Chief Innovation Officers becoming a priority for many enterprises

by CXOtoday Staff    Apr 04, 2012

While innovation is an emerging functional area within organizations, limited organizational strategies for driving innovation are impairing growth, says Capgemini Consulting.

Innovation leadership is becoming increasingly important according to a study by Capgemini Consulting, the global strategy and transformation consulting arm of the Capgemini Group, in partnership with IESE Business.

The Innovation Leadership study found that 43 percent of respondents have a formally accountable innovation executive in place responsible for driving innovation, compared to just 33 percent last year.

“This rise of the Chief Innovation Officer suggests driving innovation is becoming a key priority for companies everywhere,” the study noted.

However, despite this, 58 percent of companies still do not have an explicit innovation strategy in place, with 38 percent companies considered as innovation laggards and just seven percent classed as innovation leaders.

The study, which surveyed over 260 innovation executives globally, suggests that while innovation is an emerging functional area within organizations, limited organizational strategies for driving innovation are impairing growth.

Innovation needs a bottom-up approach

The survey found that 30 percent of respondents agree they have an effective organizational structure in place for driving innovation and 24 percent believe innovation efforts within their companies are effectively aligned.

The research also revealed that innovation strategy continues to be largely driven from the top-down, with only 11 percent of respondents explicitly involving employees in the strategy development process.

Thirty percent of respondents indicated that innovation is driven by a combination of senior management, business unit heads and internal innovation experts, with the CEO still considered the most important source of an innovation culture getting 69 percent of the responses.

This highlights the need for innovation strategy development in a more bottom-up manner, focused on people as the key source of competitive advantage to ensure all insights are taken into consideration.

“The study reveals a worrying lack of involvement of non-senior employees in the innovation process within most companies,” said Paddy Miller, Professor of Managing People in Organizations, IESE Business School.

The report also identifies the absence of a clear, well articulated innovation strategy as the most important constraint for an organization’s ability to achieve its innovation targets, followed by a lack of understanding of the external environment.

The establishment of a centralized innovation office, together with thorough innovation governance that balances, aligns and enables both short and long term innovation objectives, will help large organizations to focus and streamline their innovation efforts, the report said.

“Although there are signs of an increased formalization of the innovation function, such as the increase in the percentage of respondents that have a formally accountable innovation executive, the levers for the formal management of innovation are largely being overlooked or underdeveloped,” said Koen Klokgieters, Global Leader R&D and Business Innovation, Capgemini Consulting.