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Companies Investing in Innovation for the Long Haul, Says New Report


HEC Paris (Europe’s top business school as ranked by the Financial Times) has issued a new report on the discipline of Innovation Management. The report explores the emerging Innovation Function as it evolves from a process managed by a few to one that spans the enterprise to include R&D, strategy, marketing and other departments.  

Across the board, companies surveyed (including Shell, Total, Thales and others) agreed innovation must be a long term initiative with the end goal of creating “a sustainable culture of intellectual mobility within the company that integrates all employees, in order to transform ideas into competitive advantages.”

Topline growth is the primary driver of innovation, with 85% of those surveyed focusing heavily on the creation of new products and services and 59% focused on competitiveness and differentiation.

Companies Investing in Innovation

To drive this growth and differentiation, companies are amping up their investment in innovation – with innovation budgets and innovation staff steadily increasing year-over-year from 2009 to 2011.  Budgets for external consulting are also on the rise, but less so and the study reports that companies are looking to the internalization of innovation core assets.

The report underscores the need for collaboration across an organization: between functions and services, between innovation workers, middle management and C-suite executives, and between the organization and its partners, suppliers, customers and prospective customers.  The study cites gaps in expectations versus the reality relative to middle management involvement and the formalization of a corporate innovation process.

The report touches on some of the tools and methods companies use to drive innovation, but most of these were focused solely on idea generation and not on driving a repeatable, sustainable innovation capability suggesting many of the tools used fall short.

The report did not touch on how companies are addressing one of their greatest challenges – the knowledge enablement of innovation personnel. Clearly, this is another area where companies need to invest in order to accelerate innovation processes.

Other key findings of the report include:

  • 85% of Innovation Managers have new products and services development as an objective, and 69% the growth of their company. 34% only have objectives related to cost reduction
  • Marketing (62%), Strategy (56%) and R&D (54%) are the most common functions within the scope of Innovation Management. Logistics and Legal (13% each) are the less frequent ones.
  • Innovation budgets have increased by 5.9% and staff by 2.9% in 2010 in spite of the crisis. They are expected to increase respectively by 7.5% and 11.5% in 2011
  • 38% of Innovation Managers produce public information, either internally (Intranet 64%, Internal publications 49%) or supervised by PR department (51%) and advertising agency (36%)
  • Social medias are considered corporate tools by 10% of the respondents’ companies, but Innovation Managers lead the trend as 18% use Twitter professionally, 33% Facebook and 51% LinkedIn
  • 88% of Innovation Managers collaborate with their suppliers to develop new projects, 50% with their B2B clients and 15% only with the consumer or the end user
  • 95% of Innovation Managers think they should report to their CEO, 66% regularly meet with him and 10% only are members of the Executive Committee
  • 92% of Innovation Managers think that innovation should involve all the collaborators of the company, 51% of them think this is the case today in their companies