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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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?
STRONGLY AGREE SOMEWHAT AGREE NEITHER AGREE NOR DISAGREE SOMEWHAT DISAGREE STRONGLY DISAGREE
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
YPO Global Pulse - May 2019 1,661 total responses 0% 25% 50% 75% 100%
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
Middle East/North Africa
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
Middle East/North Africa
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
Middle East/North Africa
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
Middle East/North Africa
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
Middle East/North Africa
U.S.
24%30%
28%30% 28% 29%
34%
MAY 2019 PAGE 9
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
STRONGLY AGREE SOMEWHAT AGREE NEITHER AGREE NOR DISAGREE SOMEWHAT DISAGREE STRONGLY DISAGREE
Professional Manager
Family Business Leader
Entrepreneur
All Chief Executives
YPO Global Pulse - May 2019 1,661 total responses 0% 25% 50% 75% 100%
41% 50% 8% 1%
31% 55% 10% 3% 1%
51% 42% 4% 2%
42% 48% 7% 2%
<1%
<1%
MAY 2019 PAGE 12
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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%
YPO Global Pulse - May 2019 1,661 total responses
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%
YPO Global Pulse - May 2019 1,661 total responses
0 25 50 75 100
MAY 2019 PAGE 14
YPO.ORG/GLOBALPULSEY P O G L O B A L P U L S E F I N D I N G S
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.