your organization have an explicit innovation Less than 25% 25-50% 50-75% Over 75%
strategy?

+36%
71%
65%
58%
53% 55%

45% 47%
42%
35%
29%

Yes No Yes No

65% of innovation leaders have an explicit innovation
42% of respondents have an explicit innovation strategy
strategy versus only 29% of the laggards

11

The innovation strategy most frequently includes statements on alignment with
corporate strategy, technology and markets


Innovation Strategy Elements Leader versus Laggard Perspective
% of respondents,¹ n = 98
Does it include statements on any of the following? Less than 25% 25-50% 50-75% Over 75%

Alignment with corporate strategy 80%
38%
Technology 64% 37%
Targets +17%
Markets 62% 57%

Innovation culture 58% 55%

Innovation processes 55%
46%
Internal capabilities 47% 18%
Partners +9%
Targets 44% 61%

Partners 40% 55%

¹Multiple answers possible; Respondents who answered ‘Other’ are not shown.

Targets and partners are the least frequently included Leaders are more keen to include statements on targets and
elements of an innovation strategy partners in their innovation strategies than laggards

12

It is often developed by a combination of top management and innovation experts, and
communicated widely inside the organization


Innovation Strategy Development Innovation Strategy Communication
% of respondents,¹ n = 98 % of respondents,¹ n = 98
How is your innovation strategy developed? How is your innovation strategy communicated in your
organization?

Developed by top management 13%
Not communicated at all 2%
Developed by top management and BU
6%
heads
Developed by top management, BU Communicated to top management
30% 18%
heads, and internal innovation experts layers only
Developed by top management, BU
11%
heads, internal and external innovation… Communicated widely inside the
44%
Developed by employees, approved by top organization
2%
management
Developed by employees, validated by BU Communicated widely inside the
9% organization and used as a daily 15%
heads, approved by top management
Developed by BU heads, approved by top guideline for innovation
2%
management
Communicated widely inside and
Developed by innovation experts (internal 19%
20% outside the organization
and external), approved by top…

¹Respondents who answered ‘Other’ are not shown. ¹Respondents who answered ‘Other’ are not shown.

The development of an innovation strategy is predominantly 19% of respondents communicate their innovation strategy
a top-down exercise also outside the organization

13

Survey Results: Innovation Governance

FORMAL MECHANISMS

STRATEGY GOVERNANCE

Managing
Innovation

LEADERSHIP CULTURE

INFORMAL MECHANISMS

14

Only thirty percent of respondents agree they have an effective organizational structure
for innovation

Results: Innovation Governance (1/4)

Organizational Structure
How strongly do you agree or disagree with the following statements regarding your organizational structure for
innovation?

We have an effective organizational structure for
9% 36% 21% 23% 7%
innovation

We have a formal organizational structure for innovation 15% 30% 15% 25% 12%

We have a well defined governance structure to manage
12% 33% 19% 24% 11%
innovation in our organization
We have clearly defined roles and responsibilities with
9% 31% 24% 25% 9%
regard to innovation

Strongly disagree Disagree Neither disagree, nor agree Agree Strongly agree

¹Respondents who answered ‘Not Applicable’ are not shown.

45% of respondents do not have a formal organizational structure for
innovation

15

Thirty-nine percent do not have a formal decision-making process for managing
innovation


Decision-making Process
How strongly do you agree or disagree with the following statements regarding your decision-making process for
innovation?

We have an effective decision-making process to manage
8% 31% 26% 25% 8%
innovation

We have a formal decision-making process for managing
10% 29% 15% 30% 14%
innovation
We have a well defined process to prioritize, and allocate
8% 33% 20% 26% 11%
time and funding to, innovation projects
We have a clearly defined process for stage gating, and
9% 26% 18% 30% 15%
making go/no go decisions



Respondents disagree most with having a well defined process for
prioritization and funding of innovation projects

16

A stunning fifty-four percent of survey participants indicate not having a formal KPI
system for promoting innovation


KPI System
How strongly do you agree or disagree with the following statements regarding your KPI system for innovation?

We have an effective KPI system to promote innovation 15% 41% 21% 17% 4%

We have a formal KPI system for promoting innovation 15% 39% 14% 24% 6%

We have well defined targets and scope for innovation 11% 34% 17% 29% 7%

We have a clearly defined performance measurement and
13% 39% 20% 19% 7%
rewarding of innovation success



Only 26% percent agree they have clearly defined performance
measurement and rewarding of innovation success

17

Fewer than a quarter of the respondents have an effective organizational alignment of
innovation efforts


Organizational Alignment
How strongly do you agree or disagree with the following statements regarding your organizational alignment of
innovation?

We have an effective organizational alignment of
9% 36% 27% 19% 5%
innovation efforts

We have a formal organizational alignment mechanism for
9% 35% 21% 24% 7%
our innovation efforts
We have a well defined process for alignment of our
8% 32% 19% 30% 7%
innovation efforts with corporate strategy
We have clearly defined how to align innovation efforts
8% 37% 22% 25% 4%
across the organization and utilize internal capabilities



Respondents are most positive about the alignment of innovation efforts
with corporate strategy

18

Survey Results: Innovation Leadership

FORMAL MECHANISMS

STRATEGY GOVERNANCE

Managing
Innovation

LEADERSHIP CULTURE

INFORMAL MECHANISMS

19

Accountability for realizing growth is the main driver for senior executives to be involved
in innovation

Results: Innovation Leadership (1/2)

Executive Motivation for Innovation Leader versus Laggard Perspective
What do you think motivates senior executives to be Less than 25% 25-50% 50-75% Over 75%
involved in innovation leadership?

46%
Accountability for realizing growth 40% +19%
46%
51%
65%
15%
Intrinsic creative motivation 11%
15%
19%
18%
17%
Feel responsible for advancing innovation 28%
22%
in the organization 23%
12%
15%
Innovation is considered a high status area 17%
14%
7%
6%

¹Respondents who answered ‘Other’ are not shown.

Accountability for growth is the main driver for senior Our leader group stresses accountability for growth as the
executives to be involved in innovation driver for senior executives to be involved in innovation

20

The exciting nature of innovation work, the desire to improve things, and teamwork
aspects motivate employees most to be involved in innovation

Results: Innovation Leadership (2/2)

Employee Motivation for Innovation
How strongly do you agree or disagree with the following statements with respect to what motivates employees to be
involved in innovation?

Strongly Agree / Agree Disagree / Strongly Disagree

Innovation is considered to be exciting work 91% 4%

Desire to improve things 89% 5%
Like being part of a team or task force for something
87% 5%
new
An opportunity for self-realization 75% 7%

Like being pulled out of everyday 53% 17%

Interesting travel and conferences 26% 35%

¹Respondents who answered ‘Neither disagree, nor agree’ or ‘Not Applicable’ are not shown.

Employees are particularly involved in innovation work because of its
exciting nature, the desire to improve things and its teamwork aspects

21

Survey Results: Innovation Culture

FORMAL MECHANISMS

STRATEGY GOVERNANCE

Managing
Innovation

LEADERSHIP CULTURE

INFORMAL MECHANISMS

22

Two-thirds of our respondents have been tasked with creating an innovation culture
Introduction  Results Way Forward Demographics

Results: Innovation Culture (1/3)

Innovation Culture Leader versus Laggard Perspective
Have you been tasked with creating a culture of Less than 25% 25-50% 50-75% Over 75%
innovation in your organization?

86%
66%

65% 65%
57%

34% 43%
35% 35%

14%

Yes No Yes No

66% of respondents have been tasked with creating a Innovators with a success rate of 50% or higher are more
culture of innovation often tasked with creating an innovation culture than less
successful innovators
23

Openness, innovation as a core value, and the sharing of information are most often
mentioned as the elements that constitute an innovation culture


Innovation Culture Elements
Which elements do you think constitute a culture of innovation?

Openness (to others’ ideas, to change, to exchange) 84%
Innovation considered a core value of the company 74%
Sharing information, ideas and results 69%
Listening to ideas, pushing them forward, making sure they’re followed 59%
Acting quickly even outside plan to capture opportunities 56%
People throwing out ideas, discussing them, excited about them 54%
Facilitating and guiding ideas 54%
Code of trust 41%
People are aware they have to have new ideas and bring them up 33%
Going in directions you believe in 28%


Our leader versus laggard comparison revealed that innovation leaders
are more concerned with facilitating and guiding ideas than others

24

The CEO is considered the main driver of an innovation culture within companies


Innovation Culture Source
Where does an innovation culture come from?

CEO 69%

Peers, people you work with 59%

Managers in general 51%

Learning and development, training 36%

Innovation managers 33%

Chief Innovation Officer and innovation office 32%

Executive sponsor 30%

Internal social media collaboration 24%


In addition to the CEO, peers and managers in general are most often
mentioned as the source of an innovation culture

25

Table of Contents

Introduction
Results
Implications
Demographics

26

What does all this mean for executives responsible for leading and managing
innovation?
Introduction Results  Implications Demographics

Implications

Drivers for Innovation

INNOVATION STRATEGY ORGANIZATIONAL INNOVATION INNOVATION
FUNCTION DESIGN LEADERSHIP CULTURE
• The innovation function • Traditional strategy • Limited organizational • Real innovation • Innovation culture is a
is in the spotlight to development no longer design for innovation is leadership requires highly important
improve the suffices in the pursuit of impairing growth at large executives to reduce the mechanism to enable
organization’s ability to sustainable growth under organizations. level of disconnect agility and be able to
achieve its innovation high uncertainty – there between themselves and survive in a continuous
• There is no one size fits
targets by formulating a is a need to move employees. change environment.
all when it comes to org
well-articulated strategy development to
design for innovation but • Our leader versus laggard • Our research on
innovation strategy and the outer peripheries of
the correlation between perspective shows the innovation culture shows
improving its the company.
having a formalized relation between that – among other
understanding of the
innovation governance company size and things – openness to
external environment.
and the reported reported innovation others’ ideas, to
innovation success rate success rate, suggesting change, to exchange, and
suggests that there is that it is easier to drive acting quickly even
much to gain by innovation in small outside the plan to
improving the formal organizations. capture
mechanisms for opportunities, are
managing innovation considered important
elements of a culture.

Innovation should be in the DNA of the company as well as in its leaders and employees

27

Table of Contents

Introduction
Results
Implications
Demographics

28

Two hundred and sixty respondents contributed to this survey
Introduction Results Implications  Demographics

Demographics (1/3)

Position Role
% of respondents, n = 260 # of respondents, n = 260

Respondents’ position within their organizations What is your role in the organization?
Chief Executive Officer 24
9%
Chief Innovation Officer 23
20%
Chief Operating Officer 3
10%
Vice President of Innovation 11
C-Level
Vice President of Strategy 8
VP
Vice President of R&D 4
Director
Director of Innovation 36
13% Manager
Director of Strategy 4
22% Analyst
Director of R&D 4
Other
Manager of Innovation 41
Manager of Business Development 9
Manager of Marketing 8
27%
Other 85

Many respondents are directly responsible for leading and
60% of respondents are at the director level or higher
managing innovation

29

Innovation and corporate strategy functional areas represent 60% of the respondents

Demographics (2/3)

Functional Area Company Size
% of respondents, n = 201 % of respondents, n = 201

What is your functional area? What are your company’s annual revenues?

18% Innovation 18%
1% 37% Corporate Strategy
4%
R&D
7%
Marketing
Less than €500m
8% Operations 43%
€500m - €1b
IT
8% €1b - €10 billion
HR
24% More than €10 billion
23% Sales
15% Finance
Supply Chain

16% Other (please specify)
18% 15%

60% of respondents work within innovation or corporate There is a 50/50 split between big and small companies
strategy represented

30

The survey results represent the full range of industries and geographical regions

Demographics (3/3)

Geography Industry
% of respondents, n = 201 % of respondents, n = 201

Respondents per geographical region In which industry segment does your company operate?

3%
6% Professional Services 19%
2%
High Tech 13%
Life Sciences 13%
North America Consumer Products 13%
40% South America Financial Services 12%
Europe Public Sector 9%
Telecommunications and Media 9%
Africa
Energy, Oil & Gas 7%
Asia
Automotive 7%
Australia
46% Healthcare Providers 6%
Transportation and Logistics 5%
3% Retail 4%
Utilities 3%
Other 19%

37 countries are represented in this study with most The majority of respondents work in professional
respondents based in Europe and North America services, high tech, life sciences or consumer products

31

For more information regarding this study, please contact:

Koen Klokgieters
Vice President – Capgemini Consulting

Mob: +316 5112 3259
koen.klokgieters@capgemini.com

Paddy Miller
Professor – IESE Business School

Mob: +34 93 253 4200
pmiller@iese.edu

32

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