Innovation. The word has become a rallying cry for manufacturers everywhere. The creation of new and better products and services brought to market faster and more effectively than ever before; smarter ways to organize people, resources, and work; and new forms of doing business through partnerships and alliances all find themselves today under the big banner of innovation.
The notion of innovation has become tantamount to a populist movement for manufacturers grappling with globalization, more intense competition, and structural challenges at home. It would be hard to find a manufacturer today that would say it is not trying to innovate in one way or another. But peel back the surface skin on what people are saying about innovation, and what you will find is a paradox: the intention to innovate frustrated by a lack of good processes and follow-through.
This is the key finding of a new, exclusive Managing Automation reader poll on the state of innovation in U.S. manufacturing. Approximately 360 MA readers, surveyed in August using a questionnaire developed by New York-based innovation expert futurethink, weighed in on how their companies generate ideas, develop innovation strategies, and conduct innovation processes.
The most striking thing about the survey's findings is the schism that exists in just about every area respondents were asked about. Take the relationship between strategy and execution, for example. When asked whether innovation has been established as a strategic priority for their companies, a solid majority, 59.8%, indicated strong agreement that this has been done (Chart 3). But when asked whether their companies have put in place a core set of metrics to measure whether innovation efforts are effective, less than one-third, or 30.3% of respondents, said they could agree. Even more startling is that more than 40% said they aren't sure whether such a set of metrics actually exists in their organizations (Chart 4)
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"The results of the survey demonstrate that organizations need to shift from intention to action," says Lisa Bodell, chief executive of futurethink. "To be successful, innovation should go beyond the boardroom and become part of everyone's job. Otherwise, innovation efforts can start with a bang and end with a whimper."
Asked about how effectively they generate new ideas — the raw material for innovation — and much the same picture emerges. Nearly 57% of survey respondents said they are in close touch with their customers' needs and wants, but, when probed, only 13.2% said they use any kind of anthropological, ethnographic, or other customer research to actually determine what those needs are (Charts 1 & 2).
Silver Lining
Despite the contradictions seen throughout the survey results, some positive signs emerge. One of the most important observations is that the notion of innovation itself is clearly on the active-duty lists of most companies. Manufacturers are brainstorming, trying to anticipate opportunities and trends, and attempting to leverage intellectual capital throughout their workforces.
When asked about brainstorming sessions in their companies, for example, 53.7% said they felt strongly that these sessions have clear objectives and result in a pool of interesting ideas.
Likewise, just over 58% of those taking the survey said that innovative ideas are percolating at all levels, regions, and divisions of their companies (Chart 7). The problem, though, is how all of this intellectual activity is translated and used.
The big issue around innovation processes and outcomes emerged loud and clear when respondents were queried about whether people in their companies are all on the same page about innovation (Chart 8).
When asked whether everyone in their organizations held the same viewpoint about what innovation means for their business, only 23% said they could strongly agree with that statement. A somewhat higher percentage, 31.7%, were firm in the belief that there is no consensus on innovation's business value in their companies, while 45% simply didn't know. Yet, nearly half of respondents said that business performance is tied to innovation. Interestingly, too, less than a majority — 46.1% — said that the strategic priority of innovation is not identified in such important communications as annual reports and business planning documents.
This lack of effective communication around innovation shows up in other survey responses(Chart 5). Less than 37% of respondents agreed, for example, that their organizations had made it clear where someone should go for advice about innovation (Chart 6). Similarly, only about the same number said that their organizations had a systematic method or pipeline to centrally store and keep track of innovation ideas. Both responses demonstrate the lack of effective processes for innovation information management.
One reason for this may simply be that many manufacturing companies continue to be organized functionally and have not yet achieved true cross-functional integration, either in their processes or information systems. A key finding of the survey points in this direction. When asked how they manage innovation, a clear majority of respondents, 52%, said they manage on the basis of individual projects, with designated teams, budgets, milestones, and success metrics associated with those projects.
Changing this dynamic, of course, will require top management attention and leadership. Moreover, it requires a strategy that can be sustained and executed over time.
What's encouraging, according to the survey's results in a number of areas, is that top management is indeed present in the innovation discussions occurring in their companies. For example, 56% of respondents strongly agree that management is actively setting innovation strategy and nearly half, 49.7%, agree with the idea that senior management actively participates in and demonstrates a commitment to innovation efforts with the time, resources, vision, and support needed to move innovation forward.
But, based on the survey's overall findings and what it shows with regard to gaps between perception and execution, top management will have much work ahead in delivering on its innovation commitments. The good news is that the survey's results underscore the need for change and growth in the manufacturing marketplace today. And, as they say, necessity is the mother of innovation.
futurethink, based in New York, provides research, tools, and consulting services to help companies innovate.