Benchmarking Innovation Impact, from InnoLead | Paul4innovating Innovation Views

I have always welcomed the KPMG LLP-sponsored InnoLead benchmarking report; this is for the third year.

I received a note from Scott Kirsner, who leads the team at Innolead, and he offered me a chance to read the report before its official release today at 12 PM ET time and suggested I can post anytime, so here goes. This is longer as a post as this benchmarking report brings out a lot in my view.

This report provides a definitive innovation benchmarking document for leaders in strategy, R&D, design, and other innovation roles inside large organizations. It includes survey data, interviews with senior executives, and perspectives from KPMG leaders.

The report link “Benchmarking innovation impact from InnoLead” by @innolead and @KPMG_US does offer an excellent stimulating overview that still reflects on so much of what still needs to be done in the innovation world.

The report, as suggested in the opening Welcome by Cliff Justice, U.S. Leader, Enterprise Innovation at KPMG, does provide a variety of ideas and considerations for those seeking innovation understanding.

What was collected was 216 qualified survey responses from professionals working predominantly in innovation, research and development, and strategy roles, and conducted eight interviews with senior leaders at companies across a wide range of industries, including Colgate-Palmolive, Mastercard, NASCAR, and Entergy, the New Orleans-based utility operator.

All of the survey data was gathered in Q4 2022, and the interviews were conducted in Q4 2022 and Q1 2023, at a moment when many companies were still navigating decisions related to how they would use physical spaces to support innovation activity; absorbing predictions about a potential recession; and finalizing plans for 2023

There are many key questions every innovation leader and C-Suite executive is asking consistently, such as:
• How do we help to ensure that our innovation teams are set up for success?
• What can we do to build our innovation capabilities for the future?
• How does our innovation team compare to innovation teams at other companies?

To help meet these challenges, this report provides you with a meaningful understanding of some of the critical topics related to innovation: Budget and Resources, Collaboration and Spaces, Focus and Activities, and Challenges and Enablers.

Let me pick up on a number of points I gleaned from this report

Today it is increasingly hard to get leadership attention, grappling with threats of recession, inflation, supply chain breakdowns and an increasingly hostile world to operate it.

The job of the innovating team, as mentioned, is certainly “getting leadership excited about the vision” to continue to attract additional resources (money and people) and show the makeup of the key enablers of innovation success.

I was struck and somewhat surprised by how different the approaches to innovation success and its management seemed to be.

You can argue they might be at different points in time perhaps, but as most of these were mature, large global companies, I would have expected a greater commonality of what, why and where they were focusing, working on.

It raises the question of where can Innovation Management Software go ever to broaden out, and gain a scale and adoption momentum to support these (individual) efforts significantly.

Is it the innovating teams just within the innovation teams they create what they believe is the right approach in their opinion but I would wonder are these might be missing a well-defined, well-structured, systematic process of innovation? More on that later.

Is innovation actually an urgent priority?

I come at the summary differently to a key question asked; “improving alignment around innovation is an urgent priority” but treating innovation activities in the way this seemingly comes across lacks the transparency for others to look (deep) inside, and does it then have the rigour, structures, systems in place.

It strikes me it is very individual, perhaps too closed within the individual innovation teams, and do they “burn up” more time convincing others as it is not as transparent as it should be?

Innovation needs to be accessible and transparent to not just all involved in the process but countless others involved in the ultimate decision-making.

A point that might confirm this is the feeling they have less access to senior leadership, fewer opportunities for spontaneous interactions and a growing “loss of creativity” from too many structured meetings” – I assume within the team or is this in the wider organization?

Creating a new context for innovation needs bigger goals.

I then picked up on the “Creating a new context for innovation” I do tend to rile if I feel the next “shiny object” or talking point (such as ChatGPT) gets a deflection from the need for innovation delivery.

One point made was “we’re very intrigued by the prospects of Web3 and of the metaverse, and we’ve dipped a toe into those waters over the past 12 to 24 months“.

Now I might be taking this the wrong way to make my point but “intrigued”, or “dipping a toe” makes me puzzled about this. Is this a deflection from the need to stay on track or is this simple curiosity. Investing time needs a clear purpose not just to individuals but to potentially different outcomes. Equally in recognizing and knowing about these areas of future impact will be I incorporated perhaps so being aware readies managers to get management’s attention and approval to investigate further as it can have different impact?

I am always guilty of investing time in the potential tools, technologies and concepts that might lead to a different future, too much and sometimes forget the immediate need. Investigation is within all of our job remits but how much, at what cost and what benefit to the jobs on hand. Apologies if I might have felt uncomfortable on this point or misunderstood it in the way it seemingly came across

Also, I felt some concern about a reoccurring attitude of innovators. I often here caught up in the seemingly never-ending testing, further prototypes or experiment cycles that stay locked inside the organization, with a comment like this one from the report: “whether there was a scale in that or revenue in that was not really ever the goal. It was exploratory; it was more understanding where we might be able to fit in”.

I hope I am not reading into this report more than I should, but I sense a lack of “real drive” to achieve innovation, but I do hope I am wrong here. Are we experimenting for the sake of it?

I believe most of the innovation we do should be placed on a “burning platform.”

Downshifts on transformation innovation– a really worrying trend

The worry in the report is the significant drop-off, in general, over three recent surveys, we’ve seen a decrease in focus on transformational — or Horizon 3 — work.

That is a worry, is it organizations becoming more risk-averse or organizations settling for less out of the innovation work? Is that due to it being “too risky” or the appetite for change, is less but due to what? This needs more investigation.

The importance of welcoming diverse thought.

With regard to a physical, prototyping, or collaboration space dedicated to innovation…How frequently does your organization use its innovation space(s)?

In the interview section with Robert Long at Chief R&D Officer of Kimberly-Clark, he focused on the Innovation that Meets the Consumer.

He explains, “Diversity of thought is most relevant [because] we have a lot of segmentation among consumers, and you want your technology to meet the needs of the maximum number of consumers possible”.

He comments: “We would like our workforce to look like our consumer base because we believe a workforce representing the consumer base is likely to get the maximum appeal within that consumer base. But when it comes to the actual dynamics in the culture, it’s really important to create a safe space for everyone to bring their lived experiences. … These experiences shaped how you look at the world.“

“Gender, age, and ethnic diversity bring a collective set of experiences that no individual can bring to the table alone. So, as we’re looking to satisfy a broad array of consumers, having those perspectives is very helpful“

KPMG offered their thoughts on space, diversity and interactions

KPMG is investing significantly in engaging, multisensory physical spaces— called Ignition Centers—that offer bespoke in-person interactions that are strategic and purposeful. Our growing network of Ignition Centers curates key elements of accelerated, outcome-focused innovation: visionary thinking, advanced technology capabilities, teaming and collaboration, data-driven analysis, opportunities for experimentation, and insight-based decision-making.

Sessions engage the senses, appealing equally to visual, kinesthetic, auditory, and verbal learners. Distraction-free interactions foster effective collaboration and authentic teaming. Advanced tools and data accessibility deliver relevant insights that would take weeks to achieve in the virtual world.

I totally concur. I feel that seeking diversity, finding and fully using dedicated spaces, the critical importance of face-to-face interactions etc., are really important to building out “breakthrough” innovation and the world needs these.

As KPMG point out, research supports their experience, showing that solving complex problems takes collaboration among key thinkers and focused time to work through details.

This is perhaps one of those areas we have forgotten, forced to change due to the pandemic but having time, space, and attracting a diversity of opinion into a dedicated room for a two to three-day period to begin to really break down complex problems might allow “transformational innovation” to begin to go back on the rise. Both of these parts of the report have great building or reflecting points to them.

Yet, the one I pick up upon is “The Pain Points of External Innovation.”

I think it is a trend that all big companies are trying to figure out how to access that external innovation more effectively. Be that through working with start-ups, collaborating, venturing, consortiums etc., etc.

This is, for me, the insight (or confirmation). The part towards the end of “Six Questions to Get on the Same Page with Your CEO.”

It is Q5 that is my main point of focus, as this points towards my belief that the innovation management system needs changing.

The advice is given here: “Innovating with impact requires an ecosystem of diverse tools, people, capabilities, partners, and insights — not a group of technologists operating in a bubble. It requires a global and local network, macro and micro, internal and external. A network that comprises stakeholders and collaborators, with input from industry and functional players, innovation champions, startup communities, academia, customers, and investors, among others. New ideas and solutions, inside and out, must be incubated and accelerated while the organization provides incentives and opportunities to bring innovative concepts to fruition.”

I believe we are not opening up to Innovation Ecosystems’ thinking and designs. We are simply keeping innovation inside the closed loop of the organization. I have increased my focus on Innovation Ecosystems and, within a dedicated posting site, www.ecosystems4innovating.com.

I make a case for opening up and embracing ecosystems. Such posts build this view out, such as “Building Ecosystem Thinking and Design” and “Thinking about Innovation Ecosystems” opens up the arguments for making a (radical) change to managing innovation.

If we can embrace “ecosystem thinking and design” you will find “diversity” far more than “just” within one company, you will gain more “creative space”, and you will be pushing harder for “results” as the transparency in a good ecosystem design forces the pace as more collaborators have vested interest and increasing “skin in the game.”

The point made of “Hey, we need different capabilities to deliver new solutions in the future.” suggested by Erin Spring, Senior Director of Material Science, does sort of feeds into my point of focus about opening up our thinking towards Innovation Ecosystems.

Two additional insights I briefly touch upon from the report

Firstly the discussion with Steve Dertien, Chief Technology Officer of PTC and their use of the Geoffrey Moore model, “zone to win.” I found this a great structure for different innovation “buckets.” There’s an
incubation zone, a transformation zone, and a productivity zone. It is worth picking up on Geoffrey Moores’s books around his thinking.

Secondly, I did like Ann Tracy. the Chief Sustainability Office Colgate-Palmolive with their ‘SWORDS AND SHIELDS where they use the analogy of swords and shields… “Our strategy has 11 big actions with over 50 targets, ranging from environmental actions to social actions to product-specific actions. By “sword,” we mean what are the actions where we want to really lead and be known for it? The actions which are the “shields” are what we have to do because there’s a barrier to entry or reputational risk if we don’t do it. Those areas where we want to lead… we believe can be communicated in the right way to our brands to help them grow. I liked this.

Innovation is being tackled, but is it still too ad-hoc?

This benchmarking report does prompt many different aspects of how organizations are tackling innovation. I do think we really need to get seriously under the current innovation hood of Ideate, Refine and Initiate or what other simple moniker and recognize innovation struggles to get the attention of the Board, it constantly lacks resources (people, funds) as it has still not become a core within an organization.

I leave you this set of thoughts, partly triggered by this benchmarking report.

How are we getting ready for the challenges yet to come? how and why? Challenging times (yes), Budget pressures (yes), pushing the boundaries (yes, but how). We simply have not organized and invested in all the tools, structures, and processes to do the job innovators are asked to do. What we need is to equip all innovators for the changing future, and that is still not, in the vast majority, in the present way we are undertaking innovation. We are holding the true potential of innovation back!

Innolead asks that you not republish or post this report in its entirety; if you quote from it or reference it, then please credit InnoLead and KPMG. To access prior InnoLead research reports, visit innolead.com/research.

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