Making Ideas Work -...

Booz & Company 30 October, 2012

Making Ideas Work The 2012 Global Innovation 1000 Study

2012 Innovation 1000-Making Ideas Work-Results Summary EXTERNAL.pptx Booz & Company

Introduction

R&D Spending Trends Analysis

Front-End Innovation Survey Findings Summary

1


For the past eight years, Booz & Company has examined innovation spending and linkages to corporate performance

2009: Profits Down,

Spending Steady

2005: Money Isn't Everything

2006: Smart Spenders

2007: The Customer

Connection

2008: Innovation Beyond

Borders

2010: How Top Innovators

Keep Winning

2011: Why Culture

is Key

2

Previous Global Innovation 1000 Studies 2012: Making Ideas Work

Our 8th annual study of the world’s

1000 largest corporate R&D spenders

focuses on the “front end” of the

innovation process – the tools,

mechanisms and networks companies

use to generate ideas and convert them

into projects for commercialization.

2012 Innovation 1000-Making Ideas Work-Results Summary EXTERNAL.pptx Booz & Company 3

Furthering the Innovation Dialogue

2005

Initiated study to better understand how organizations can maximize their

return on innovation investment

Found no statistical relationship between R&D spending and key

measures of corporate success

2006

Confirmed lack of relationship between R&D after adding additional data

(e.g., patent records) and analyzing using more complex methods

Defined “High Leverage Innovators” who produced

better results per R&D dollar than industry peers

Awarded “2006 Special Achievement Award

for Advancing Innovation” by Innovate Forum

2007

Examined the connection between performance and the elements of

innovation strategy, including customer focus and alignment of corporate

and innovation strategies

2008

Identified characteristics of global innovation networks (i.e. R&D

footprint) that correlated with higher performance

Awarded “Best of Visions” award from PDMA

Awarded Silver Award for Editorial Excellence: Original Research and

National Bronze Award for Graphics Excellence by American Society of

Business Publication Editors

2009

Reported impact of 2008-09 global recession on worldwide R&D spend

2010

Identified the critical capabilities required for successful innovation and

their relationship to corporate performance

2011

Examined the links between business strategy, innovation strategy and

culture

Selected Media Coverage Highlights

Covered by ABCNews and MSNBC television

Featured on NPR radio in US and BBC Radio in UK

Cited in over 170 publications across 27 countries

Called “The most comprehensive assessment of the

relationship between R&D investment and corporate

performance” by The Economist

The Innovation 1000 study continues to be well recognized as an important contributor to the study of R&D and innovation

Representative Publications


In addition to our annual R&D spending trends analysis, the theme of this year’s study is the “front end” of the innovation process

1. Idea Generation

Generating good ideas and/or

decisions on platform refresh

2. Idea Conversion

Converting good ideas into

actionable projects for execution

2012 Innovation 1000 – “Making Ideas Work”

4

Annual R&D Spending Trends Analysis

Annual R&D spend growth across the 1000 largest

spenders on R&D (publicly-traded firms)

R&D spend by region and industry (absolute

spending, growth and proportion of total)

Spend as percent of revenue (R&D “intensity”)

Top 20 R&D spenders

Top 10 “Most Innovative Companies” and financial

performance comparisons to Top 10 spenders

Survey: The “Front End” of the Innovation Process


Introduction



5


R&D spend grew 9.6% in 2011, continuing 2010’s strong growth after the 2009 decline

Sources: Bloomberg data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis

Innovation 1000 R&D Spend

2001–2011; $Bn

$603

$550

$503$521

$495

$450$417

$391$369

$355$353

2003 2002 2001 2007

5.50%

2011 2010 2009 2008 2006 2005 2004

Annual

Growth

0.6% 6.5% 7.9% 10.0%

11-year CAGR

= 6%

3.7% 6.2% 5.4% -3.5% 9.3%

6

9.6%

3-year CAGR

=3.5%

3-year CAGR

=9.5%


The top 3 industries continue to be Computing and Electronics, Health, and Automotive

2011 R&D Spend by Industry

($603Bn)

7%

7%

10%

16%

Other

2%

Telecom

2% Consumer

3% Aerospace and Defense

4% Software and Internet

Chemicals and Energy

Industrials

Automotive

Health

21%

Computing

and Electronics

28%

7


Two-thirds of the $53Bn spending increase came from the Computing and Electronics, Automotive, and Industrials sectors

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

Total Aerospace

and Defense

1,487

Telecom

352

Consumer

1,655

Other

1,718

Chemicals

and Energy

3,607

Change in R&D Spend

(Million USD)

Health

6,037

Software/Internet

6,229

Industrials

7,867

Automotive

13,214

Computing

and

Electronics

13,440

Change in 2010-2011 R&D Spend by Industry Increases

Decreases

52,632

Represents 66% of total

R&D spend increase

8

While Health is the third largest

spender, Industrials experienced the

third largest absolute spend increase

While Health is the third largest

spender, Industrials experienced the

third largest absolute spend increase



India/China-based firms continue to increase their R&D spending at a higher proportionate rate than those in more mature regions

-5%

2006-11 CAGR

50% 10% 5% 0% -5%

ROW

North America

Japan

10%

Europe

15%

30%

35%

5%

40%

45%

2010-11 Increase

0%

India/China

0

2

4

6

8

10

12

14

16

18

20

22

24

26

28

9.6%

Japan

2.4%

Europe

5.4%

North

America

9.7%

ROW

12.2%

India/China

27.2%

Change (%) in R&D Spend by Region 2010 – 20111)

R&D Spend by Region 2006 - 2011

1) Innovation 2012 yearly R&D spend comparison for the 918 companies for which R&D spend available for both 2011 and 2010


Average

38% rate in last

year’s report

9

Size of bubbles are

proportionate to the

R&D spending 2006-11


India and China have been steadily gaining share in R&D spending – but are gaining revenue share at an even faster rate

10

31.1%

35.0%

32.1%

34.5%

30.1%

32.4%

29.9%

33.6%

9.5%5.3%

9.6%6.1%

11.7%

6.1%

10.5%

4.9%

2.7%2.3%1.5%1.0%

21.7%

Revenue

2009

30.0%

7.3%

R&D

2010

21.1%

23.3%

4.2%

R&D

2009

38.5%

22.6%

Revenue

2011

27.3%

20.1%

8.5%

R&D

2011

37.9%

23.3%

Revenue

2010

27.4% 38.3%

Revenue

2008

29.9%

21.3%

4.3%

R&D

2008

38.6%

24.4%

Japan

Europe

North America

ROW

India/China

Innovation 1000 Company R&D Spend and Revenue by Region: 2008-2011

China HQ 15 23 40 47

India HQ 4 6 10 9

# Companies in

Innovation 1000



-15

-10

-5

0

5

10

15

20

CAGR (%)

‘10-’11

7%

10%

‘09-’10

8%

15%

‘08-’09

-4%

-11%

‘07-’08

5% 6%

‘06-’07

10% 10%

2005-’06

8% 9%

R&D spending and sales increased for a second year in a row while R&D intensity returned to historical levels

R&D CAGR

Revenue CAGR

1) Innovation yearly R&D spend and Revenue comparison for companies for which R&D spend and Revenue available for both years


3.43%

3.52%

3.73%

3.42%3.42%3.40%

3.00

3.10

3.20

3.30

3.40

3.50

3.60

3.70

3.80

Intensity (%)

2011 2010 2009 2008 2007 2006

R&D Spend and Revenue CAGR1)

2006-2011

R&D Intensity 2006 - 2011

11


Overall R&D spending continued to rise with sales, though R&D intensity declined slightly in 2011

1.141.171.24

1.141.141.131.151.211.23

1.35

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Indexed to 1997

R&D Spending

Sales

R&D as % of Sales 1.00 1.05

1.20 1.23 1.24

R&D Spending, Sales, and R&D Intensity Indexed to 1997

12



Daimler (#19) is a new entrant to the Top 20 R&D spenders this year

13

2011

Rank Company Geography Industry

2010 R&D

Exp.

$Bn

1 Roche Holding AG Europe Health 9.6

2 Pfizer Inc North America Health 9.4

3 Novartis AG Europe Health 9.1

4 Microsoft Corp North America Software & Internet 8.7

5 Merck & Co Inc North America Health 8.6

6 Toyota Motor Corp Japan Automotive 8.5

7 Samsung ROW Computing & Electronics 7.9

8 Nokia OYJ Europe Computing & Electronics 7.8

9 General Motors Co North America Automotive 7.0

10 Johnson & Johnson North America Health 6.8

11 Intel Corp North America Computing & Electronics 6.6

12 Panasonic Corp Japan Computing & Electronics 6.2

13 GlaxoSmithKline PLC Europe Health 6.1

14 Volkswagen AG Europe Automotive 6.1

15 IBM North America Computing & Electronics 6.0

16 Sanofi Europe Health 5.8

17 Honda Motor Co Japan Automotive 5.7

18 AstraZeneca PLC Europe Health 5.3

19 Cisco Systems Inc North America Computing & Electronics 5.3

20 Siemens AG Europe Industrials 5.2

Total $141.8

2012

Rank Company Geography Industry

2011 R&D

Exp.

$Bn

1 Toyota Motor Corp Japan Automotive 9.9

2 Novartis AG Europe Health 9.6

3 Roche Holding AG Europe Health 9.4

4 Pfizer Inc North America Health 9.1

5 Microsoft Corp North America Software & Internet 9.0

6 Samsung ROW Computing & Electronics 9.0

7 Merck & Co Inc North America Health 8.5

8 Intel Corp North America Computing & Electronics 8.4

9 General Motors Co North America Automotive 8.1

10 Nokia OYJ Europe Computing & Electronics 7.8

11 Volkswagen AG Europe Automotive 7.7

12 Johnson & Johnson North America Health 7.5

13 Sanofi Europe Health 6.7

14 Panasonic Corp Japan Computing & Electronics 6.6

15 Honda Motor Co Japan Automotive 6.6

16 GlaxoSmithKline Europe Health 6.3

17 IBM North America Computing & Electronics 6.3

18 Cisco Systems Inc North America Computing & Electronics 5.8

19 Daimler AG Europe Automotive 5.8

20 AstraZeneca PLC Europe Health 5.5

Siemens moved to #22 Total $153.6

2011 Top 20 R&D Spend Ranking (2010 data)

2012 Top 20 R&D Spend Ranking (2011 data)

NEW

Increase or decrease within Top 20 ranking compared to 2011


Amazon bumped Facebook as a new entrant in the Top 10 “Most Innovative” ranking; Samsung rose in rank for 3rd straight year

14

2012 Top 10 “Most Innovative Companies”

2012

Rank

% of

Respondents Company

2011 R&D

Spend ($M)

Overall

Spend

Rank

Industry

Spend

Rank

2011

Revenue

($M)

R&D Spend as %

of Sales

(Intensity)

1 79.8% Apple $ 2,429 53 16 $ 108,249 2.2%

2 43.1% Google $ 5,162 26 2 $ 37,905 13.6%

3 15.2% 3M $ 1,570 86 7 $ 29,611 5.3%

4 14.9% Samsung $ 9,017 6 1 $ 149,080 6.0%

5 11.4% General Electric $ 4,601 30 2 $ 142,237 3.2%

6 10.7% Microsoft $ 9,043 5 1 $ 69,943 12.9%

7 9.3% Toyota $ 9,881 1 1 $ 235,482 4.2%

8 - Tie 7.7% IBM $ 6,258 17 5 $ 106,916 5.9%

8 -Tie 7.7% Procter & Gamble $ 2,001 72 1 $ 82,559 2.4%

10 6.3% Amazon.com $ 2,909 48 4 $ 48,077 6.1%


Looking at movement across the past three years shows Samsung’s rise and others’ continued success

15

Change in the Top 10 “Most Innovative Companies” 2010-2012

3-yr. R&D Spend CAGR 2010-2012

35%

Apple 35%

Samsung

3M

General Electric

Microsoft

P&G

Toyota

IBM

Amazon

Google

10%

16%

18%

0%

4%

4%

4%

53%

2010 2011 2012

1st

2nd

3rd

4th

5th

6th

7th

8th

9th

10th

Tie


Once again, there are significant differences between the Top 10 “Most Innovative Companies” vs. the top R&D spenders

16

Company Industry

2011 R&D

Spend

($Bn)

2011 Sales

($Bn)

Spend as

% of Sales

(Intensity)

Toyota Automotive $9.9 $ 235.5 4.2%

Novartis Health $9.6 $ 58.6 16.4%

Roche Health $9.4 $ 48.1 19.5%

Pfizer Health $9.1 $ 67.4 13.5%

Microsoft Software &

Internet $9.0 $ 69.9 12.9%

Samsung Computing &

Electronics $9.0 $ 149.1 6.0%

Merck & Co Health $8.5 $ 48.0 17.7%

Intel Computing &

Electronics $8.4 $ 54.0 15.6%

General Motors Automotive $8.1 $ 150.3 5.4%

Nokia Computing &

Electronics $7.8 $ 53.8 14.5%

2012 Top 10 “Most Innovative Companies” (2011 Data) 2012 Top 10 R&D Spend Ranking (2011 data)

Company Industry

2011 R&D

Spend

($Bn)

2011 Sales

($Bn)

Spend as

% of Sales

(Intensity)

Apple Computing &

Electronics $ 2.4 $ 108.2 2.2%

Google Software &

Internet $ 5.2 $ 37.9 13.6%

3M Industrials $ 1.6 $ 29.6 5.3%

Samsung Computing &

Electronics $ 9.0 $ 149.1 6.0%

General

Electric Industrials $ 4.6 $ 142.2 3.2%

Microsoft Software &

Internet $ 9.0 $ 69.9 12.9%

Toyota Automotive $ 9.9 $ 235.5 4.2%

Procter &

Gamble Consumer $ 2.0 $ 82.6 2.4%

IBM Computing &

Electronics $ 6.3 $ 106.9 5.9%

Amazon.com Software &

Internet $ 2.9 $ 48.1 6.1%

Companies appearing on both lists


In line with last year’s findings, the Top 10 “Most Innovative” outperform the Top 10 spenders across three financial metrics

17

Top 10 “Most Innovative Companies” vs. Top R&D Spenders

62%

68%

54%

45%

65%

40%

0%

50%

100%

Market Cap

Growth (5-

yr. CAGR)

EBITDA as a

% of Revnue

(5-yr. AVG.)

Revenue Growth

(5-yr. CAGR)

Top 10 R&D Spenders Top 10 Most Innovative

Observations

The Top 10 R&D spenders lag their industry

peers on revenue and market cap growth

On the “Most Innovative Companies” list,

only Apple, Google, and Samsung

outperform their industries across all 3

metrics

Intel still outperforms across all 3 metrics,

but is no longer a Top 10 Innovator…

…and remains among the Top 10 highest

R&D spenders (moved from #10 to #8 in

2011)

Highest

Possible

Score:

Lowest

Possible

Score:

Normalized

Performance

of Industry

Peers1):

1) Financial metrics were normalized in each industry sector among the Innovation 1000 companies to control for industry performance fluctuations and to set performance values to a 100-point scale. A score of 50% is the normalized performance across industries for each financial metric.


Executive Summary – R&D Demographics

After growing 9%+ for the second consecutive year in 2011, R&D spend is back on its 10-year

historical growth trend after its one-year decline in 2009

The top three industries by R&D spend continue to be Computing and Electronics, Health, and

Automotive – Industrials, Automotive and Health accounted for 66% of the overall growth

North America grew at an above-average rate of 9.7%; Europe and Japan grew at below-average

rates of 5.4% and 2.4%, respectively…

…while India and China-based firms increased R&D spend at a phenomenal rate (27%) – albeit

from a small spend base

The Top 20 R&D spenders averaged 5% R&D growth, compared with a 9.6% increase overall

The Top 10 “Most Innovative Companies” outperformed the Top 10 R&D spenders across key

financial metrics – revenue growth, EBITDA as a percentage of revenue, and market cap growth

18


Introduction



19


Nearly half of the respondents felt that their organizations were only marginally effective at generating ideas and converting them to projects

20

Marginally

Effective Highly

Effective

Note:

(1) How effective do you feel your organization is at converting ideas into projects for execution? “Please rank your company’s level of effectiveness in idea conversion.” With “1”=Marginal Effective and “5” = Strongly Effective.

(2) How effective do you feel your organization is at generating new ideas? “Please rank your company’s level of effectiveness in idea generation.” With “1”=Marginal Effective and “5” = Strongly Effective.

Idea Conversion(1) vs. Idea Generation (2) ALL RESPONDENTS (N = 685)

~25%

~46% ~18%

~11%

Highly

Effective

Idea

Conversion

1 2 3 4 5

1

2

3

4

5

Idea Generation Respondent ranked idea generation

effectiveness as 1,2 or 3 Respondent ranked idea generation

effectiveness as 4 or 5


Companies that are highly effective at idea generation and conversion outperform their peers on average

21

Note:

(1) Data derived from survey Question 8: A. “How effective do you feel your organization is at generating ideas? B. “How effective do you feel your organization is at converting ideas into projects for execution?” With “1”=Marginal

Effective and “5” = Strongly Effective.

(2) For all companies for which financial performance data was available, financial metrics were normalized in each industry sector to control for industry performance fluctuations and to set performance values to a 100-point scale. A

score of 50% is the normalized performance across industries for each financial metric.

Market Cap

Growth (5-

yr. CAGR)

49%

58%

EBITDA as a

% of Revenue

(5-yr. AVG.)

56% 60%

Revenue Growth

(5-yr. CAGR)

42%

50%

Strongly Effective Marginally Effective

Highest

Possible

Score:

Lowest

Possible

Score:

Normalized

Performance

of Industry

Peers2:

Financial Comparison of

Idea Conversion Performance1

N = 47 N = 66

50%

65%

54% 52%

EBITDA as a

% of Revenue

(5-yr. AVG.)

0

50

100

Market Cap

Growth (5-

yr. CAGR)

Revenue Growth

(5-yr. CAGR)

45% 46%

Marginally Effective Strongly Effective

Financial Comparison of

Idea Generation Performance1

N = 60 N = 53


22

18%19%

22%

31%

42%

15%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Reco

ded

Mean

Technology

Road Mapping

Idea Work-

Out Sessions

All other categories

(<15% each)

Feedback from

Sales and

Customer Support

Traditional

Market Research

Direct Customer

Observation

Companies reported that the majority of new ideas are still generated from traditional sources…

Top 5 Ranking for “Which of the following tools and mechanisms, if

any, does your organization use to generate new ideas?” (1) ALL RESPONDENTS (N = 685)

Note:

(1) “Please force-rank up to five of the following tools in order to influence by ranking the most influential mechanism 1st, the next most influential mechanism 2nd and so on. Responses above reflect the recoded means, that is, responses

of 1 or 2 = 1, all others = 0


23

11%

13%

17%

18%

21%

21%

22%

22%

29%

29%

Business case competitions

Lead customer surveys

Advanced development review teams

Rapid / virtual prototyping (preference testing)

Rapid / virtual prototyping (proof of concept)

0%

Learning launches

Third party partners (e.g., for concept development)

Focus groups

Third party partners (e.g., for rapid assessment)

Seed-funded due diligence and concept design

15% 10% 5% 30% 25% 20%

…and internally-focused mechanisms are the most useful tools for converting those ideas to products

“Which of the following mechanisms or processes are the most effective in evaluating and converting

an idea to a promising product or service concept for commercialization?” (1)

ALL Responses (N = 685)

Note:

(1) All mechanisms assume adequate customer/consumer research and insights are available. “Please force-rank up to five of the following tools in order to influence by ranking the most influential mechanism 1st, the next most influential

mechanism 2nd and so on. Responses above reflect the recoded means, that is, responses of 1 or 2 = 1, all others = 0.

Internally-focused

Externally-focused


Need Seekers – Consistently strive to be first

movers; Proactively engage customers to

determine needs and shape new innovations;

Determine new innovations market back from market

need identification

Market Readers – Adopt a 2nd mover strategy;

Focus on driving value through incremental change;

New innovations determined market back; although

not as proactively as Need Seekers

Technology Drivers – Drive innovation via

technological achievement; Leverage technology

for both incremental and breakthrough change.

The least proactive of the three strategies in directly

contacting customers

Three Innovation Strategies Example Companies

In 2007 we defined three distinct innovation strategies which we further explored in this year’s study


Similar to our findings on capabilities and culture in past studies, each Innovation Model has a distinct front-end innovation profile

Need Seekers

Top Ranked Front-End Mechanisms

Idea Work-out Sessions

End-user focus groups

Top Ranked Internal Network Structure

Focused Technical Innovation

Networks across the business

All Three Top Ranked Front-End Mechanism

Direct Customer Observation

Top Ranked Internal Network Structures

Innovation Champions

Cross-unit Staffing (non-rotational)

Top Ranked External Network Structures

Customers

Channel Partners & Suppliers

Market Readers

Tech Drivers

Sources: Bloomberg data; 2010 Booz & Company Innovation 1000 survey; 2011 Booz & Company Innovation 1000 survey


Sales & Customer Support Feedback

Traditional Market Research


Technology Road-mapping

Meetings w/ External Technical

Community


IT Collaboration Tools

Facilities Layout


Communities of Practice

Organized Conferences w/ Technical staff

No distinct difference in External

networks by strategy model


On an indexed basis, the innovation models use idea generation tools and mechanisms at the front end that support their innovation strategy

26

0.96

0.92

1.17

Technology Foresight Tools

1.21

0.90

0.85

Market Insight Tools

0.91

1.16

0.91

End User Insight Tools

Technology Driver (N = 248) Market Reader (N = 255) Need Seeker (N = 182)

Indexed average value across all survey respondents

“Which of the following tools and mechanisms, if any, does your organization

use to generate new ideas?” (1)

(1) Responses reflect the indexed value of the likelihood that respondents are choosing a value

higher or lower compared to the average across all responses. An index value of “1” represents

the indexed average of responses

Need Seekers

over-index on

tools/mechanisms

that provide deep

end-user insights

Market Readers

over-index on

tools/mechanisms

that provide

market insights

and demand leads

Technology

Drivers over-index

on tools/

mechanisms that

guide where/ how

they can push the

tech frontier

End-User Insight Tools

Idea Work-Out Sessions

Social Network Data Mining

End User / Customer Focus Groups

Direct Customer Observation

Market Insight Tools

Feedback from Sales & Customer Sppt

Traditional Market Research

Seed Funding for Exploratory Research

Technology Foresight Tools

Periodic Meetings of Technical

Community

Technology Road Mapping

External Technology & Idea Scouting

Cross B.U. Communities of Practice


Note:

(1) Respondents were asked to rank their top 5 tools and mechanisms from a list of 11 choices. Total responses reflect the recoded means: responses of 1 or 2 ranking were counted as 100%, all others (3-5) were counted as 0 for

statistical separation and significance.

(N=182) (N=255) (N=248)

Need Seekers Market Readers Technology Drivers

Seed Funding for Exploratory Research 8%

Cross B.U. Communities / Sharing 9%

Social Network Data Mining 10%

Periodic Meetings of Tech Community 10%

External Technology and Idea Scouting 11%

Technology Road Mapping 15%

End User / Customer Focus Groups 18%

Feedback from Sales and Cust. Support 21%

Idea Work-Out Sessions 24%

Traditional Market Research 26%

Direct Customer Observation 43%

16%

7%

9%

11%

12%

15%

15%

10%

29%

34%

42%

9%

19%

16%

13%

8%

12%

14%

17%

22%

31%

40%

While priorities differ slightly, the Strategies agree that much-hyped tools like Social Networks and Seed Funding are least important

Top 5 Ranking for “Which of the following tools and mechanisms, if

any, does your organization use to generate new ideas?” (1)

Least Important


28

Social Networks are the least influential idea generation mechanisms for engineered products industries like Automotive, Industrials and A&D

Industry breakout of respondents ranking “Social Networks” within the

Top 2 most used tools for generating ideas (1)

0

5

10

15

Avg.

Recoded Mean

Chemicals

and Energy

Consumer Computing

and

Electronics

2%

0%

10%

Health

11%

Software

and Internet

15%

Industrials Auto Telecom Aerospace

and Defense

3% 3%

6%

7%

Note:

(1) Respondents were asked to rank their top 5 tools and mechanisms from a list of 11 choices. Total responses reflect the recoded means: responses of 1 or 2 ranking were counted as 100%, all others (3-5) were counted as 0 for

statistical separation and significance.


Note:

(1) Average of total responses for prevalence and effectiveness (score scale 1-5 with 5 being highest) for an External Network group category

)

Need Seekers Market Readers

2.5

2.5

3.0

3.0

3.2

4.0

2.6

2.5

2.9

3.0

3.3

4.1

Channel Partners

Suppliers

Government Agencies

Open Networks

Customers

Universities

2.0

2.1

2.3

2.8

3.0

3.8

2.1

2.1

2.4

2.8

3.0

3.7

2.0

2.3

2.7

2.7

3.0

3.6

2.2

2.3

2.7

2.7

2.9

3.6

Customers and Channel Partners are the most prevalent external groups while governments and open networks are used the least in ideation

Which of the following external network groups are most often used by

your organization during idea generation? (1)

( N = 182) (N = 255) (N = 248)

Prevalence Effectiveness

Technology Drivers


Executive Summary – Survey Findings

Nearly half of the respondents felt that their organizations were average or below average at both

generating ideas and converting them to projects…

…which has implications on financial performance – companies that are highly effective at idea

generation and conversion outperform their peers in revenue, market cap, and EBITDA growth

The majority of new ideas still come from traditional sources and rigorous process management –

going against popular innovation concepts in mainstream media (e.g., “crowdsoucing”)

External networks that are part of the ecosystem are used by companies to generate ideas (e.g.,

customers, suppliers) but those outside of the ecosystem (e.g., government and universities) are not

considered primary sources of ideas

Consistent with our definitions, the innovation strategy models have a distinct set of front-end

innovation mechanisms and use different networks for generating ideas:

– Need Seekers focus on discovering unarticulated customer needs through direct customer observation, end-user focus groups and idea work-out sessions

– Market Readers “cherry pick” from existing ideas by mining traditional market research and feedback from their sales and customer support channels

– Technology Drivers focus on developing technology-based breakthrough products

30


For the complete study and additional

information on the annual

Booz & Company

Global Innovation 1000 Study

Please Visit:

www.booz.com/innovation1000

For media or other inquiries, please contact

Siobhan Ford

+1-212-551-6234

+1-978-314-6382

31

http://www.booz.com/innovation1000

Making Ideas Work -...

Documents

Transcript of Making Ideas Work -...