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Innovation: from ideation to activation

Governance

Leadership matters

Having a senior leader responsible for innovation can help a company stay focused on the innovation agenda. These leaders play a critical role in helping define the innovation strategy, promoting innovation where appropriate in the organization and ensuring efforts are coordinated and tightly integrated across the enterprise. They also play a critical role in managing the innovation process, ensuring the company can explore, but also exploit and rapidly commercialize, the best ideas.

Not surprisingly, our survey found that larger organizations are the most likely to have a senior leader accountable for innovation. However, smaller organizations are more likely than mid-sized companies to have a senior leader in charge of innovation. For many small organizations the investment pays off, as their ability to innovate is critical to rapid growth and a successful IPO or sale to a larger organization.

Does your company have a senior leader accountable for innovation within the company?

EY - Chart - Does your company have a senior leader accountable for innovation within the company?

Money talks

Organizations with ambidextrous capabilities typically spend more on innovation as a percentage of their total costs. Those with neither explore nor exploit capability typically spend less than 1%. Only when a firm has a defined and fully implemented process are they likely to have a separate innovation budget.

The technology industry is a great example of a sector that needs to innovate to differentiate and survive, and does so accordingly. Technology companies are generally wired differently — they hire young, creative people, then reward product innovation and really drive an innovation culture. Those that fail to innovate quickly go out of business.

What is the estimated percentage your organization spends annually on innovation as a percentage of total operating costs?

EY - Chart - What is the estimated percentage your organization spends annually on innovation as a percentage of total operating costs?
EY - Building Blocks

Governance: key success factors

  • Establish an innovation operating model for recruiting, sponsorship, ownership and resource allocation.
  • Identify funding, including associated decision rights, and put in place measurement and monitoring (performance management and benefits tracking criteria).
  • Define measures of success, goals, objectives and timeframes.