CHICAGO, Ill. – Wellspring, a player in innovation solutions used by over 500 organizations each day for R&D management, tech scouting, corporate venturing, licensing, and intellectual property management, today announced its third-annual R&D and Innovation study. Polling over 60 senior decision makers -- directors, managers, VPs, and C-Suite executives -- at manufacturing, heavy equipment, industrial products and construction companies with annual revenues of at least $1 billion across the US and UK, the study examined key topics and trends that have dominated the manufacturing and durable goods corporate innovation sector during the COVID-19 pandemic. Key among them: while innovation ambitions have grown as a result of the pandemic, longstanding internal “Innovation Ops” issues threaten to derail future growth -- resulting in wasted resources, capital, and revenue opportunities for corporations.
“The pandemic has driven an exciting shift in innovation interest among both corporate boardrooms and the general public,” said Robert Lowe, CEO and co-founder of Wellspring. “Unfortunately, per our findings, it has also exposed what many observers of corporate innovation have known for years -- that a vast majority of today’s corporations simply fail to employ many of the necessary habits that translate into tangible, long-term innovation success.”
COVID Boosts Innovation Ambitions
The COVID-19 pandemic represents one of the most disruptive and unsettling periods in corporate innovation history. This has resulted in widespread efforts by manufacturing and durable goods corporations to overhaul their Innovation Ops in hopes of responding effectively to a myriad of supply chain disturbances, demand explosions, digital transformation needs, and other issues.
For example, according to this year’s study:
● 60% of respondents reported that their corporate innovation budgets were expected to increase – with many respondents saying they expected a major bump in investment. This statistic dwarfs those companies anticipating budget cuts by a whopping six-to-one ratio.
● 57% of respondents said that they are interested in being leaders and disruptors in innovation vs. following the pack.
Execution Threatens to Derail Innovation
Despite the promise of growing innovation ambitions, many manufacturing and durable goods corporations lack the cohesive approach needed to drive material success from their investments. Of particular concern is that these execution related missteps are wide-ranging and interconnected -- spanning from C-Suite buy-in and coordination issues to poorly constructed innovation metrics and measurements.
C-Suite Disengagement & Disconnect
Only 6% of C-suite leaders believe that a lack of C-suite engagement in innovation is a “very significant” impediment to Innovation Ops success, versus a third of VPs and senior innovators at every other level from Manager to VP.
“All too often, there is a disconnect between the C-Suite and other innovation leadership, whereby C-Suite leaders simply adjust innovation strategies and then move on, leaving other Innovation Ops leaders to deliver on goals with minimal oversight” said Lowe. “As a result, employees fall back into old, ineffective habits and processes, instead of driving innovation forward.
Metrics Not Fit For Purpose
Measurement of innovation remains one of the biggest challenges for Innovation Ops leaders, with many still relying on a grab bag of KPIs versus an overarching measurement approach. Furthermore, the KPIs that are in place do not accurately reflect innovation success. For example, 43% of respondents said that a straight project-by-project financial reckoning was their most common innovation measurement metric -- with nearly a fifth saying it was their only meaningful innovation measure.
“The time has come for companies to rethink the way they measure their innovation progress, yet many still rely on metrics that are simply not appropriate for measuring innovation,” said Lowe. “This has resulted in confusion among decision-makers, which has created a longstanding climate of pulling the plug on promising innovation initiatives too early -- or investing in safer yet less impactful innovation projects.”
Disjointed Innovation Priorities
Conflicting on-the-ground priorities for manufacturing and durable goods Innovation Ops teams also interfere with success. While an overwhelming proportion of respondents buy into their firm’s top-level innovation strategy, their on-the-ground efforts often devolve into parochial concerns and short-term fixes. For example, breakaway growth companies regularly cited innovation priorities such as capturing new markets or novel whitespace (76% of respondents) and introducing disruptive innovations (59% of respondents) as important or very important. However, these two outcomes were the least important among all other companies.
“Having lofty ambitions is great, but without long-term strategic priorities that can be pursued deliberately across a firm’s Innovation Ops, the chances of success are virtually nil,” said Lowe. “Better orchestration of strategic innovation programs needs to be a foremost concern for corporate decision-makers, especially as they plan to ramp up innovation investments post-COVID.
Disorganized Approach to Collaboration
Nearly two-thirds of respondents said that a lack of internal coordination between innovation groups was either a “very significant” or “somewhat significant” impediment to innovation success -- making it the number one obstacle according to respondents in this year’s study.
“It would seem to be common sense to make inter-department collaboration a priority, but unfortunately, it is not – which is wreaking havoc on both Innovation Ops performance and financial outcomes,” said Lowe. “As innovation departments expand, many corporations now have at least several disparate innovation teams, which all too frequently results in miscommunication and disorganization. If left unaddressed, corporations are likely to squander their stepped-up innovation investments at a record pace.”
Methodology: For this study, Wellspring collected quantitative survey data – based on nearly 50 research questions – from over 60 mid- to senior-level innovation leaders at US- and UK-based manufacturing, heavy equipment, industrial products and construction corporations with annual revenues of at least $1 billion. Based on the data, Wellspring developed a statistical model that predicts which innovation behaviors correlate with top-tier financial performance at the firm level.