From Inventors to Innovators_FINAL 11.25

CEB Research & Development Leadership Council

From Inventors to InnovatorsUnlocking the Innovation Potential of Your R&D Workforce

R&D TALENT

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FRom INvENToRs To INNovAToRs

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CEB Research & Development Leadership Council

ExECuTIvE summARy

Corporate R&D organizations have a wealth of inventors—staff with technical expertise and a passion for technology who deliver value to the technology organization. But R&D executives want more innovators—staff who can identify unarticulated customer problems, create novel solutions, then create the momentum required to commercialize them.

What makes innovators different from inventors? How rare are they? Are there ways to spot someone with high innovation potential without having to wait 10 years to observe his or her track record? What are the most promising ways to nurture innovation potential? CEB conducted a research study to tackle these questions. The research drew on extensive interviews with R&D executives and individual level assessments of over 1,900 R&D staff at 42 major companies.

The top findings include the following:

■ Companies with high innovation-potential R&D workforces have new product sales performance that is 75% better than other companies, on average—$1.4 billion in additional sales each year for a $10 billion company.

■ Five specific behavioral markers are highly predictive of innovation potential, more predictive than technical competencies.

■ Most companies’ R&D performance management systems overfocus on project management rather than the competencies that have the largest impact on innovation potential.

■ Since it’s rare to find people who excel at all five markers, R&D organizations should form heterogeneous teams based on the five markers.

■ R&D staff’s innovation potential improves with the leadership effectiveness of their managers, but few R&D managers excel at managing innovators. Many unwittingly diminish innovation.

As a result, R&D leaders need to identify the five innovation markers in the workforce, use that knowledge to guide talent deployment and design optimal project teams, and build a leadership environment that nurtures innovation.

This paper discusses the research findings and some strategies leading companies are taking to improve innovation in their R&D workforces.

R&D leaders need to identify five specific markers in their workforce, use that knowledge to guide talent deployment and design optimal project teams, and build a leadership environment that nurtures innovation.

This research draws on:

Interviews with 80 Senior R&D Leaders

Surveys of 700 R&D Managers at Major Companies

Assessments of 1,900 R&D Staff Worldwide

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Contents

Introduction 1

What R&D Executives Want in Their Workforce 1

A scientific Approach to Innovation Potential 2

The Five markers of Innovation Potential 3

Top six Research Findings 3

Finding 1: Two Behavioral Markers Matter a Lot 3

Finding 2: The Five Behavioral Markers Are Strong Predictors of Innovation Potential 4

Finding 3: We Don’t Reward the Behaviors That Matter Most 5

Finding 4: Staff with Multiple Markers Have Higher Innovation Potential but Are Rarer 6

Finding 5: Behaviorally Diverse Teams Make Individuals More Innovative 6

Finding 6: Quality of Leadership Influences Innovation Potential 7

From Inventors to Innovators: R&D Talent strategies in Action 8

Imperative 1: Identify the Five Innovation Markers in Your R&D Workforce 8

Hillshire Brands Co. Identifies Good Ideas and Idea Champions 8

Imperative 2: Use the Five Innovation Markers to Design Optimal Teams 9

Unity Industrial Co., Ltd., Makes Behavioral Diversity Work 9

Imperative 3. Build a Leadership Environment That Nurtures Innovators 9

Colgate-Palmolive Helps its Leaders Better Manage Innovators 9

How CEB Can Help 10

Action steps for R&D Executives 10

About CEB 11


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1


IntroductionCorporate R&D organizations have a wealth of inventors—staff with technical expertise and a passion for technology who deliver value to the technology organization. But R&D executives want more innovators—staff who can identify unarticulated customer problems, create novel solutions, then create the momentum required to commercialize them.

What makes innovators different from inventors? How rare are they? Are there ways to spot someone with high innovation potential without having to wait 10 years to observe his or her track record? What are the most promising ways to nurture innovation potential? CEB conducted a research study to tackle these questions. The research drew on extensive interviews with R&D executives, and individual level assessments of over 1,900 R&D staff at 42 major companies.

What R&D Executives Want in Their WorkforceInterviews with R&D executives confirmed that they want a workforce with more innovators, who can to deliver more value to the enterprise. They have a wealth of inventors—staff with technical expertise and a passion for technology, who deliver value to the technology organization. But they want more innovators—staff who can identify pressing, unarticulated customer problems and create novel solutions that will resonate internally and in the market.

However, there is little clarity about what specific attributes are most important for innovation potential. Is it adaptability, business acumen, collaboration, or creativity? Is it problem solving, technical expertise, strategic thinking, or intellectual curiosity? Ask 10 experts and you’ll get 10 different answers. Review the current literature on innovation, and you’ll get several answers but little consensus.

Although the R&D group is highly technical and scientific, understanding what attributes drive innovation has been more art than science. In fact, 92% of R&D organizations we surveyed do not use behavioral competency models to systematically assess innovation potential in their workforces.

“Identifying innovators is more of a judgment call through our periodic

interactions with managers and staff.”

VP Product DevelopmentConsumer Products Company

“Only an established track record of delivering innovation would allow

us to identify innovators.”

SVP R&DHigh-Technology Company

92% of R&D organizations we surveyed do not use behavioral competency models to systematically assess innovation potential in their workforces.

Current State Ideal State

Too many inventors generating value for the technology organization

More innovators generating value for the enterprise and its customers

Focusing on solving complex technical problems

Defining and redefining the right problem before solving it

Striving to develop solutions that are technologically complex and difficult to imitate

Developing solutions that are easy for customers to use or adopt and easy for stakeholders to articulate

Depending on others to “sell” their solutions

Creating stakeholder momentum to commercialize ideas


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A scientific Approach to Innovation PotentialCEB wanted to put a scientific approach and quantitative analysis to these pressing questions: Could R&D organizations be more systematic in identifying the attributes of innovation potential and, armed with that information, what could they do to develop greater innovation in the workforce?

The first step on this journey was to define “innovative employee.” In collaboration with our member executives, we developed an index of Innovation Potential, a score calculated based on managers’ assessment of an individual’s abilities to:

The innovation potential of R&D staff can be measured by assessing their contribution to identifying big unarticulated customer problems, developing differentiated solutions, and generating internal momentum for ideas.

The innovation potential of R&D staff can be measured by assessing contributions to the team in all three areas: identifying problems, developing solutions, and selling the ideas internally. The next step was to use this Index of Innovation Potential framework to identify the specific attributes and behaviors that support these capabilities—and the answers weren’t necessarily the obvious.

CEB surveyed 700 R&D leaders from more than 42 corporations worldwide. In a staged process, CEB:

Efforts to foster innovation pay off. Companies where R&D staff has higher innovation potential deliver significantly better new product performance (measured by vitality) relative to companies with lower innovation potential staff. Vitality is defined as the percentage of current year global sales attributable to new products and services launched in the previous three years. For example, a $10 billion company where the average R&D professional has high innovation potential delivers $1.4 billion extra in new product sales relative to peer companies of similar size.

$10B company where the average R&D professional has high innovation potential can deliver

$1.4B extra in new product sales relative to peer companies of similar size.

Identify Customer Problems

Identify customer problems that, if solved, could generate high-impact ideas and big offerings for the company.

Develop Novel solutions

Develop novel solutions that are easy for customers to use, create competitive advantage, have sufficient business value to command a price premium, and can actually be implemented even if they produce big increases in customer demand.

Create Internal momentum

Create internal momentum for ideas, both in generating internal support, commitment, and enthusiasm to move ideas forward and in developing solutions that stakeholders can readily communicate to secure commitment.

Gathered managers’ Assessments of Their staff

The R&D managers provided assessments of more than 1,900 staff members’ core innovation activities from different R&D levels and sub-functions.

Identified the Competencies most Critical to Innovation

Working with the managers’ assessments, CEB researchers used the evidence-based CEB/SHL Universal Competency Framework to identify behaviors most likely to influence innovation.

Determined Ways to Foster Those Competencies

Knowing which competencies mattered most led to identification of best practices to spot and nurture innovators, creating an environment where innovation can thrive.


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The Five markers of Innovation PotentialCEB researchers identified natural competency groupings based on their statistical relationships with one another, found common themes shared by competencies in each factor, and then used multivariate regression to examine the impact of each factor on outcome variables that indicate innovation potential.

When we tested for the prevalence of 48 behavioral competencies from the Universal Competency Framework and their statistical connection to innovation potential, we found five specific innovation potential markers:

■ Results Seekers achieve personal and project goals. They are prepared to put in the extra effort and hours to achieve an objective. They see things through to completion and monitor progress against deadlines and milestones.

■ Customer Empathizers seek opportunities to get customer input and feedback. They champion the customer perspective in developing ideas and solutions, thoroughly research customer needs and expectations, and relate customer needs to relevant technologies.

■ Idea Integrators identify common themes over multiple issues. They are good at pinpointing key information from masses of data, understanding how one issue may be a part of a larger system, sorting information into patterns and relationships, and exploring and drawing on ideas from a wide range of disciplines and fields.

■ Influencers listen, consult, and communicate proactively with others. They build strong relationships and handle objections convincingly. They are good at adapting their communication style to the context and audience and explaining complex ideas to a non-technical audience.

■ Risk Takers decide on a definite course of action and prefer to take calculated risks rather than miss opportunities. They initiate action without referring to others. They are willing to stake their personal reputations on ideas and projects they believe in. Risk takers are good at identifying opportunities and threats from market information and competitors.

Note that individuals can have strengths in none, one, or more of these five markers. Each of the five markers individually has a significant impact on the innovation potential of R&D staff. Collectively, the five markers explain over 70% of R&D staff’s innovation potential.

Top six Research FindingsFinding 1: Two Behavioral Markers Matter a Lot

Based on a maximum impact analysis, two markers can most strongly drive innovation potential: Customer Empathizer (understanding customer needs) and Idea Integrator (synthesizing insight from disparate sources).

There are five observable markers that predict R&D staff’s innovation potential. Customer Empathizer and Idea Integrator competencies most strongly drive R&D staff’s innovation potential.

70% of R&D staff’s innovation potential can be explained by the five markers.


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All Five Behavioral Markers Influence Innovation—Two of Them Greatly

(20%)

0%

20%

40%

26% 24%

14%10% 9%

Results Seeker

InfluencerRisk TakerIdea Integrator

Customer Empathizer

Five Markers of Innovation

Understanding unarticulated customer needs and synthesizing insight from disparate data and multiple disciplines most strongly drives innovation.

n = 1,337.

Finding 2: The Five Behavioral Markers Are Strong Predictors of Innovation PotentialR&D organizations prize technical expertise, but that expertise does not necessarily lead to innovation. The study showed that staff who excel at technical competencies—those who averaged a six or higher on a seven-point scale on technical competencies such as prototype development and validation—had only a 50–50 chance of having high innovation potential overall. In contrast, 76% of staff who excelled at any of the five behavioral markers showed high innovation potential.

If you want to find talent with the best innovation potential, assess behavioral competence rather than focusing too narrowly on technical expertise.

76% of staff who excelled at any of the five behavioral markers showed high innovation potential.

The Five Behavioral Markers Are More Predictive of Innovation Potential than Technical Competencies

Staff Who Excel at Any of the Five Behavioral Markersa

n = 286.

Staff Who Excel at Technical Competenciesb

n = 473.

a Behavioral competence is defined as a score of 5.5 or higher out of 7 on the behavioral markers Influencer, Risk Taker, Customer Empathizer, Idea Integrator, and Results Seeker.

b One on a 1 to 7 scale, where 7 represents extremely effective and 1 represents extremely ineffective, technical expertise represents those who averaged 6 or higher in competencies such as concept generation and development, product and prototype development, and validation.

The five behavioral markers of innovation potential—Results Seeker, Customer Empathizer, Idea Integrator, Influencer and Risk Taker—yield much better insight into an employee’s innovation potential than technical or functional expertise.

0%

40%

80% 76%

51%


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Finding 3: We Don’t Reward the Behaviors That Matter MostWhen we looked at the relative importance of the five behavioral markers on an employee’s performance score, we found a disturbing disconnect that hampers innovation.

In the chart below, the blue bars represent the impact of each behavioral competency on innovation potential, while the orange bars represent the impact of that competency on the employees’ actual overall performance score. The discrepancy is clear, companies over-focus on project management and outcomes rather than on other attributes that are far more important to innovation.

Although rewarding positive results is important, employees need to also be recognized and rewarded for innovation behaviors if innovation is a goal for the business. Many organizations unwittingly have disincentives in place to squelch the very competencies that would improve innovation.

Although customer-focused and idea integration behaviors drive innovation potential significantly more than others, we tend to reward results-seekers when assessing performance.

Most Companies Focus Too Heavily on Outcomes Rather Than the Behavioral Markers of Innovation Potential

0%

25%

50%

26%

7%

24%

11%14%

0%

10%

41%

9%

15%

n = 1,337.

a Employee performance scores represent manager assessment of their direct reports’ performance (in the most recent review) on a 1 to 7 scale where 1 = far below expectations, 4 = meets expectations, 7 = far above expectations.

b Value not shown due to statistical insignificance at 95% confidence level.

Maximum Impact on Employee Performance Scorea

Customer Empathizer

Risk Takerb InfluencerIdea Integrator

Although customer-focused and idea integrator behaviors drive innovation potential significantly more than others...

...we tend to reward results-seekers when assessing performance.

Results Seeker

Maximum Impact on Innovation Potential


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Finding 4: Staff with Multiple Markers Have Higher Innovation Potential but Are RarerThe more innovation-related competencies an employee displays, the greater the chance that he or she will have high innovation potential. So it was surprising to find that 61% of R&D staff in the survey sample did not excel (score a six or seven on a seven-point scale) on any of the five important markers, as assessed by their managers.

61% of R&D staff in the survey sample did not excel on any of the five markers.

Focus on developing (or finding) the five behavioral markers in R&D staff to increase innovation potential. Companies should likely focus on developing markers in the majority of staff who currently excel at none, especially for the markers where the team is collectively weak.

Finding 5: Behaviorally Diverse Teams Make Individuals More InnovativeTeam diversity definitely influences an individual’s innovation potential. For purposes of this study, we defined homogeneous teams as those that excel at three or fewer of the five markers of innovation, and heterogeneous teams as those that excel at four or more. We found that individuals are, on average, more innovative on teams that are behaviorally diverse. So heterogeneity in team structure is a good idea, but our research found R&D teams are just as likely to be homogeneous as heterogeneous.

An individual’s innovation potential is higher when working in a behaviorally diverse team.

n= 1,932.

Prevalence of Innovation Markers and the Associated Likelihood of High Innovation Potential

Staff Who Excel at Zero of the Five Innovation

Markers

Staff Who Excel at Two of the Five Innovation

Markers

Staff Who Excel at Four

of the Five Innovation

Markers

Staff Who Excel at One of the Five Innovation

Markers

Staff Who Excel at All

Five Innovation

Markers

Staff Who Excel at Three

of the Five Innovation

Markers

Percentage of Staff Likelihood of Having High Innovation Potential

0%

50%

100%

61%

12%8% 7% 5% 7%

33%

9%

55%

68%

83%

96%


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0.0

3.0

6.0

5.1

3.8

Finding 6: Quality of Leadership Influences Innovation PotentialThe innovation potential of R&D staff improves with the leadership competencies of their managers, such as the abilities to provide a strategic view, cope with disappointments, inspire staff to innovate, and maintain a long-term focus. However, few R&D leaders excel at managing innovators, which diminishes staff’s innovation potential. In fact, 77% of CTOs told us their R&D managers are not very effective at these leadership competencies.

Employees Have Higher Innovation Potential on Heterogeneous Teams

Behaviorally Homogenous Teams

Behaviorally Heterogeneous Teams

n = 626. n = 598.

0.00

3.00

6.00

4.71

5.53

Few R&D Leaders Excel at Managing Innovators, Which Diminishes Innovation Potential

n = 52.

High Manager Effectiveness at Key Leadership Competencies

Medium or Low Manager Effectiveness at Key

Leadership Competencies

∆ = 17%

∆ = 34%


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From Inventors to Innovators: R&D Talent strategies in ActionTo unlock the innovation potential of the R&D workforce, R&D leaders need to:

■ Identify the five innovation markers in the workforce.

■ Use their knowledge of the five innovation markers to deploy talent and design optimal teams.

■ Build a leadership environment that nurtures innovators.

Imperative 1: Identify the Five Innovation Markers in Your R&D Workforce

Hillshire Brands Co., Identifies Good Ideas and Idea ChampionsHillshire Brands Co.—a leading supplier of meat products under such iconic brands as Jimmy Dean, Ball Park and Hillshire Farm—wanted to establish an open forum for idea generation. In monthly workshops, R&D employees can exchange bold ideas and get feedback. Executives can also observe the innovation potential of the broader R&D workforce and identify latent innovators who might normally go undetected.

Hillshire’s approach includes three primary components:

Employees fear that failure in bold, innovative projects will be seen as incompetence and affect their careers. That concern is mitigated or eliminated by having executives demonstrate how their own personal failures actually advanced their careers.

Since the inception of this approach, Hillshire staff have been more willing to innovate. Top management has identified more staff with innovation potential as a result of these workshops and seen a significant increase in the number of quality innovation ideas being reviewed each year.

“We didn’t build this process to identify innovators,” said an R&D executive, “but we found that it provided a really good snapshot of the organization’s innovation potential.”

open Forum for Innovation

Monthly SNOW days (“sharing new opportunities to win”) provide an informal way to share and learn new opportunities or ways to deliver results. R&D staff perceive the forum as a risk-free environment to network with peers as well as senior executives.

Executive Failure Discussions

Executives share stories of their failures and how their careers were propelled by what they learned from those failures. This candid sharing helps employees realize that failure is an integral part of success, and learning from failures is a necessary step to leadership.

Depersonalized Executive Feedback

Hillshire hosts informal reviews where R&D executives offer depersonalized, constructive feedback to innovators to encourage staff to continually generate and refine ideas.


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Imperative 2: Use the Five Innovation Markers to Design Optimal Teams

Unity Industrial Co., Ltd., Makes Behavioral Diversity Work

An individual’s innovation potential is higher when working in teams that are behaviorally diverse. However, individuals with different behavioral competencies may often be at odds with each other during the lifecycle of an innovation project. For example, a Results Seeker’s desire to demonstrate a quick win may be fundamentally at odds with an Idea Integrator’s desire to broaden the scope of an idea and spend more time refining it at the front end.

An international manufacturing company, pseudonymed here as Unity Industrial Co., Ltd., tackles this issue by using team-based guidelines and metrics to ensure that team members aren’t working in conflicting ways:

■ Uniform team behavior scores create collective accountability for team behaviors by assigning a common team behavior score to all project team members and integrating it with performance evaluations as a key component of business objectives.

■ Team behavior guidelines provide a roadmap for how to operate in a diverse team environment, which reduces friction and encourages greater collaboration.

This approach has built appreciation for behavioral diversity among R&D staff. By participating in a live idea-to-concept cycle with a behaviorally diverse team, employees gain an appreciation of the importance of different competencies for team success. Holding team members collectively accountable for good team behavior ensures overall collaboration and synergy.

Imperative 3: Build a Leadership Environment That Nurtures Innovators

Colgate-Palmolive Helps Its Leaders Better Manage Innovators

How do you make sure your middle managers aren’t inadvertently stifling innovators? Under pressure to deliver outcomes, R&D managers often struggle to inspire staff to innovate. Only a minority of R&D managers are open to new approaches, dealing with early failures, and providing a strategic view, according to their direct managers.

At the consumer products giant Colgate-Palmolive, executives take direct ownership of the responsibility to transform R&D managers into innovation leaders. Executives deliberately expose mangers to innovation-oriented situations and projects that require them to demonstrate leadership, and ensure that managers do not act in ways that hinder innovation behaviors.

This initiative has three primary components:

■ Leadership champion pairs: Two leadership champions are identified and paired with each manager to drive strategic thinking and leadership competencies.

■ Critical learning experiences: A series of action-learning project opportunities takes managers out of their comfort zones and requires them to appreciate and foster behaviors critical to innovation.

■ Peer coaching lab: Middle managers get together to focus on short-term results with a long-term strategic view, detail challenges they observe, and collectively brainstorm solutions to challenges related to championing innovation. The platform for peer coaching helps managers crystallize their own learning from innovation projects to prepare them for coaching their direct reports.

Leadership-led manager development has significantly improved middle managers’ engagement in innovation, which in turn has enabled staff to pursue more innovation ideas.


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Action steps for R&D ExecutivesThe research points to five key action steps for any R&D organization that wants to raise the level of innovation:

1. Assess staff for the five behavioral markers that most influence innovation: Results Seeker, Customer Empathizer, Idea Integrator, Influencer, and Risk-Taker behaviors.

2. Use your knowledge of these innovation markers when making talent deployment decisions to ensure that high innovation potential staff are optimally deployed.

3. Create behaviorally diverse project teams while managing the friction that can naturally result from this heterogeneity.

4. Orient performance incentives toward the behavioral markers that matter the most, rather than focusing too narrowly on outcomes.

5. Build managerial support for a climate of innovation. Create opportunities for managers to have greater insight on the behavioral competencies of R&D staff, self-discover and neutralize their behaviors that inhibit innovation, and learn how to more effectively nurture innovation behaviors.

The full research report, “From Inventors to Innovators: Unlocking the Innovation Potential of Your R&D Workforce,” provides additional details on the research methodology and findings, key imperatives for R&D executives, ways to empower your R&D teams for innovation, insight into additional approaches of leading companies, and more. For more in-depth, interactive exploration of the subject, visit rd-talent.com.

How CEB Can HelpWe support the world’s leading organizations by providing end-to-end solutions to plan for, assess, and develop R&D staff to meet critical talent objectives.

■ CEB Research & Development Leadership Council: Membership provides you with access to decision-support tools, advisory services, and networking opportunities to inform organizational changes and talent strategies. We help more than 200 corporate R&D teams adopt best practices in hiring, development, performance management, and succession management.

■ CEB R&D Talent Assessment: Identify the prevalence of the five markers of innovation potential, identify your high-potential employees, and engage your staff. CEB’s talent assessment service scientifically measures each staff member’s individual capabilities and helps your managers develop better coaching techniques.

■ CEB R&D Leadership Academy: This classroom development program is designed to build broader business engagement and influencing skills required of R&D staff today, including how to drive cross-functional collaboration to meet business and innovation goals.

R&D TALENT

Assess

Plan

Develop

End-to-end R&D talent solutions. Learn more at rd-talent.com.

Assess staff for the five behavioral markers that have the greatest influence on innovation, and use that knowledge to guide talent deployment decisions and form heterogeneous project teams that spawn greater innovation.


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About CEBCEB, the leading member-based advisory company, equips more than 10,000organizations around the globe with insights, tools and actionable solutions totransform enterprise performance. By combining advanced research and analyticswith best practices from member companies, CEB helps leaders realize outsizedreturns by more effectively managing talent, information, customers and risk.Member companies include approximately 85% of the Fortune 500, half the DowJones Asian Titans, and nearly 85% of the FTSE 100.

Through this network, more than 300,000 business professionals have access tomore than 300,000 corporate best practices, 1,500 benchmarking data sets, and11,500 analytical tools to drive faster, more effective decision making across allmajor disciplines and areas of business.

This white paper presents summary findings from a 2013 CEB research study on how companies can unlock the innovation potential of their R&D workforce; the research drew partly on assessments of more than 1,900 R&D staff at 42 companies.

For more information:

+1-866-913-8102

[email protected]

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