There is no better time than the end of the fiscal year, to prepare recommendations for improvements for the upcoming year. Although there are a lot of data and analytics to process, they can be used as a solid ground for future improvement recommendations. Also, statistical data allow us to collect information from around the world and to compare it with our current situation. They are also used to predict or direct the future and, surely, there is a lot to learn from them.
That is why we have decided to analyze relevant innovation-related statistics from well-known experts and provide some conclusions and guidance on best practices in this area. Therefore, let’s deep dive into the most relevant statistics in the field of innovation and try to learn more from this data:
“The top challenges companies face regarding corporate innovation are:
fostering an internal culture of experimentation and innovation (57%);
juggling competing for internal agendas and goals (56%);
overcoming the middle management “permafrost” layer (45%);
and moving forward despite the deferred commitment and delayed action (33%).” Report: The Corporate Innovation Imperative
This survey shows that companies face the most challenges when building the innovation culture internally. Therefore, maybe the opportunity lies in making a strong structure able to quickly adapt to changes and innovation strategy to support innovation culture.
“61% of our survey respondents are embracing open innovation to generate new ideas.” PwC’s Innovation Benchmark 2017
Embracing an open innovation approach to generate new ideas is definitely something that is recognized as beneficial to any organization. With open innovation, you will be able to include a wider community in solving your current business challenges. From external experts to stakeholders, universities, customers and online visitors, you can collect valuable ideas and feedback and improve your products and services.
“54% of innovating companies struggle to bridge the gap between innovation strategy and business strategy.” PwC’s Innovation Benchmark 2017
Incorporating innovation strategy into the overall business strategy is an important step in achieving long-term success and we can see that it is still a huge issue for organizations to connect and align them properly. Innovation strategy needs to provide clear guidelines for the execution of innovation activities as well as its connection with the overall company product portfolio. Only when strategic alignment is achieved, companies will be able to innovate in the long and predictable term.
“Although 84% of executives agree that innovation is important to growth strategy, only 6% are satisfied with innovation performance.” McKinsley Global Innovation Survey
Dissatisfaction with innovation performance is a clear indicator that companies have a lack of innovation strategy, management, processes, tools and metrics. For any innovation activity to deliver true value, it has to be aligned with a company’s business strategy and have proper management, tools, metrics and people to achieve it.
“54% of companies say customer engagement strategy helps define innovation from early ideation and 35% of companies say customers are their most important innovation partners.” PwC’s Innovation Benchmark 2017
Considering the fact that the market is becoming more and more customer-focused, customer engagement and contribution is becoming the most valuable element of innovation within any industry. Customers are becoming the driving force of innovation and any customer-focused organization should create ways to easily connect with their customer base and take advantage of this huge innovation potential. Of course, engagement works both ways. So, while asking for your customers’ feedback make sure to deliver on it.
“Globally, business executives say that 40 percent of innovations over the last five years have had a positive impact on their business’s bottom line.” GE Global Innovation Barometer 2018
According to this statistic, organizations have to pay more attention to maximizing the return on investments. To do this properly you have to have a clear structure and more measured approach to understand the impact on the bottom line.
“While 79% of strong innovators reported that they have properly digitized the innovation process, only 29% of weak innovators made the same claim.” The Most Innovative Companies 2018: Innovators Go All In On DIgital
We can freely conclude that strong innovators have already digitized their innovation process. The transformation of the innovation process, on the one hand, requires changes in strategy, operations and overall organization, and on another, simplifies the execution of innovation processes. Embracing digital solutions for innovation management will open up new opportunities and possibilities.
“Nearly three in four global executives believe a lack of skills is an issue facing their industry. And 64 percent say this problem is restricting their ability to innovate (a challenge that has increased over time, up from 56 percent in 2014).” GE Global Innovation Barometer 2018
The employees are considered to be the most crucial element to innovation success, yet skill gaps continue to be the top concern among businesses. Finding and retaining the right talent and skillsets is equally important as investing in employees to gain new knowledge and skills.
“IT, Customer Care, and Marketing, departments tend to score better than other departments when it comes to their ability to adapt to technological change. Conversely, HR, Legal, and Manufacturing are most likely to be considered slow to adapt to technological change.” 2018 DIGITAL TRANSFORMATION INDEX
It is no surprise that the departments with more creative and flexible jobs are more likely to succeed in adapting to technological change. Implementing technological solutions will improve your processes and operational efficiency. Therefore to make your investment pay off, make sure to educate your employees to use the tool, before implementing such a solution.
“For the last 3 years, 50.4% of companies report that technology disruption has had a positive impact on their business, while 30.7% report that the impact of technology disruption had a negative impact on their business. 18.9% reported no noticeable change.” 2018 DIGITAL TRANSFORMATION INDEX
Technology-driven disruption is not new and we are witnessing that over the last two decades new technologies have emerged and fundamentally changed the way we work. However, disruption will not take place in a vacuum. To see and understand the impact of the technology-driven disruption, organizations have to have the appropriate structure, knowledge-transfer and policies in place.
“Though 61% of Innovation Leaders have “innovation” in their title, only 4% have the title of “Chief Innovation Officer.” Report: The Corporate Innovation Imperative
This study also shows that “not only do the majority of leaders have “innovation” in their current title, but 40% also had it in their previous role.” The role of Innovation Leader is in demand, while Chief Innovation Officer is reserved for large corporations. Both roles require high education and experience yet corporations mature in innovation require a results-oriented professional background before reaching a level where roles are allocated towards leadership.
“A corporate innovation leader will spend, on average, 3.2 years in their position while his career will last 18.6 years, on average.” Report: The Corporate Innovation Imperative
Corporate innovation leaders definitely have a long way to climb corporate ladders. Leadership positions are reserved for those able to acquire their position through knowledge, experience and great leadership skills. They need to know the business, their employees and to have the credibility to obtain needed resources from executives.
“In 2018, 65% of companies decide to wait to perfect and test the innovation before launch, in order to make sure the customer is completely satisfied from the start” GE Global Innovation Barometer 2018
This statistic shows that the trend to launch a product to the market as quickly as possible does not exist anymore, even with the option of delivering an imperfect and incomplete product or service and improving it along the way. This will probably somewhat prolong the product development time but will ensure customer satisfaction.
“84% of respondents say it is somewhat or very important that the company they buy from is innovative.” The Lab42 Innovation Survey
Consumers care if a company is innovative and they are making their decisions to purchase a product based on the brand image of the company. Innovation is seen as the key factor in driving purchase and retaining customers.
“Over 83% of respondents would pay more for innovation in electronics with 15% of these willing to pay over 40% more. In the automotive industry, 75% of respondents would be willing to pay an innovation premium, with 10% willing to go over 40% more.” The Lab42 Innovation Survey
These findings speak that consumers are more willing to pay if they feel that the products are innovative. In the customer-centric economy, it is needed to have cool and innovative products and services that will grab customers’ attention.
“55% of business executives think that if their government had protectionist policies towards innovation it would benefit the business sector.“ GE Global Innovation Barometer 2018
It is recognized that governments worldwide are not able to regulate innovation as a structured system and cannot keep up with the pace of innovation. Those policies toward innovation are seen as a way to find investments for innovation and to gain a competitive advantage. The question is would it give the government too much control and certain barriers for investment.
“R&D spending among the Global Innovation 1000 overall increased 11.4 percent in 2018, to a record high of $782 billion. Revenues for the Global Innovation 1000 also increased by 11.4 percent, leaving R&D intensity, or innovation spending as a percentage of revenue, unchanged from 2017 (at 4.5 percent) and maintaining the 14-year high.” Report: PwC’s 2018 Global Innovation 1000 study
This represents high-record spending which indicates that organizations understand the necessity to invest in innovation in order to stay competitive. The fact that R&D spending increases in all regions and nearly all industries, indicates that there is a global trend in investing in innovation.
“China is now responsible for a quarter of global R&D – a massive rise from 2.6% in 1996. Private sector R&D investments from China amounted to 27% of the world’s total in 2017, nearly on a par with U.S. firms. China maintains top ranks in industrial designs, patents and trademarks, high-tech exports and creative goods exports.” Global Innovation Index 2019
These findings show that the global scene for innovation is beginning to shift to Asia. China stands out in terms of product innovation and retains top ranks in patents, industrial designs and trademarks by origin.
“In the top echelon, Switzerland, Sweden, and the United States of America (U.S.) lead the innovation rankings, with the latter two moving up in GII 2019. Other European nations, such as the Netherlands and Germany, along with Singapore in Asia, remain consistent members of the GII top 10. This year, Israel moves up to the 10th position, marking the first time an economy from the Northern Africa and Western Asia region cracks the top 10 rankings.” Global Innovation Index 2019
This report states that the geography of innovation is changing. More and more developing countries continue to incorporate innovation in their economic policies, so we may see further changes in the global innovation map next year.
“The companies on BCG’s most innovative list for 2019—especially those in the top ten—extensively use AI and platforms.” The Most Innovative Companies 2019
These findings show that highest-ranking companies use AI, platforms, and ecosystems to enable the development of new products and services and ways of working. Al has the potential to bring a great impact on any innovation area, and platforms are there to enable better data integration, collaboration and monitoring.
We can all conclude that innovation is important for the growth strategy and has to be in accordance with your business strategy. More and more companies are investing in the digital transformation of the innovation process that needs to be followed by a predefined implementation plan, so that the employees can adapt to changes with ease. The more your employees are included in innovation, the better the overall performance will be. We hope you will find these statistics interesting and useful to consider when you create future recommendations for the improvement of your innovation system. If you decide to embrace some changes and improvements in your innovation system, Innovation Cloud is a good place to start - your technology partner that will assist you in managing end-to-end innovation.
Innovative Holiday Greetings from Innovation Cloud
HAPPY NEW YEAR!