Innovation - YPO...MAY 2019 PAGE 2 YPO.ORG/GLOBALPULSE YPO LOBA PULSE FINDINS Opening Summary At its...

MAY 2019 YPO.ORG/GLOBALPUL SE

YPOGLOBALPULSE

InnovationAs a Business

Imperative

MAY 2019 PAGE 2

YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S

Opening SummaryAt its simplest definition, innovation is the process of creating new ideas,

methodologies, services or products that lead to business transformation.

Innovation is a continual challenge for many across the business landscape,

independent of location, industry or business sector. The latest YPO Global Pulse

survey reveals that chief executives’ appetites for innovation are not keeping up

with their beliefs in the urgency for proactive innovation investment.

Customers are cited as a primary source of innovation inspiration and customer

experience as a primary business area needing innovation. Plans for innovation

investment over the next 12 months are most likely to be focused on products,

internal processes and technology. Geographic location, industry, company size

and length of job tenure greatly influence chief executives’ opinions and future

innovation action plans.

1,661

34

105

CHIEF EXECUTIVES

INDUSTRY SECTORS

COUNTRIES

Over the next 12 months, chief executives

are extremely likely to invest in innovation

in the following areas — products (45

percent), internal processes (44 percent)

and technology (42 percent).

More than four in 10 chief executives

strongly believe they have the appetite

for experimentation and risk when they

do business (this grows to 90 percent

when factoring in those who “strongly” and

“somewhat” agree they have an appetite

for experimentation and risk). Those leading

companies with annual revenues between

USD25 million and USD99 million appear

to be the most risk averse compared to

those leading smaller businesses and those

leading businesses with more than USD100

million in annual revenues.

Nearly half of chief executives cited

customers as their top source of

innovation inspiration (48 percent) with

employees (35 percent) ranking second

and business colleagues third (27 percent).

Consultants (10 percent) and think tanks

(7 percent) lag far behind.

Key Findings: 57 percent of chief executives

strongly believe there is an urgent

need for their business to be

innovative. However, more than

one-third of those respondents

— 37 percent — indicated they are

not likely to invest in innovation in the

next 12 months.

36 percent of chief executives

strongly agree that changing

market conditions are disrupting

their business; 24 percent strongly

agree their industry is being

disrupted by technology; and

20 percent strongly agree new

competitors threaten their business.

Customer experience is the primary

business area needing the most

innovation with nearly one in five

respondents citing it before products,

data/business intelligence or

technology.

1. Urgency to innovate amid business disruption

a. Regional differences

2. What areas need innovating?

a. Regional differences

3. Areas of investment over the next 12 months

4. Frontrunners of innovation

a. Who drives innovation?

b. Industry type

c. Appetite for experimentation and risk

5. Inspiration for innovation

Table of Contents

YPOGLOBALPULSE

MAY 2019 PAGE 4


Urgency to Innovate Amid Business DisruptionBridging the gap between the urgent

need to innovate and taking the

necessary steps to do so remain a

significant challenge to business

leaders. Fifty-seven percent of chief

executives strongly agree there is

an urgent need to be innovative.

However, only 31 percent strongly

agree their company is proactively

planning for innovation, and just 19

percent strongly agree their company

is an innovation leader.

Sources of business disruption

When chief executives were asked

where they saw disruption coming

from, they identified changing market

conditions as the primary source, over

technology or new competitors.

Thirty-six percent of chief executives

responding to the Global Pulse

strongly agree changing market

conditions are redefining their

business; 24 percent strongly agree

their industry is being disrupted by

technology; and 20 percent strongly

agree new competitors threaten their

business model.

What is your level of agreement with these statements regarding innovation and your company?

STRONGLY AGREE SOMEWHAT AGREE NEITHER AGREE NOR DISAGREE SOMEWHAT DISAGREE STRONGLY DISAGREE

There is an urgent need to be innovative

Our company proactively plans for innovation

My company is an innovation leader

YPO Global Pulse - May 2019 1,661 total responses 0% 25% 50% 75% 100%

What is your level of agreement with these statements regarding innovation and your company?


Changing market conditions are redefining business

Our industry is being disrupted by technology

New competitors threaten our business model

Technology is making our business model obsolete

Our competitors are innovating faster than we are


57% 31% 7% 2% 3%

31% 47% 14% 7% 2%

19% 38% 25% 14% 4%

36% 45% 11% 6% 1%

24% 37% 19% 16% 4%

20% 37% 20% 17% 6%

10% 28% 22% 24% 15%

6% 20% 35% 28% 11%

MAY 2019 PAGE 5


Chief executives in MENA (10 percent) and Asia (9 percent)

are more likely to strongly believe their competitors are

innovating faster compared to the respondents across all

regions (6 percent).

100%

75%

50%

25%

0%

Are changing market conditions redefining your business?

Percentage of respondents who strongly agree

Africa

Asia

Canada

Europe

Latin America

Middle East/North Africa

U.K.

U.S.

44%37% 37%

31%40%

51%43%

34%

15%

10%

5%

0%

Are competitors innovating faster than us? Percentage of respondents who strongly agree

Africa

Asia

Canada

Europe

Latin America


U.S.

8%9%

3%

7%6%

10%

6%

30%

20%

10%

0%

Is technology making your business model obsolete? Percentage of respondents who strongly agree

Africa

Asia

Canada

Europe

Latin America


U.S.

6%

14%10% 9%

19%

13%

7%

Regional DifferencesChief executives in emerging markets (Africa, Latin America

and the Middle East) feel an urgency to innovate, while those

in Europe are more likely to proactively plan for it.

U.K. respondents (43 percent) were much more likely than

their European peers (31 percent) to strongly agree that

changing market conditions are redefining their business.

Respondents in the Middle East/North Africa had the

strongest agreement with this statement (51 percent),

followed by Africa (44 percent).

Chief executives in Latin America (19 percent) and Asia

(14 percent) are more concerned that technology is

making their business model obsolete, especially when

compared to their peers in Europe (9 percent) and the

United States (7 percent).

MAY 2019 PAGE 6


What Needs Innovating?Overall, customer experience tops

chief executives’ responses of

what needs innovating the most

with nearly one in five citing it as a

top area of focus. Products, data/

business intelligence, business model

and technology were also named as

important areas to innovate.

For chief executives with the most

innovation urgency (most likely to

innovate and invest), the top area of

focus for innovation was the business

model, while for those with the least

innovation urgency (least likely to

innovate and invest), products were

the priority of innovation focus.

Within your primary business, what is the area that needs innovation the most?

Customer experience 18%

Products 16%

Data/business intelligence 15%

Business model 15%

Technology 12%

Overall internal processes 11%

Talent 5%

Logistics 4%

Other 2%

Financials 2%

0% 5% 10% 15% 20%

MAY 2019 PAGE 7


Areas of Investment Over the Next 12 MonthsWhen it comes to plans for innovation

investment in the next 12 months,

survey respondents indicate that their

strongest innovation investments will

most likely be in products (45 percent),

internal processes (44 percent) and

technology (42 percent).

The likelihood that chief executives will

invest to innovate their products in the

next 12 months (45 percent) aligns with

the DHR International-Sponsored report

by Harvard Business Analytic Services,

The State of Innovative Leaders Report

2018. In that report, just 45 percent

of 636 respondents drawn from the

Harvard Business Review audience of

readers defined their innovation focus

as transforming their existing business

models, products and services.

Although only 19 percent of YPO’s

chief executive respondents are

“extremely likely” to invest in business

model innovation in the next year,

that figure grows to 55 percent when

accounting for both “extremely likely”

and “moderately likely.” This finding is

consistent with the 2018 Gartner CEO

and Senior Business Executive Survey,

where 63 percent of global executives

said they are likely to change their

business models between 2018

and 2020.

The key differences between innovation

investments in the next 12 months

among company size types are seen

in data/business intelligence, where

chief executives of larger organizations

(USD250 million+) are far more likely

to plan for investing in this area (47

percent) compared to those leading

smaller companies.

In the next 12 months, what is the likelihood your firm will invest in innovation in these areas?

EXTREMELY LIKELY MOST LIKELY NEUTRAL MODERATELY LIKELY EXTREMELY UNLIKELY

Products

Internal processes

Technology

Data/business intelligence

Talent

Business development

Changing the business model

Finance

YPO Global Pulse - May 2019 1,661 total responses

0% 25% 50% 75% 100%

Most likely innovation investments, based on company size

Under

USD25 millionUSD25 million-

250 millionUSD250 million+

Finance 12% 14% 17%

Changing the business model 19% 18% 24%

Business development 33% 24% 27%

Talent 31% 29% 37%

Data/business intelligence 30% 33% 47%

Technology 41% 42% 49%

Internal processes 39% 45% 48%

Products 45% 43% 50%

The top innovation investments in

the next 12 months among those

leading USD25 million-USD250 million

businesses are internal processes (45

percent) followed by products (43

percent) and technology (42 percent).

Chief executives of smaller

organizations (USD25 million or

less) reported they will be focusing

their innovation investments in

the next 12 months on product

innovation (45 percent).

2%

1%

2%

2%

2%

45% 28% 18% 5%4%

44% 39% 11% 4%

42% 42% 11% 3%

34% 41% 17% 6%

31% 40% 21% 6%

27% 46% 20% 5%

19% 36% 25% 13% 7%

14% 28% 37% 14% 8%

MAY 2019 PAGE 8


Regional DifferencesWhen looking across global regions, chief executives differ in

their views on innovation investment in the next 12 months:

60%

50%

40%

30%

20%

10%

0%

Likelihood of investing in product innovation

Africa

Asia

Canada

Europe

Latin America


U.S.

45% 44% 44%54%

39% 39%45%

60%

50%

40%

30%

20%

10%

0%

Likelihood of investing in business model innovation

Africa

Asia

Canada

Europe

Latin America


U.S.

21%19%

13%

21%26% 25%

16%

Chief executives in Latin America (26 percent) and the Middle East/North Africa (25 percent) are more likely to invest in business model innovation compared to their peers in the United States (16 percent) and Canada (13 percent). This compares to the overall response of 19 percent.

U.S.-based business leaders (34 percent) are slightly more likely to invest in talent compared to all others (29 percent).

Respondents in Europe (54 percent) have the highest response

to the likelihood of investing in product innovation.

60%

50%

40%

30%

20%

10%

0%

Likelihood of investing in talent

Africa

Asia

Canada

Europe

Latin America


U.S.

24%30%

28%30% 28% 29%

34%

MAY 2019 PAGE 9


Frontrunners of InnovationWho drives innovation?

When asked “Who drives innovation strategy in your

company?”, more than half of chief executives responding

— 64 percent — indicate they personally drive innovation

at their organization, with 41 percent saying innovation is

integrated across their leadership team.

YPO chief executives take a more distributed approach to

innovation leadership. According to the DHR International-

Sponsored Harvard Business Analytic Services report The

State of Innovative Leaders Report 2018, 85 percent of

respondents consider the CEO the most important executive to

lead innovation efforts. Sixty-four percent of chief executives in

the Global Pulse study indicate they are the ones who are driving

innovation strategy within their company. In addition, 26 percent

of respondents to the The State of Innovative Leaders Report 2018

indicate that a chief innovation officer is the most important driver for

innovation. In the latest YPO Global Pulse, 11 percent of chief executives

indicate that an innovation officer drives innovation at their companies.

Who drives innovation strategy in your company?

I do 64%

Integrated across leadership team 41%

Technology team 27%

Operations team 26%

Marketing team 24%

Board of directors 23%

Engineering team 17%

Dedicated innovation team 13%

Chief product officer 12%

External consultants 11%

Innovation officer 11%

Other officer-level leader 9%

Chief customer officer 8%

YPO Global Pulse - May 2019 1,661 total responses 0 25 50 75 100

MAY 2019 PAGE 10


Industry Type Drives Approach to Innovation Industry seems to play a large role on

defining chief executives’ approach

to innovation.

Chief executives responding with

the highest urgency to innovate

and highest likelihood to invest in

innovation in the next 12 months

are in service industries including

advertising/marketing and insurance,

as well as from more capital-intensive

industries such as aerospace/defense

and logistics.

On the opposite side of the spectrum,

chief executives with the least urgency

to innovate and invest in innovation

in the next 12 months came from

industries such as manufacturing,

agriculture and utilities.

Chief executives in the media/

publishing industry indicate high

urgency to innovate with moderate

likelihood of investment in innovation

in the next 12 months.

Chief executives who are likely to

invest in innovation in the next 12

months, but feel less urgency to

innovate, come from the investment,

travel and restaurant industries.

Advertising/marketing

RestaurantInvestment

Travel

Education

Utilities

Real Estate

Engineering

Chemicals

Automotive

Pharma

LegalApparel

Telecom

Bus Service

InsuranceLogistics

Food/Bev

Environmental

Architecture

Hospitality

Retail

Oil, Gas, Mining

ConsultingEntertainment

Media/publishing

TransportationManufacturing

Health Care

IT

Aerospace/DefenseFinancial Services

DistributionAgriculture

0.6

0.4

0.2

0.0

-0.2

-0.4

-0.6

-0.70 -0.50 -0.30 -0.10 0.10 0.30 0.50 0.70

Innovation Investment Likelihood — Next 12 Months

Urg

ency

to

Inno

vate

MAY 2019 PAGE 11


Appetite for Experimentation and Risk The balance between risk and security

has grown more complex to navigate

for chief executives. Where there is a

desire to innovate, there is also a fear of

investing in something not yet tried

and true.

Family business leaders, entrepreneurs

and professional managers differ in their

mindset when it comes to taking risks and

investing in innovation.

Family business (family-owned for

more than one generation) leaders

tend to be more conservative in their

approach to innovation, being cautious

about changing the model that make

multigeneration businesses successful.

They are more risk averse, careful to

adopt new practices and are less likely

to plan for major innovation initiatives,

staying focused on internal processes and

company culture.

Conversely, entrepreneurs (company

founders) are more likely to be

innovators and have an appetite for

risk. Entrepreneurs tend to make quick

decisions, experiment as they build and

grow their business, and pivot as they

align their company culture and talent

with their bigger personal vision.

Professional managers (hired executives)

are more likely than entrepreneurs

and family business leaders to invest

in business model and technology

innovation. They are more concerned

about customer experience while more

hesitant to invest in innovation.

Industry and the size of the organization

play significant roles in a chief

executive’s attitude toward embracing

experimentation and risk:

cc Executives in the IT & software, health

care and advertising & marketing

industries are more likely to have an

appetite for experimentation and

risk (more than 55 percent) while

leaders in the distribution, automotive

and apparel industries are more risk

adverse (35 percent).

cc Companies with annual revenues

between USD25 million and

USD99 million are the most risk

averse compared to those leading

smaller business and those leading

businesses with more than USD100

million in annual revenues.

I have an appetite for experimentation and risk when I do business


Professional Manager

Family Business Leader

Entrepreneur

All Chief Executives


41% 50% 8% 1%

31% 55% 10% 3% 1%

51% 42% 4% 2%

42% 48% 7% 2%

<1%

<1%

MAY 2019 PAGE 12


Who and What Inspires Innovation? cc Forty-eight percent of chief

executives indicate they look to

their customers for inspiration.

cc More than one-third selected

their employees and conferences/

seminars as top inspiration sources.

cc More than 20 percent also chose

other companies, business

colleagues, media/periodicals and

YPO as innovation inspirers.

What are your top three sources of innovation inspiration?

Customers 48%

Employees 35%

Conferences/seminars 35%

Companies 28%

Business colleagues 27%

Media and periodicals 25%

YPO 23%

Books 14%

Universities/academics 11%

Other CEOs outside of YPO 11%

A specific innovation leader 10%

Consultants 10%

Think tanks 7%

Other 7%

Blogs 4%

Family 4%

YPO Global Pulse - May 2019 1,661 total responses0 25 50 75 100

MAY 2019 PAGE 13


About the SurveyThe YPO Global Pulse focuses on gathering insights from

chief executives around the world on the topics that

influence businesses and drive leadership decisions.

The survey was conducted between 29 April and 6 May

2019 via an online questionnaire and gathered insights

from 1,661 member respondents across 105 countries

and 34 industry sectors.

Chief Executive Type

Entrepreneur 42%

Family Business Leaders 35%

Professional Managers 23%

YPO Global Pulse - May 2019 1,661 total responses 0 25 50 75 100

Region

Africa 5%

Asia Pacific 15%

Canada 7%

Europe 15%

Latin America 10%

Middle East/North Africa 4%

U.S. 44%


0 25 50 75 100

Time Leading Company

Less than one year 3%

1-3 years 15%

4-6 years 18%

7-10 years 12%

More than 10 years 52%


0 25 50 75 100

MAY 2019 PAGE 14


About YPOYPO is the premier global leadership organization for more than 27,000 chief executives in over 130 countries and the global

platform for them to engage, learn and grow. YPO members harness the knowledge, influence and trust of the world’s most

influential and innovative business leaders to inspire business, personal, family and community impact. Today, YPO member-

run companies, diversified among industries and types of businesses, employ more than 22 million people globally and

generate USD9 trillion in annual revenues. For more information, visit ypo.org.

Date post:	12-Apr-2020
Category:	Documents
Upload:	others
View:	5 times
Download:	1 times

Innovation - YPO...MAY 2019 PAGE 2 YPO.ORG/GLOBALPULSE YPO LOBA PULSE FINDINS Opening Summary At its...

Documents