Survey of 677 Corporate

Strategy Executives
 ABOUT CB INSIGHTS

To make the right decisions, you need to know

the facts — and where and how to find them.
At CB Insights, we believe that So we use machine intelligence to synthesize,

using facts over feelings is key analyze, and visualize millions of documents

to answering your most complex, and give you fast, fact-based insights. We give

strategic business questions. companies the power to take control, make

better decisions, and capitalize on change.

CB INSIGHTS STATE OF INNOVATION REPORT    2

KEY FINDINGS
Corporate strategists
talk the talk but don’t
walk the walk.
84.9% said innovation is very
important, but 78% of respondents
focus on incremental changes.
PA G E 9
CB INSIGHTS
 igh performing
H Corporate
companies are more
likely to be first movers.
35% of high-performing respondents
were first movers and 2x as likely
to be risk-seeking.
PA G E 15
innovation
is slow.
60% of companies said it takes a year or
longer to create new products. Corporate
propensity for building over partnering or
buying slows down innovation.
PA G E 22
STATE OF INNOVATION REPORT    3
M E T H O D O LO G Y N OT E

Throughout this report,

high-performing companies
are defined as those in the top
15% of financial performance HIGH PERFORMERS

relative to primary competitors

in the last 12 months.
M O D E R AT E P E R F O R M E R S
Moderate-performing companies are in
the middle 45% of financial performance.
Low-performing companies are in
the bottom 40% of financial performance. LO W P E R F O R M E R S

CB INSIGHTS STATE OF INNOVATION REPORT    4

 B U T F I R S T, W H O D I D W E TA L K T O?

We surveyed
677 strategy leaders.

CB INSIGHTS STATE OF INNOVATION REPORT    5

WHO WE SURVEYED

REACH SIZE

Global 66% are $1B in revenue or greater

49.5%
AMERICAS
12.9%
37.6% APAC

EMEA

38.4% 27.3% 13.1% 7.1% 14.1%

$10B+ $1B - $250M - $100M - $10M -
$9B $999M $249M $99M

CB INSIGHTS STATE OF INNOVATION REPORT    6

WHO WE SURVEYED

SENIORIT Y FUNCTION INDUSTRY

8% C-level All major industries covered

9% SVP / EVP Other 26%

13% VP 56% Strategy

Corp Dev. 10%
8%
28% Director
Gen. Mgmt

25% Manager Financial Services Manufacturing Education

Business Services CPG Transportation
Information Technology Energy & Utilities Materials
17% Associate Life Sciences Retail Consumer Services
Insurance Telecommunications Other
Industrial Media
Due to rounding, not all percentage
totals in this report are equal to
100%. All comparison calculations
are made from total numbers, not
rounded numbers.

CB INSIGHTS STATE OF INNOVATION REPORT    7

 While corporations worry about
disruption, do they actually invest
in preventing it?
ANSWER = NO

CB INSIGHTS STATE OF INNOVATION REPORT    8

 84.9%
SAID INNOVATION IS
VERY IMPORTANT

Companies care
about innovation.
There was broad agreement among
the respondents. The more senior
the survey respondent, the more
importance they placed on innovation.

Larger companies, especially those generating

more than $10B in revenue, placed the highest
importance on innovation.

CB INSIGHTS STATE OF INNOVATION REPORT    9

 How at risk is your Top 5 industries
company of disruption at risk of disruption
by emerging technologies
and companies?

9% EXTREMELY AT RISK

32.4% VERY AT RISK

41% of executives said their 1 MEDIA & ENTERTAINMENT

companies are extremely at risk
or very at risk of disruption. 41.4% MODERATELY
AT RISK
2 TRANSPORTATION

3 FINANCIAL SERVICES
When asked, “How at risk is your company
of disruption by emerging technologies and 4 EDUCATION
companies?” less than 4% said they were
13.4% SLIGHTLY AT RISK

3.8% NOT AT RISK 5 INSURANCE

not at risk.

CB INSIGHTS STATE OF INNOVATION REPORT    10

Despite deep fear
and talk of disruption,
companies invest
in the small stuff.

CB INSIGHTS STATE OF INNOVATION REPORT    11


Companies focus on
incremental innovation.
Continuous innovation­— iterating on the
status quo rather than on disruptive risks —
is the primary type of innovation companies
pursue. This includes enhancing existing
products/services, cutting costs, and efforts
focused on productivity.
CB INSIGHTS
78%
of innovation portfolios are allocated
to continuous innovation instead of
disruptive risks.
Innovation goals reflect the incremental nature
of innovation efforts, with only 1 out of 5 goals
focusing on new products and services.
RANK COMPANY INNOVATION GOALS
1 Generate revenue by enhancing existing products & services
2 Generate revenue by launching new products & services
3 Improve customer satisfaction
4 Improve operational effectiveness / productivity
5 Reduce costs for existing products and services
STATE OF INNOVATION REPORT    12
 Top 10 Sources of Innovation

1 Customers

2 Employees

3 Competitive intelligence

Customers and 4 Suppliers / vendors

employees are 5 Academic partners and/or

scientific literature

driving innovation. 6 Industry analysts

7 Accelerators & incubators

Part of the reason for the incremental
8 Corporate venture capital
nature of innovation is that the primary
sources for innovation are existing 9 External ideation consultants
customers and employees.
10 Bankers & VCs

CB INSIGHTS STATE OF INNOVATION REPORT    13

 What are characteristics of highly
innovative companies?
A N S W E R = F I R S T-M O V E R S, R I S K-S E E K I N G, C E O O W N E R S H I P

CB INSIGHTS STATE OF INNOVATION REPORT    14

High-performing
companies are more
likely to be first-movers.
Innovation plan / philosophy

High-performing companies HIGH PERFORMERS

were 3x more likely to strive 35% 28% 37%
for first-mover advantage
(35% of high-performing MODERATE PERFORMERS
respondents were first- 24% 31% 45%
movers versus 11% among
low performers). LOW PERFORMERS

11% 35% 54%

Meanwhile, the majority of low performers
describe their innovation philosophy as
FIRST-MOVER
“ad hoc,” or not having an innovation FAST FOLLOWER
philosophy or plan. AD HOC, OR NO PLAN

CB INSIGHTS STATE OF INNOVATION REPORT    15

High-performing
companies invest in
disruptive projects. Innovation investment allocation

HIGH PERFORMERS
On average, companies invest
78% of their innovation budget 28% 72%
in continuous improvements to
MODERATE PERFORMERS
existing processes and products.
24% 76%
But high-performing companies tend to invest
more in disruptive innovation. This propensity LOW PERFORMERS
for high-performing companies to place bigger 18% 82%
bets on uncertain projects is consistent with
other findings in this study: high performers DISRUPTIVE
have a greater appetite for risk. CONTINUOUS

CB INSIGHTS STATE OF INNOVATION REPORT    16

Innovation-driven financial
performance requires a high
appetite for risk.
High-performing companies
are 2x as likely to report
being risk-seeking when
High performers are
pursuing innovation.

When asked to describe their company’s 2X

appetite for risk, respondents from high- more likely to report
performing companies were twice as likely being risk-seeking compared
to low performers.
to answer either “risk-seeking” or “very risk-
seeking” compared to low-performers.

CB INSIGHTS STATE OF INNOVATION REPORT    17

 Relative to your primary
competitor(s), how would you
rate your organization’s level of
innovation in the last 12 months?

The most innovative

companies feel they
HIGH PERFORMERS M O D. P E R F O R M E R S LO W P E R F O R M E R S

3% VERY HIGH

are far ahead of their

12%
VERY HIGH
28%
competition.
32%
VERY HIGH HIGH

35%
HIGH

What is the link between

innovation and financial 42%
performance? 41% AVERAGE
HIGH

In our survey of 677 strategy executives at 41%

major corporations, we found respondents AVERAGE

from high-performing companies were

19% 25%
10.7x more likely than low performers to AVERAGE LOW
report very high levels of innovation in the 11% LOW
8% LOW
last 12 months.

1% VERY LOW 2% VERY LOW

CB INSIGHTS STATE OF INNOVATION REPORT    18

High-performing
companies build
cultures of innovation
across functions.
A culture of innovation needs to be High performers are
felt across every major function.

Survey respondents from high-performing

5X
more likely than low
companies were more likely to report nurturing
performers to build a culture
a culture of innovation across every business of innovation across every
function, including HR, finance, sales, product, business function.
marketing, and more.

CB INSIGHTS STATE OF INNOVATION REPORT    19

 “At what level does the
innovation function primarily
report at your company?”

HIGH PERFORMERS M O D. P E R F O R M E R S LO W P E R F O R M E R S

9% BOARD 9% BOARD
15% BOARD

30%
39% CEO

High-performing CEO 36%

CEO

CEOs do not delegate 24%

innovation strategy. 20% CXO

CXO 25%
CXO

When asked, respondents from high performing 33%

30% XVP
companies were far more likely to respond XVP 22%
XVP
that innovation was centralized in upper
management — particularly with the CEO.

2% OTHER 2% OTHER 4% OTHER

CB INSIGHTS STATE OF INNOVATION REPORT    20

 What did we learn about
corporate innovation processes?
A N S W E R = A D H O C, S LO W, S H O RT-T E R M, I N S U L A R

CB INSIGHTS STATE OF INNOVATION REPORT    21

57% of respondents
said their companies
do not follow formal
innovation processes.
Executing on corporate
innovation remains mostly
ad hoc and unstructured. 43% 57%
HAVE AN DON’T HAVE AN
The majority don’t have processes for INNOVATION INNOVATION
PROCESS PROCESS
ideation and development phases.

CB INSIGHTS STATE OF INNOVATION REPORT    22

Though most companies 71%
MEASURE

don’t have a process

INNOVATION

for innovation, they are

focused on measuring it.
71% of companies assess
innovation quantitatively, using
primarily short-term metrics.

Among those who measure innovation, 85%

track revenue generated as at least one of their
metrics for success. About half look at the
number of projects completed and customer 85%
MEASURE USING
satisfaction. We found that those who assess REVENUE
innovation quantitatively track 2.9 metrics
on average.

CB INSIGHTS STATE OF INNOVATION REPORT    23

 Would you describe your
company as effective
at each of the following
phases of innovation?

IDEA GENERATION

Companies 13%
30%

lack confidence
11%

DEVELOPMENT/DESIGN

in their ability 9%
10%

to innovate. 4%

COMMERCIALIZATION/LAUNCH High performers are

10%

2.7X
We found evidence that innovation 6%
becomes progressively more 2%

difficult as ideas move into OPTIMIZATION/MANAGEMENT

more effective at idea
development and then into 10% generation than low
commercialization. 6% performers.
4%

Overall, respondents lacked confidence in PRODUCT RETIREMENT

their ability to innovate when asked, “How 7% HIGH PERFORMERS
effective is your company at each of the 4% MODERATE PERFORMERS
1% LOW PERFORMERS
following phases of innovation?”

CB INSIGHTS STATE OF INNOVATION REPORT    24

 How do you prefer to
make innovation happen?

Companies take an 51% BUILD

insular view on how they

will attack innovation.
Overall, respondents said 31% PARTNER
their companies are 2.8x more
likely to build than to buy
when asked, “Please rank your
company’s orientation toward 18% BUY

creating innovation.”

CB INSIGHTS STATE OF INNOVATION REPORT    25

 Average time from

Because they prefer ideation to launch

to build, corporate Longest 24 + MONTHS

25%

innovation is slow. 13 TO 24 MONTHS

35%
7 TO 12 MONTHS
60% of companies say it takes a year or
31%
longer to create new products, with almost
6 MONTHS OR LESS
one-fourth saying it takes over two years
Shortest 9%
from ideation to launch.

CB INSIGHTS STATE OF INNOVATION REPORT    26

F I R S T, T H A N K Y O U

To everyone who participated,

thank you for your candor and
willingness to share the state of
innovation at your organization.

CB INSIGHTS STATE OF INNOVATION REPORT    27

 W H AT’S N E X T?

If innovation-driven growth is an imperative for your organization,

CB Insights has communities, case studies, and content to help you
make growth and innovation happen in your organization.

We’d love to talk.

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CB INSIGHTS STATE OF INNOVATION REPORT    28

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CB INSIGHTS STATE OF INNOVATION REPORT    29

 T R U S T E D B Y T H E W O R L D ’ S L E A D I N G C O M PA N I E S

“We use CB Insights to find emerging trends and interesting

companies that might signal a shift in technology or require
us to reallocate resources.”

Beti Cung,
CORPORATE STRATEGY, MICROSOFT

CB INSIGHTS STATE OF INNOVATION REPORT    30

Survey of 677 cbinsights.com
Corporate Strategy info@cbinsights.com
Executives 212 292 3148