Wednesday, January 10, 2007

New Research: Big Company Execs on Innovation

The organization I work for has just released some valuable research about support for innovation within large companies. The finding that stands out most is that executives feel that their companies are picking up the pace of product innovation but that market's interest lags behind.

Here's the entire press release:

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Big Company Innovation Picking Up Speed, But Marketplace Interest Lags

Gap Between Company Support and Market Readiness for Innovation Shows "New" May Not Be Good Enough, According to First Annual ILO Institute Innovation Index

FAIRFIELD, CT -- (MARKET WIRE) -- January 09, 2007 -- Overall support for innovation both inside and outside large organizations is higher this year than last year, according to an ILO Institute survey of 50 senior executives at multi-billion dollar companies. While support for innovation is rising across all categories explored -- inside the company, in the marketplace, among suppliers and vendors, and among employees -- a notable gap between the perception of internal support for new-product development and market friendliness to new-product initiatives stood out in the survey results.

The survey asked about support for new product development, new market entry, and development of new business processes. With a score of 1.0 representing no change over one year ago, the overall average score was 1.41. The biggest gap in the survey results came when executives were asked about internal support for new-product development initiatives at their companies, which rated an average of 1.475, and then were asked about market friendliness to new-product development initiatives, which rated 1.275.

(Click here for details) The ILO Institute Innovation Index Survey required responders to comparethe current climate of support for innovation to one year ago, in fourareas -- inside the company, in the marketplace, among suppliers andvendors, and among employees. The questions specifically asked, in eachof these areas, about support for new product development, new marketentry, and development of new business processes.

"We're getting a glimpse of the brick wall that a number of companies are running toward right now," said Dr. Peter Temes, president of the ILO Institute. "Innovation is in the air as the big new idea and internal support is high, but the marketplace does not appear to have the same appetite."

Temes points out that failure is a necessary and often positive part of the process of crafting new products and entering new markets -- but that many big companies are talking the innovation talk without preparing for the inevitable marketplace bumps. Firms that lower the cost of failure and shorten the cycle time of experimentation are best positioned to apply the lessons of these failures to refine or redirect innovation initiatives.

"The real question now is how much time and money companies are willing to invest to bridge that gap between internal enthusiasm and market realities," Dr. Temes continued. "New products usually fail. Smart companies learn from those failures and use them as platforms for bigger and better things."

About the ILO Innovation Index

In the fourth quarter of 2006, the ILO Institute asked fifty senior executives at multi-billion-dollar companies a series of questions about support for innovation inside and outside their companies, to establish a baseline for an annual "innovation index." The questions required responders to compare the current climate of support for innovation to one year ago, in four areas -- inside the company, in the marketplace, among suppliers and vendors, and among employees. The questions specifically asked, in each of these areas, about support for new product development, new market entry, and development of new business processes.
The titles of the executives completing the survey included Chief Information Officer, Chief Technology Officer, Senior Vice President for Strategic Planning, Vice President for Innovation, Senior Vice President for Marketing, COO, and Business-Unit President.

About the ILO Institute

The ILO Institute is a membership organization focused on knowledge sharing and research into innovation in large organizations. ILO stands for Innovation in Large Organizations. Global corporations across all industries form its membership, including Eli Lilly, Microsoft, Motorola, Toyota Motor North America, Bayer Material Sciences, and UnitedHealth Group. Members of the Institute gather three times a year to share knowledge with each other and with advisors to the Institute, including Nobel Prize-winning economists, political and policy leaders, and distinguished researchers at leading universities. Recent guests at member meetings have included Nobel laureates Joseph Stiglitz, Gary Becker and James Heckman, authors Clayton Christensen, Esther Dyson and Michael Treacy, and former German Foreign Minister Joschka Fischer. For more information about the I L O Institute, visit www.iloinstitute.org

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AB -- 1/10/07

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