Benchmarking Report

INNOVATION
BENCHMARKING
REPORT
2015
INTRODUCTION
Welcome
CONTENTS
INTRODUCTION
Welcome 2 Perhaps you are part of a small innovation team inside a big company, with
About the Data 4 a limited budget. While you report to senior leadership, the ideas you culti-
vate often run into the brick wall of business unit opposition. You’re trying
to apply resources to both incremental and transformational ideas. Yet it’s
hard to escape every company’s favorite short-term measuring stick: how
PROGRAM STRUCTURE
much revenue have you generated for us lately? How can your latest idea
Program Structure 6 become a billion-dollar business, rather than a million-dollar “successful”
pilot test?
Program Focus 8
Reporting Structure 10 If any of that resonates with you, you’re not alone. That scenario was
painted by many of the senior innovation executives we surveyed and in-
Team Size 12 terviewed for this report.
Innovation Budgets 14
We began working on this first-of-its-kind study in 2014, at the specific
Innovation Tools 16 request of corporate innovation executives — namely, Innovation Leader
Maturity 18 members and Innosight clients — who wanted hard data with which they
could validate, shape, and improve their own programs.
Innovation Leader convened an informal advisory group of corporate in-

INNOVATION PROJECTS novation officers in 2014 to assist in the creation of this report. The advisory
Project Volume 20 group identified 25 questions that would help paint a picture of the current
state of corporate innovation programs. Those questions were grouped into
Time in Each Stage 22 three broad categories:
Advancing Projects 23
1. PROGRAM STRUCTURE, which explored the infrastructure and orga-
Budgets & Staffing per Project 24 nizational composition of corporate innovation groups, including bud-
Staff Training 26 gets and reporting structure;
Volume of Ideas 28 2. INNOVATION PROJECTS, which explored ideas, initiatives, and how
they progress through the organization; and
Source of Ideas 30
3. MEASUREMENT & ANALYSIS, which explored how companies track
and monitor innovation.
MEASUREMENT & ANALYSIS Even at large, established companies, we encountered many young in-
Metrics Used 31 novation programs, where executives are still experimenting with mission,
metrics, and long-term impact.
Cost, Time to Kill Projects 34
Based on nearly 200 responses, we identified five common and persistent
Why are Projects Killed? 36
challenges facing innovation executives and their programs:
Who is Killing Projects? 37
1. The mission thing
It’s hard to be a training organization and an idea-development “skunk-

CONCLUSION
works”; to be a consultancy to innovators throughout the organization and
Conclusion 38 a rapid-prototyping group; to do both incremental and transformational
innovation simultaneously. This “all-you-can-eat buffet” approach to inno-
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2 © Innovation Leader 2015. All rights reserved.

PROGRAM INNOVATION MEASUREMENT
STRUCTURE PROJECTS & ANALYSIS
INTRODUCTION
vation, trying to do a bit of everything, is not a long-term approach. Innovation teams will need to
clearly define their mission if they hope to endure and deliver value.
2. The idea avalanche
Many innovation programs are clearly fielding and managing too many ideas from inside and outside
the organization. Too many resources are spent sorting and sifting ideas, and keeping contributors
engaged — and not enough resources are dedicated to developing a few high-potential ones.
3. Speed + buy-in
Finding ways to engage business unit executives and others throughout the organization — without
getting bogged down by process and approvals – is an ongoing campaign that can sap energy and
morale.
4. Fly or die
Companies need to get better at accelerating or killing projects quickly, cheaply, and for the right
reasons. Incorporating customer input, outside perspectives, and market data to the decision-making
process is critical.
5. Metrics
Companies need to identify metrics that are aligned with what senior management truly cares about.
That means avoiding a measurement regime that squashes truly disruptive ideas, or becomes oner-
ous to maintain.
There are no pre-fabricated strategic playbooks that will work magically for every company and
culture. But we hope this Benchmarking Report will provide data, examples, and case studies to help
you build and validate your innovation program.
We’d love to hear how your organization is tackling these challenges. We’ll be hosting webcasts,
discussions, and other opportunities to engage on these issues, and we hope you’ll join us in the com-
ing weeks. (If you’re not already on our e-mail list, you can sign up at innovationleader.com.)
We’re grateful to the many executives who helped us formulate and craft this report, from devel-
oping the survey, to answering it, to participating in follow-up interviews.
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© Innovation Leader 2015. All rights reserved.

3
INTRODUCTION
About the Data

We collected survey responses for this report during Q4 of 2014.
Our survey generated more than 200 responses. To ensure the integrity of the data, all responses
were individually reviewed. We eliminated significantly incomplete responses. Data submitted by ac-
ademics, vendors, consultants, or other non-corpo-
Respondents by Industry rate innovation executives – including companies
that market products or services to innovation exec-
2%18.8% Consumer Products utives – were similarly excluded from the result set.
15.3% Technology That process yielded 197 qualified responses

12.5% Healthcare from corporate executives.
8.3% Insurance Industries

6.9% Financial Services
Responses came from a diverse group of 20 indus-
6.9% Industrial Manufacturing tries, from Insurance and Energy to Chemicals and
Industrial Manufacturing. The largest group of re-
spondents came from the Consumer Products industry (18.8%), with Technology and Healthcare mak-
ing up the next largest groups (15.3% and 12.5%, respectively).
Company Size
Reflecting the large-company makeup of both Innovation Leader’s membership and Innosight’s client
base, a plurality of respondents (43.8%) were from the largest of companies, or those with more than
$10 billion in revenue. Slightly more than one-third of respondents (34.6%) were from companies with
revenue between $1 billion and $9.9 billion. The smallest group of respondents (21.6%) was from com-
Respondents by Company’s Total Revenue
SMALL COMPANIES
21.6%
LARGE COMPANIES
14.4% 9.8%
43.8%
7.2% 9.2%
24.8% More than $50 billion

20.9% $25 billion to $49.9 billion
$10 billion to $24.9 billion
13.7% $5 billion to $9.9 billion
$1 billion to $4.9 billion
MID-SIZED COMPANIES
$500 million to $999 million
34.6% Less than $499 million
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INTRODUCTION
panies with less than $999 million in revenue.
For the sake of simplicity, we have grouped responses into those three sizes of companies, which
will be referred to throughout this report:
1. Large Companies, with revenue greater than $10 billion
2. Mid-Sized Companies, with revenue between $1 billion and $9.9 billion
3. Small Companies, with revenue less than $999 million
When we asked about employee numbers, the results were similar: 43.2 percent of respondents
were from the largest of companies, or those with more than 25,000 employees. Forty-five point eight
percent of respondents worked at companies with 1,000 to 24,999 employees. And 11 percent of re-
spondents worked at companies with fewer than 999 employees.
Respondents by Company’s Total Employees
SMALL COMPANIES
11%
11.0% LARGE COMPANIES

12.9% 43.2%
14.2%
27.1% More than 100,000

50,000 to 99,999
16.1% 25,000 to 49,999
10,000 to 24,999
1,000 to 9,999
18.7%
MID-SIZED COMPANIES Fewer than 999
45.8%
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5
PROGRAM STRUCTURE
PROGRAM STRUCTURE
Structure
The first and most important benchmark for our study was innovation program structure, or how com-
panies have designed their innovation organization.
Half of respondents (50.6%) claimed their company has a hybrid structure, with innovation activi-
ty taking place in a central group as well as throughout the business units. Approximately one-third
(32.1%) have a purely centralized innovation team, and 17.3 percent are pursuing a distributed ap-
proach.
Marriott International is one company with a hybrid structure. According to Global Brand Officer
Brian King, Marriott’s centralized “Insight,
Strategy + Innovation” team is focused
on disruptive innovation opportunities, “Core to Marriott’s DNA is the idea that
while other deparments and business
units “share the innovation charge but
‘Success is Never Final.’ This core belief
focus on the more incremental, near- keeps us grounded in always finding ways to
term innovation necessary to keep our
brands and guest experiences fresh and
improve across our organization. So, while
relevant.” we believe innovation is everywhere and we
At Vodafone Global Enterprise, a divi- expect each department to always innovate,
sion of telecom giant Vodafone Group, a core we do have a centralized practice.”
Marriott International Global Brand Officer Brian King
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INNOVATION MEASUREMENT
INTRODUCTION
PROJECTS & ANALYSIS
PROGRAM
STRUCTURE
team of three people based in Silicon Valley and London

have assembled a network of about 40 internal “innova- Innovation Program Structure
tion champions” around the world who run workshops
with both customers and Vodafone employees. These 50.6% Hybrid approach
champions spend about 20 percent of their time working 32.1% Centralized (central office, function)
on innovation-related activities, explains Vodafone senior
innovation manager Shannon Lucas. 17.3% Distributed (within business units)
Each structure has its own drawbacks and benefits.

Too distributed, and the innovation effort can lose steam or become occupied by a bevy of modest
incremental improvements. It can be hard to coordinate activity, or gather data about what is happen-
ing. Too centralized, and there’s the risk of being seen as a “think tank” or “skunkworks” disconnected
from the realities of the day-to-day business.
KEY TAKEAWAY
Centralized teams are more likely to have the proper staff and perspective to explore
longer-term, disruptive innovation. Distributed networks of innovators are good at deliver-
ing process improvements, cost-cutting approaches, and line extensions, as well as doing
ideation and sparking collaborations with existing customers. An ideal scenario has the
two groups working together to come up with quick wins and also cultivate “big picture”
initiatives that require more time.
“We identify new champions through different

means; some are nominated by their business units,
some raise their hands, and some are just naturally
passionate about innovation and are an obvious fit
for the team. Increasingly, we conduct internal in-
novation boot camps throughout Vodafone Global
Enterprise to find appropriate people who have the
skills to be innovation champions.”
Vodafone Global Enterprise Senior Enterprise Innovation
Manager Shannon Lucas
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7
PROGRAM STRUCTURE
Program Focus
We asked respondents whether their innovation program was focused on transformational innova-
tion, incremental innovation, or a combination of the two.
Examples of transformational innovation might include Amazon’s development of a web services

or “cloud” business (which now generates about $5 billion in annual revenue), or Google’s experiments
with self-driving vehicles. Incremental or “adjacent” innovation typically describes smaller product en-
hancements or brand extensions that have a material impact on a product line. One example comes
from the $1 billion specialty cheese company Sargento Foods, whose low-calorie “Ultra Thin Slices”
cleared $50 million in sales during its launch year, and doubled in year two.
“Industry-wide, we would all be a little better off if there was more respect paid to incremental
innovation,” says Brian Romansky, Director of New
Innovation Program Focus Business Opportunities at Pitney-Bowes, a $4 billion
mailing, data, and e-commerce company. “Incremen-
53.5% Hybrid approach tal gets lost in the noise,” but it can benefit from tools,
31.9% Incremental / Adjacent process, and attention, Romansky believes.
14.7% Transformational / Breakthrough As was the case with Program Structure (Page 6), a
“Hybrid” focus is the most common. According to re-
spondents, 53.5 percent said their companies pursue
a Hybrid approach, or one that includes both transformational and incremental innovation.
Only 14.7 percent said they were pursuing transformational innovation exclusively. That does not
include companies that may have a venture-capital arm making early investments in disruptive start-
ups, or a corporate development group considering strategic acquisitions; those activities are typically
separate from the innovation team.
Among companies focusing exclusively on further-out projects is Hearst Business Media, where
Chief Innovation Officer Justin Gra-
ham says business units are focused
on incremental or “adjacent” innova-
tion. “We’ve intentionally stayed out “We’ve intentionally stayed out of the
of the business units’ roadmaps,” he business units’ roadmaps.”
says. “They work on things that are
more adjacent.” When business units Hearst Business Media Chief Innovation Officer
have worried that something Gra-
Justin Graham
ham’s team is developing could be
competitive, or cause conflicts, “My
boss says, ‘I don’t care. It could be a great business.’ I see part of my job as potentially innovating and
putting other [Hearst] companies out of business. Better that it’s us doing that than a competitor.”
When Graham’s group pursues ideas like that, often they’re set up as their own separate business units.
Another way of describing program focus is to talk about timeframes or horizons. Is the team work-
ing on projects that will be launched in a year or two, or three to five years? At Under Armour, Jason
Berns says that his four-person open innovation team tends to “think about two to four years — a little
further out if it’s a big enough concept — but we tend to steer clear of long-term R&D projects.”
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PROJECTS & ANALYSIS
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KEY TAKEAWAY
Finding the balance of transformational vs. adjacent innovation is challenging, and much
adjacent activity may be best housed within the business units. Respondents noted that
transformational innovation — particularly at public companies — is difficult to do without
a visionary founder or CEO. Few innovation groups said they had the necessary autono-
my, distance, resources, or CEO support to develop breakthrough ideas and bring them
to market. We expect that more companies will begin to develop growing “respect,” in
Romansky’s words, for incremental innovation, and acknowledge that a reliable way to
tap into disruption — and entrepreneurial energy — is through investments, partnerships,
and strategic acquisitions of startups.
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9
PROGRAM STRUCTURE
Reporting Structure
The vast majority of respondents’ innovation programs, 79.9 percent, report to a Chief Innovation Offi-
cer, VP Innovation, or “Other C-Level Executive.” In most cases, these C-level executives report directly
to the CEO.
At the $41.3 billion health-

Innovation Program Reports to:
care company Humana, for
example, the Chief Innovation 20.1% Chief Executive Officer
Officer oversees the innovation
program and reports directly 41.0% Other C-Level Executive
the CEO. “That helps build the 38.9% Chief Innovation Officer or VP Innovation
alignment with the near-term
16.7% Innovation Committee or Board
priorities for the company,” Hu-
mana’s Director of Consumer
Innovation Nate Bellinger told
Innovation Leader, “but it also positions innovation to inform the long-term priorities for the company.”
The top innovation executive at $2.4 billion Panera Bread Co., whose title is Chief Transformation
and Growth Officer, also reports directly to CEO Ron Schaich, and worked with Shaich on a redesign of
Panera’s stores called Panera 2.0.
In many other cases, the innovation team is “one link away” from the CEO. For example, Hershey
Co. innovation head Deborah Arcoleo, who heads the company’s Advanced Innovation Center of Ex-
cellence, reports to the Chief Growth and Marketing Officer, who in turn reports to the CEO. The same
is the case for U.S. Bank Chief Innovation Officer Dominic Venturo; his boss, the Vice Chairman of Pay-
ments, reports to the CEO.
Many survey respondents told us they report to business-line presidents or segment presidents,
while others report to an array of senior executives, from SVPs of Engineering to SVPs of Marketing.
Some have dotted line reporting relationships: Hyatt’s Chief Innovation Officer Jeff Semenchuk, for
example, reports to both the CEO and the Chief Marketing Officer, who acts as his “sherpa” to help
Semenchuk, a relative newcomer to Hyatt, navigate the organization.
Ownership of innovation differed significantly based on company size. For example, 54.2 percent
of small companies (with less than $499
million in revenue) had innovation pro-
Reporting to the CEO, by Company Size grams reporting directly to the CEO. For
54.2% Small Companies (less than $499 million) large companies (with more than $10
billion in revenue), the number was only
7.5% Large Companies (more than $10 billion) 7.5 percent.
While innovation groups aren’t often

under the umbrella of a particular busi-
ness unit, that relationship is extremely important. “A critical part of our job is to reach out to our
colleagues in the organization, understand their problems, and work with them to develop solutions,”
says Jake Chambers, Head of Insight & Innovation at Nationwide Building Society, a UK-based financial
services firm with 15 million customers. “If you take a fully-formed solution to somebody and just say,
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INTRODUCTION
PROJECTS & ANALYSIS
PROGRAM
STRUCTURE
‘Ta da,’ there’s a tendency to respond with ‘Not Invented Here’ syndrome. It’s hard for people to accept
a solution they haven’t been involved with.”
KEY TAKEAWAY
Innovation teams that report to the CEO or another C-level executive may feel they have
a bigger megaphone within the company, and more staying power. But relationships to
business unit chiefs are equally important when it comes to delivering results, and the CEO
can’t establish and maintain those for you.
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11
PROGRAM STRUCTURE
Team Size
The majority of our respondents (55.2%) stated that they had one to nine dedicated full-time employ-
ees on their innovation team. More than three-quarters of respondents said they have fewer than 25
FTEs on the innovation team.
“That’s right where we are,” says

Nicolas Petitjean, Head of Innova- Dedicated Full-Time Employees on Innovation Team
tion at Paris-based DBApparel, one of
the largest intimate apparel makers 3.3% More than 500
4.6% 5.2%
in the world. “We have five to seven 100 to 499
full-timers focused on innovation, 5.2% 50 to 99
maybe nine if you add consultants.” 25 to 49
10 to 24
Only 8.5 percent claimed to have 1 to 9
more than 100 FTEs on the innovation
7.8% No FTEs
team. Most of those respondents, not
surprisingly, came from the largest
of companies, and that number like- 18.8%
ly includes research-and-develop- 55.2%
ment teams. Most respondents with
these large innovation or R&D teams
worked at companies with more
than $10 billion in revenue, and 69.2
percent worked at companies with
more than 50,000 employees.
“We’re definitely in that larger cat- Indirect Resources on Innovation Team

egory,” says Thomas Merrill, Director
of Corporate Strategy for the $19.7 More than 500
100 to 499
billion Kimberly-Clark. “We have lots 8.8% 8.8%
50 to 99
of innovation teams through the
10.1% 25 to 49
corporation, each in autonomous
10 to 24
business units, working on a laundry 1 to 9
list of strategic and product innova- 23.0% No FTEs
tions.” 12.2%
However, one shouldn’t assume
that large companies all boast large
innovation teams. Of companies with 13.5%
more than $10 billion in revenue, the 23.7%
majority (61.2%) had fewer than 25
direct, dedicated full-time employ-
ees on the innovation team.
Industry did not appear to be a great predictor of innovation team size; nearly every industry gar-
nered responses from every size category.
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PROJECTS & ANALYSIS
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STRUCTURE
KEY TAKEAWAY
If you think you’re understaffed, your peers feel the same way: Corporate innovation
teams tend to be small. In fact, most have fewer than ten dedicated full-time employees.
And as readers will see in our section on Budgets, innovation executives have had to get
creative simply to build and retain those teams. From interviews, it’s clear that staffing is
an ongoing challenge, and that new FTEs are much easier to justify after the innovation
group has delivered on new products, revenue, cost-savings, or other strategic objectives.
One shouldn’t assume that large

companies all boast large innovation
teams. Of companies with more than
$10 billion in revenue, the majority
(61.2%) had fewer than 25 direct,
dedicated full-time employees on the
innovation team.
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13
PROGRAM STRUCTURE
Innovation Budgets
rs
Of great interest to our informal advisory group was budget data. However, tracking total budget num-
bers was deemed “nearly impossible to capture,” as innovation budgets are often distributed across
the organization or within business units.
Instead, the advisory group asked that we attempt to capture expenditure ranges for specific inno-
vation initiatives or programs, such as:
1. Personnel
2. Innovation Center / Lab
3. IT Infrastructure
4. Ideation
5. Events (i.e., Hackathons or Innovation Awards Ceremonies)
6. Programs
7. R&D
8. Investments / Joint Ventures
9. Vendors & Partners
The table below is a visual representation of budget ranges for each initiative. The majority of these
initiatives have budgets in the low hundreds of thousands of dollars. For example, 88.7 percent of
respondents spend less than $500,000 on their innovation events, such as hackathons and annual in-
novation awards programs.
According to respondents, only two catego-

Budgets for innovation initiaves ries had budgets with larger averages: Research
& Development, and personnel. In the R&D
category, companies with budgets between
Less than $499,999 $5 million to $9.9 million
$500,000 to $999,999 $10 million to $24.9 million $500,000 and $5 million comprised almost one-
$1 million to $4.9 million More than $25 million third of responses (29.6%).
A plurality of companies with the largest

Personnel
R&D budgets (more than $10 million) came from
Innovation Center/Lab the Consumer Products (20.7%) and Technolo-
IT Infrastructure gy (17.2%) industries; Industrial Manufacturing
made up 13.8 percent of responses.
Ideation
Events (i.e., Hackathons) Not surprisingly, larger R&D budgets were
more prevalent at larger companies; of the re-
Programs spondents who said their R&D budget was north
R&D of $10 million per year, 58.6 percent of them
worked for companies with more than $10 billion
Investments/JVs
in revenue.
Vendors/Partners
As is the case with all corporate functions, the
0% 20% 40% 60% 80% 100%
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INTRODUCTION
PROJECTS & ANALYSIS
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STRUCTURE
battle for budget is never-ending. “We have a stan-

dard budget for salaries, and budget for consultants,” Industries with R&D Budgets Above $10 million
says Adam Yaeger, innovation director at the $9 billion
insurance firm Assurant. “That has been pretty stable, 20.7% Consumer Products
because we have very good support from the CEO and 17.2% Technology
our EVP of business development.” But Assurant can
13.8% Industrial Manufacturing
be opportunistic, as well. “The way we get our stuff
funded beyond that [standard budget] is our Growth
Council, which is very senior people from each busi-
ness unit, and from corporate. Their challenge is to be driving innovation, and they have a budget
each year where they can fund our experiments. If we’re requesting $150,000 or $300,000, for example,
we’ll go to them with a full business case: Here’s what we’ve learned, here’s the pain point, here’s the
strategic fit.”
Madge Meyer, who was the first chief innovation officer at the $10 billion financial services firm
State Street Corp., agrees that creativity is critical in finding budget. For example, Meyer notes that
producing cost savings was a big focus at her more conservative company. “If you’re smart enough,
you can make a deal with the executives — if your ideas are saving them $30 million or $40 million a
year — some of that I would reinvest into the next innovation,” Meyer says.
KEY TAKEAWAY
Aside from personnel and R&D expenditures, the majority of respondents are spending
less than $500,000 on most innovation initiatives, from infrastructure and labs, to hack-
athons and ideation. And while the budgets aren’t insignificant, it’s clear that respondents
have had to show creativity and political savvy in capturing budget — no different than
any other corporate function. Figure out what services and programs are delivering an
impact, allocate budget, and shed initiatives that aren’t moving the needle.
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PROGRAM STRUCTURE
Innovation Tools
Rapid prototyping tools are the most widely-used among our respondents (71.8%). These prototyping
technologies enable companies to quickly and inexpensively build and test innovative concepts or
product ideas. Often, these tools are 3-D printing or modeling applications. But they can also be so-
called “paper prototypes” shown to customers to get their responses, or quickly mocked-up mobile
websites.
20.7% Though 53.5 percent of the companies using rapid
Tools Used as Part of Innovation Program prototyping were indeed from physical product indus-
17.2%
71.8% Rapid prototyping tries (such as Consumer Products and Industrial Man-
ufacturing), another 35.1 percent came from service
64.7% Focus groups industries such as Insurance, Banking and Financial
62.2% Idea capture Services.
51.9% Customer profiling Marriott International may be a prime example of a
46.8% Discussion platforms non-product (hospitality) firm that has adopted rapid
prototyping. The $12.8 billion lodging giant excels at
46.8% Product lifecycle, management tools quickly prototyping guest rooms at its innovation lab,
43.6% Application development known as “The Underground,” and utilizes a variety of
prototyping tools to shorten time to market and lower
40.4% Big Data tools
costs during the development process.
35.9% Crowdsourcing
Many respondents discussed utilizing those tools
33.3% Customer sentiment analysis
within the context of their approach to innovation.
32.1% Visualization For example, Justin Graham at Hearst noted that “The
Lean Startup,” a book by Eric Ries that advocates a
21.8% CRM
particular approach to rapid prototyping and market
20.5% Social voting testing new ideas, “is required reading” for all his em-
17.3% Social media dashboard ployees. “We’re all in agreement that that is how we
should function.”
14.7% E-commerce tracking
12.2% ERP Another large group of respondents stated they
used idea capture tools (62.2%), also known as
idea-management software. These tools typically ex-
tend beyond simply idea capture, and include built-in competitions and incentive programs to collect,
track, and reward the best ideas within an organization. Another 35.9 percent of respondents stated
they used crowdsourcing software, which often
extends idea-capture beyond the enterprise to in-
clude customers, partners, or outside experts and Use of Idea-Capture Tools by Industry
entrepreneurs.
11.5% Technology
Perhaps most surprising was how few respon- 8.3% Healthcare
dents claimed their companies were leveraging
“social voting.” It’s entirely possible that the catego- 7.1% Consumer Products
ry was misunderstood or assumed to be included 5.1% Financial Services
within the crowdsourcing category; however, it was
4.5% Energy, Utilities & Mining
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surprising that fewer than one-quarter of respondents were utilizing social media or other tools to
gauge employee, customer or partner support of innovative ideas.
But tools for analyzing “big data” to find business opportunities or unarticulated customer needs
are clearly on the rise. At Procter & Gamble, the company is trying to get more of a “360-degree, holis-
tic view of our data sets” so that the company “can be smarter and more connected to the consumer
base,” says Ajay Kapoor, a corporate innovator at P&G.
KEY TAKEAWAY
Veteran innovation executives are increasingly using tools that help them understand cus-
tomers and new markets, create prototypes quickly, and get them in front of customers for
feedback. But through the use of idea capture tools, or idea management, they are also
trying to ensure that they are collecting ideas from a wider swath of the company and its
ecosystem. Sometimes, however, the volume of ideas can become a burden.
Idea management tools are “great for operational

improvement, like finding a new component that will
make your next smartphone smaller, or making some
internal process more efficient. So they can be helpful
in driving continuous improvement, because you’re
getting ideas from front-line workers who know ways
that they can do their jobs better, or design something
smarter.”
Mona Vernon, VP Data Innovation Lab, Thomson Financial
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PROGRAM STRUCTURE
Maturity
Though the topic of maturity is subjective, we wanted to get respondents’ takes on how sophisticated
their innovation programs were. In doing so, we worked with our advisory group to identify five key
maturity levels. Those levels, listed from least to most mature, were:
AD HOC EMERGING DEFINED IN TEGR ATED OPTIMIZED
1. Ad Hoc – This stage is often characterized by innovation “projects” throughout the organization,
as opposed to true centralized or strategic “programs.” These projects sometimes lack executive
leadership or support, and there is often little communication throughout the organization, lead-
ing to overlapping or disconnected projects.
2. Emerging – In this stage, there might be a new individual or group responsible for innovation,
but formal systems or procedures haven’t been fully put in place throughout the organization. In
such emerging programs, cultural initiatives are just being established, like training programs or
“innovation days.” At this stage, there is often tension between the innovation group and specific
business units or product managers, where “ownership” of innovation is brought into question.
3. Defined – At this stage, the innovation program has reached a level of stability. Though it might
not have had any big wins yet, it is at least recognized and supported throughout the organiza-
tion. Basic processes are standardized and consistent, and communication throughout the orga-
nization is becoming regular.
4. Integrated – At this stage, productivity really kicks in. Not only are there strong and formal links to
business units and strategy, but each group within the enterprise is focused on its particular area
of innovation, with full executive support. That might mean, for example, that business units are
working on incremental product innovation, and a central group is focusing on transformational
innovation. Either way, productivity is apparent, and results are being tracked, shared and realized.
Optimized – In this most mature stage, the organization has truly become innovation-focused. It has
5.
established, well-oiled innovation systems and procedures, and has repeatable processes for rapid
innovation. It can pursue projects quickly and kill them
off just as fast for rational reasons. Metrics are in place,
How Mature is your Innovation Program? and efforts are delivering clear value. From the top down,
5.1% the culture pursues innovation, and does so without fear
Ad Hoc
Emerging of failure or “innovation climate change,” when priorities
Defined suddenly shift.
Integrated More than half of respondents put themselves firm-
15.2% Optimized
13.9% ly in the first two “immature” buckets. Fifteen percent
put themselves into the first Ad Hoc category, and the
largest group (38%) classified themselves as Emerging.
That’s no surprise, as many corporate innovation

programs are barely toddlers yet.
27.9%
38.0% “It’s interesting, because we have a 135-year history
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PROGRAM
STRUCTURE
of innovation, with transformational innovations dating back to World War I, but we’d still probably consider ourselves
in the early stages of program maturity,” says Thomas Merrill from Kimberly-Clark. His view was echoed consistently by
other respondents.
Not many innovation groups have a 15-year track record, like Fidelity Investments’ Center for Applied Technology, which
has built prototype investing tools for virtual reality goggles and smart watches, and — with a group of other financial services
and technology companies — helped to create a new accelerator program for
financial services startups called the FinTech Sandbox.
Consider Themselves Less Mature:
A little more than one-quarter of the respondents (27.9%) put their innova-
tion programs into the Defined category. Five percent were ready to declare
(“Ad Hoc” or “Emerging”)
victory, dubbing their programs Optimized.
Banking & Capital Markets
When looking at maturity levels, there were a few interesting data 100%
points worth mentioning; however, it’s important to note that these don’t Healthcare
necessarily represent significant trends, only statistics worthy of mention: 76.4%
1. Mature and Immature Industries – Companies in the Entertain- Entertainment & Media
ment & Media sector almost universally considered their innovation 71.4%
programs immature. Nearly three-fourths (71.4%) described their pro-
grams as Ad Hoc, and only one was as advanced as the Defined level. Insurance
Conversely, companies in the Consumer Products sector appeared 58.3%
more mature than most. They comprised 40% of the most mature
companies (Optimized), and 36.4 percent of the second most-mature Consider Themselves More Mature:
group (Integrated). Industrial Manufacturing and Technology compa- (“Integrated” or “Optimized”)
nies were also well represented in these more mature categories.
Consumer Products
2. Smaller Cos. Less Mature – As expected, companies with fewer em-
ployees were over-weighted in our least mature ‘Ad Hoc’ category. In 37.0%
total, 40 percent of the respondents who described their innovation Industrial Manufacturing
programs as Ad Hoc were from companies with fewer than 10,000 30.0%
employees. That story was similar when looking at company revenue,
where 72 percent of Ad Hoc respondents were from small or mid-size
companies; specifically, 40 percent of the respondents who described their innovation programs as Ad Hoc were
from small companies (less than $999 million in revenue), and 32 percent were mid-sized companies ($1 billion to
$9.9 billion in revenue).
3. Larger Cos. Not More Mature – Interestingly, while smaller companies may trend less mature, larger companies
don’t appear to be more mature. More than half of respondents at large companies (with more than $10 billion in
revenue) claimed their innovation programs were either Ad Hoc (10.4%) or Emerging (41.8%). The number of large
company respondents who said their innovation program was Defined (26.9%) was right in line with all companies
(27.9%). Similarly, the number of respondents from large companies who said their innovation program was in the
two most mature categories (20.9%) was about the same as all other companies (19%).
KEY TAKEAWAY
If you fear that your company’s innovation program is still in the fledgling stage, well, join the club. With
95 percent of respondents describing their programs as not yet Optimized, there’s plenty of room for
companies of all sizes to improve.
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INNOVATION PROJECTS
INNOVATION PROJECTS
Project Volume
In an effort to understand how many projects innovation groups were managing, we worked with
our corporate advisors to define four generic stages of innovation projects, even though we under-
stand these four stages
may not map precisely
to every organization’s RESEA RC H PROTOT YPE PILOT IN MA R K E T
way of doing things.
The stages are:
1. Research Stage – Due diligence and investigation to determine whether an idea is viable.
2. Prototype Stage – Building “fast, cheap and dirty,” or “minimally-viable” versions of a product
and collecting early input from customers.
3. Pilot Stage – Small-scale market tests with a handful of customers, to evaluate costs, feasibility,
usability and feedback.
4. In Market – A live market offering, although these may often be limited in scope and exposure to
allow for additional feedback and modifications before a full rollout.
The majority of respondents (62.2%) stated that they were managing fewer than 10 projects in the
Research stage at any given time; most of those (37.3%) typically had one to five innovation projects in
the Research stage.
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Just over one-third of respondents claimed to have more than

11 projects at this stage. Not surprisingly, almost all companies How many projects are typically in
see fewer projects moving into later stages. But the number of your key innovation stages?
respondents claiming they had more than 11 projects “In Market”
(23.3%) is a nice badge of success for those innovation programs. 0 6-10
And 95 percent of respondents said they had at least one project 1-5 11+
in market.
Research Stage
“We have a goal of getting one project launched every year,
and we feel like we really need to be able to review eight or ten Prototype Stage
product concepts each year in addition to that,” says Justin Gra- Pilot Stage
ham at Hearst Business Media, who oversees a six-person team
“In Market”
that is growing. But in 2014, he says, “we focused on [developing]
0% 20% 40% 60% 80% 100%
one product, and we didn’t really have the bandwidth to pursue
those other ideas while we were building that one idea.”
KEY TAKEAWAY
Most innovation executives know that lots of experiments — and failures — at the re-
search, prototype, and pilot stages will result in higher-impact projects reaching the mar-
ket. But “in market” offerings are what companies ultimately care about.
“We have a goal of getting one project launched

every year, and we feel like we really need to be
able to review eight or ten product concepts each
year in addition to that.”
Justin Graham, Hearst Business Media
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INNOVATION PROJECTS
RE S E A RCH PROTOT YPE P ILOT IN MA R K E T
Time in Each Stage

How long do innovation projects spend in each of the four stages? According to our respondents: not
long.
The majority of respondents (66.1%) said that their innovation projects are in the Research stage for
less than six months; more than half of those respondents (34.4% total) said their innovation projects
are in the Research stage for only three months.
Only 17.5% of respondents see projects lingering in the Research stage for more than 12 months,
and the majority of those (57.6%) were larger companies with more than $5 billion in revenue. That
may be proof that bigger equals slower — or an indicator that larger companies are undertaking more
ambitious projects, seeking bigger returns.
Projects spend longer periods of time in the later stages, likely as partners inside and outside the
company get engaged. A plurality of respondents (38.7%) said their projects were in Prototype stage
for three to six months, and in the later Pilot stage for six to 12 months (33.3%). “These longer incuba-
tion periods are absolutely in line with expectations,” said Innosight’s Managing Director Scott Antho-
ny. “Companies want to take greater diligence as the innovation projects progress, since they should
be tested, refined and improved during the process.”
The time each project spends in each stage “really depends on whether the project is a disruptive
innovation or a less complicated innovation,” noted one respondent from a large industrial manu-
facturing company. “Research has a huge spread,” noted
another respondent. “It can be very short or very long.”
What is the average time (in months) that
Nicolas Petitjean at DBApparel agrees. “We have one
projects typically spend in each stage? disruptive innovation we’ve been analyzing for three
years — we may not have the technical solution to pursue
Less than 1 month 6-12 months
it yet, but we’re not going to kill it either.”
1-3 months More than 12
3-6 months months
Referring to a recent collaboration with Facebook and
“beacon” technology that can send messages to individ-
Research Stage uals based on their location, Sree Srinivasan, Chief Digital
Officer at the Metropolitan Museum of Art says, that it was
Prototype Stage “three weeks from the time I heard about it until it was
Pilot Stage in the main hall of the Met. That is shockingly fast for a
business, let alone a 145-year old organization like ours.
“In Market” It involved legal and visitor services and IT. But I try to run
0% 20% 40% 60% 80% 100%
my team as a startup inside a big organization.”
“Everyone in corporate innovation wants to be faster,”

says Ajay Kapoor, a corporate innovator at Procter & Gamble who focuses on digital, big data, and ex-
ternal innovation. But at most large companies, “there are structural aspects that may not allow that
to happen.” One area where big companies can work more quickly is in collaborating with startups,
Kapoor says. And he adds that P&G has been exploring ways to reinvent procurement processes and
other systems that innovation teams rely on, and has “torn them up and rebuilt them for our innova-
tion groups.”
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Advancing Projects
One way for companies to benchmark their innovation performance is to compare how successful they are in killing
or advancing projects. So, what percentage of projects typically survive from one stage to the next?
Nearly three-quarters of respondents (72.9%) say

that fewer than half of their innovation projects make What percentage of projets typically advance
it from Research to Prototype. And for a plurality of through each stage?
them (42.0%), fewer than a quarter of projects advance.
“That’s no surprise,” says Scott Anthony, Managing
Partner at Innosight. “You want projects moving quick- 0% 50%-75%
1%-25% More than
ly or dying quickly.”
26%-50% 75%
The number of projects that make it to the next
stage – from Prototype to Pilot – is about the same; From Research to Prototype
again, nearly three-quarters of respondents (71.7%)
say that fewer than half of their innovation projects From Prototype to Pilot
advance. About one-third of respondents (31.7%)
From Pilot to “In Market”
have an even stricter screen, telling us that fewer
than a quarter of projects advance. That may imply 0% 20% 40% 60% 80% 100%
that quality control in the process works: fewer proj-
ects are killed getting to pilot, because they were
already eliminated in earlier stages.
At the same time, getting to Pilot doesn’t guarantee getting to Market; most respondents (45.2%) said that fewer than
one-quarter of their innovation projects make it from Pilot to “In Market.”
For the few companies that claimed to be better at greasing the skids for innovation projects, it did appear that
smaller companies had a slight advantage. Only 40.6 percent of the respondents who said they advanced more than
half of their projects through each stage were from companies with more than $10 billion in revenue. Similarly, for large
companies with more than 10,000 employees, the number dropped to 32.8 percent. What is unclear about the data is
motivation; for example, are large companies more bureaucratic, or pickier about the projects they pursue … or both?
Budgets seemed to have a material impact on getting projects from stage to stage, particularly at the later end
of the process. Of the respondents who said more than half of their projects advanced from Research to Prototype
stage, 36 percent had R&D budgets exceeding $1 million, and 30 percent had personnel budgets exceeding $1 mil-
lion. But when we then looked at the respondents who said more than half of their projects advanced to the next
stage (Pilot), those numbers jump to 44 percent with R&D budgets above $1 million, and 40 percent with personnel
budgets above $1 million. But the largest impact is at the last stage. Of the respondents who said more than half of
their innovation projects advance to Market, the vast majority (70%) claimed to have R&D budgets that exceeded $1
million, and 56 percent had personnel budgets above $1 million.
KEY TAKEAWAY
To nudge products from the research and testing phase into the market, you need to make an invest-
ment. “To some extent, you get what you pay for, and we’re seeing that here; it’s not about company
size, but about commitment to innovation,” said Innosight’s Scott Anthony.
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INNOVATION PROJECTS
RE S E A RCH PROTOT YPE P ILOT IN MA R K E T
Budgets & Staffing per Project

So how much do companies spend per project? And how does that manifest itself at each stage?
We provided a set of budget ranges for each of our stages:
1. Under $499,000
2. $500,000 to $999,999
3. $1 million to $4.9 million
4. $5 million to $9.9 million
5. More than $10 million
The vast majority of spending at the early stages is at the lower end of the spectrum; 87.5 percent of
respondents said they allocated less than $499,000 to projects in the first innovation stage, Research.
As the project demonstrates promise at each successive stage, and risk is removed, companies dial up
their investment.
For example, let’s look at the third range, above ($1 million to $4.9 million). Only 2.2 percent of re-
spondents allocate that range of dollars to projects in the Research stage. But once projects advance to
the Prototype stage, the percentage of respondents whose companies allocate that same amount of
money per project more than triples to 7.1 percent. Similarly, once projects advance to the Pilot stage,
the percentage of respondents whose companies allocate that range of money more than doubles to
18.6 percent. And in the final “In Market” stage, 29.5 percent of respondents say their companies allo-
cate that amount of money.
Similar findings can be seen in all other ranges, with

What is the average spend-per-project at the most dramatic jumps in the fourth range ($5 mil-
each stage? lion to $9.9 million). In general, very few respondents
allocated that amount of budget during the Research
Under $499,000 $5M to $9.9M or Prototype stages (0.5% and 1.1%, respectively). But
$500K to $999K More than $10M once projects hit the Market stage, respondents who
$1M to $4.9M
allocated that much jumped to 10.4 percent.
Research Stage We saw the same dynamics with staffing levels.
Prototyope Stage We asked respondents to estimate FTE-equivalents

involved in each innovation project, at each stage of
Pilot Stage the innovation process. As expected, more bodies are
allocated as innovation projects advance through each
“In Market” Stage stage.
0% 20% 40% 60% 80% 100%
For example, most respondents (89.7%) claimed
they had fewer than four FTEs involved in each project
at the Research stage; very few (2.2%) said they had more than 10 FTEs involved with each project at
this stage.
But as the projects progressed to Prototype and then the Pilot stage, the number of respondents
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INNOVATION
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claiming they still had fewer than four FTEs in-

volved in each project dropped to 32.0 percent, What is the average number of FTE-equivalents
while those claiming they now had more than 10 involved in projects at each stage?
FTEs involved per project skyrocketed to nearly
half of respondents (43.9%).
0 10 to 19 FTEs
“If you think of the individuals you need involved 1 to 4 FTEs More than 20
in these projects as they progress – product man- 5 to 9 FTEs FTEs
agers, design, marketing, financial analysts, sales,
packaging, customer service – it simply requires a
Research Stage
more diverse cross-functional team once you’re in
the Pilot stage,” noted Scott Anthony of Innosight. Prototyope Stage
Pilot Stage
KEY TAKEAWAY
“In Market” Stage
0% 20% 40% 60% 80% 100%
Lean teams may perform well in a project’s
earliest stages, but when projects reach the
market, they require more muscle. At the
same time, companies need to be careful about prematurely layering on bureaucracy
before they’ve figured out the business model. “The increased FTEs and budgets at later
stages may also be a potential warning sign that companies are overstaffing innovation
projects as they near the finish line,” warns Innosight’s Scott Anthony.
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INNOVATION PROJECTS
Staff Training
Building and maintaining a culture of innovation is a major challenge, and for many companies it’s a
core focus. “We’re totally focused on the culture side of innovation,” BNP Paribas Cardif’s Head of Inno-
vation Heloise Lauret recently told Innovation Leader. Much of her work involves running hackathons,
connecting BNP employees with startups and entrepreneurs, and organizing an annual awards cere-
mony.
We asked respondents what percentage of their staff is trained in innovation techniques; not sur-
prisingly, the answer was “not many.” The majority of respondents (60%) said that only between 1
percent and 10 percent of employees were trained on innovation techniques. More than 10 percent
said they had done no training at all.
Of course, “innovation training” is an ambiguous and non-standardized term. While many compa-
nies conduct training on innovation tactics and tools – from lean startup to design thinking to brain-
storming — the nomenclature for “innovation training” is still relatively nascent.
It does appear that more innovation training is happening inside larger companies. Of the respon-
dents who said that more than one-quarter of employees had been trained on innovation techniques,
the vast majority (80%) work at companies with more than 10,000 employees. “Larger, more estab-
lished companies typically have the HR infrastructure to conduct this type of training, and often have a
culture of learning that is easily portable to innovation,” said Scott Anthony of Innosight.
Such is the case at Intuit. “Over 1,500

Percent of Staff Training on Innovation Techniques employees have taken part in our var-
ious experimentation training work-
11.2% No one trained shops, generating tens of millions in
37.7% 1 to 5 percent trained new revenue and business impact,” says
Intuit Innovation Leader Bennett Blank.
22.4% 6 to 10 percent trained
“These teams are also learning how
12.9% 11 to 24 percent trained to work better on their daily projects,
2.4% 25 to 49 percent trained which further amplifies the impact.“
8.8% More than 50% trained “The most important thing about
4.7% Not sure spreading innovation training is to rec-
ognize that adults learn best through
application,” says Innosight’s Scott An-
thony. ”Pick some problems that matter to the organization and give people a real-time chance to
practice new approaches while solving those problems. These don’t have to be creating the next big
thing, they can be more everyday things like booking conference rooms or increasing employee en-
gagement.”
Respondents from the Consumer Products industry comprised the lion’s share of companies that
have trained more than one-quarter of their staff on innovation techniques (31.3%). Other well-repre-
sented industries included Industrial Manufacturing (25%) and Technology (18.8%). “Again, these in-
dustries have experience with Six Sigma and other quality training programs, so it’s no surprise they’re
ahead of the curve on innovation training,” added Anthony.
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Appropriately, respondents who said their companies trained more than one-quarter of employees
on innovation techniques also seemed to come from companies that said their innovation programs
were at a more mature stage. As noted in the Program Structure section of this report, only 46.8 percent
of respondents classified their innovation pro-
grams in the later maturity stages (Defined,
Integrated, or Optimized). But of the respon- Industries That Have Trained More Than One-
dents who trained more than a quarter of em- Quarter of Employees on Innovation Techniques
ployees, 68.8 percent were from companies in
these more mature stages. That suggests that 31.3% Consumer Product companies
training is one element of an innovation pro-
gram that is being built for the long haul.
18.0% Technology
At Ingersoll Rand, VP Innovation Michael
Wynblatt uses simulation-based training to
help people get better at innovation. Wyn-
blatt compares innovation training to practicing for an instrument or a sport, as musicians and athletes
spend much more time practicing than performing. Not so within corporations. “In business, we spend
99.9 percent of our time performing, and hardly any time at all practicing,” he says. According to Wyn-
blatt, Ingersoll Rand designs scenarios for developing particular projects, or managing an innovation
portfolio to “try to get the most good ideas into the marketplace.” Teams compete to see who can do
best.
Rank-and-file employees can be so busy with their existing responsibilities that getting them to
simply “be more innovative” and look for opportunities to generate more revenue, streamline process-
es, or reduce waste can feel close to impossible. “Our CEO talks about being an innovative company,”
says David Shaw, Innovation Lead at chipmaker Intel, “but people are so focused on deliverables. We’re
trying to figure out things people can integrate into their daily work.” For an engineer “tasked with
producing a certain number of widgets per day or per hour, how does innovation translate to what
they do on a daily basis?”
KEY TAKEAWAY
Running broad-based innovation training programs requires significant time and resourc-
es. Some companies opt for more targeted training programs, teaching “lean startup” or
“design thinking” methodologies to employees who’ve already raised their hands to par-
ticipate in innovation initiatives, or who’ve begun addressing a new market opportunity. 2015
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INNOVATION PROJECTS
Volume of Ideas
Newly-minted innovation leaders tend to get excited about how many ideas are in their innovation
pipeline, with some proudly telling us that theirs is bursting with more than 20,000 ideas. But the lon-
ger they are in the job, the more they see the wisdom of focused and controlled input from colleagues
and business partners.
We asked respondents how many ideas are submitted by employees annually. A majority of re-
spondents (76.6%) stated that fewer than 1,000 ideas
were submitted by employees every year. A plurality
Number of Ideas Generated Annually of those (43.3% total) saw fewer than 100 ideas sub-
mitted annually.
2.3% None
Only 2.4 percent of respondents said they see
43.3% Under 99 more than 10,000 ideas per year. That suggests that
33.3% 100 to 999 many companies are moving beyond the “wide open
suggestion box” approach to idea collection.
8.2% 1,000 to 9,999
Not surprisingly, the companies that collect more
2.3% More than 10,000 ideas from employees tend to be larger companies.
For example, of the respondents who said that their
10.5% Not sure companies get more than 1,000 ideas submitted
each year, the vast majority (82.4%) were from large
companies with more than $10 billion in revenue. In-
terestingly, most of those companies (37.5%) were Technology companies.
In interviews, we found several companies that once sought broad-scale employee input have
changed tack.
“We used to have idea funnels so that employees could submit ideas, but it was actually fraught with
peril,” acknowledged Thomas Merrill of Kimberly-Clark, the consumer products and paper company
known for brands like Kleenex and Scott. “It was great from an engagement perspective, but most
of the ideas weren’t strategically im-
portant from a business perspec-
tive. In addition, it’s very frustrat-
ing for an employee to not hear “Ideas are cheap — anybody can have
back regarding their idea, or to
get rejected; the program turned
one. What I’m more interested in is concepts
out to be both non-strategic and that can be executed on.”
quite frankly a downer.”
Jason Berns, Under Armour
“What I’m doing is to make
sure that we start with a custom-
er problem or pain point,” says
Wim Vandenhouweele, Executive Director of Emerging Markets and Commercial Innovation at Merck.
“If a doctor is doing something you want to change, go spend the day with that doctor, and see what
their issues are.”
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Nicolas Petitjean at DBApparel says his company has ‘innovation drivers’ that form a long-term stra-
tegic roadmap for ideation and R&D. “We have 14 drivers, and work carefully to ensure our ideas fall
within those drivers and are tied to our vision and strategy.”
At MasterCard, idea competitions have a subtle objective: to make the organization more accepting
of new ideas and change, says John Sheldon, Senior Vice President and Group Head of Innovation
Management. A competition last November to develop new services using existing data produced
430 ideas, Sheldon says. “In this case, one idea was substantive enough that we’re looking to change
that person’s job to take on this full-time. Some of the business units jumped on board with auxiliary
prizes for the best ideas within their business units.” But Sheldon says that “a big part of engaging the
company with innovation tournaments is to culturally prepare the company, so when we go to reinsert
these innovations into the core business, they’re ready for it.”
Jason Berns of Under Armour puts it well: “Ideas are cheap — anybody can have one. What I’m more
interested in is concepts that can be executed on.” With open calls for ideas, “We found that the quality
level for the ideas coming in was fairly average.”
KEY TAKEAWAY
Collecting thousands of ideas creates a huge risk that an innovation team becomes per-
ceived as unresponsive, and can lead to employee disengagement. A growing number of
companies are creating two paths for ideas. In one, simple, easy-to-implement ideas on
process improvements or serving customers better get funneled to business unit leaders.
In the other, innovation teams invite employees to focus on particular problems or areas
of opportunity, looking for ideas that may require research, time, and resources — but
deliver significant impact.
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INNOVATION PROJECTS
Source of Ideas
According to respondents, business units or specific lines of business supply the lion’s share of ideas.
The innovation team and general employees also contributed heavily.
Executive management didn’t. Most respondents (48.4%) said that executive management made up
fewer than nine percent of new ideas; 12.9 percent said executive management contributed none. That’s
probably a good thing, since those ideas are usually political hot potatoes — moved ahead without
sufficient data, for instance, and very hard to kill. Noted Scott Anthony of Innosight, “Many companies
intentionally seek a separation of influence, and you
may be seeing that represented here in the data.”
How many of the company’s innovation ideas Customers and partners also don’t seem to be
are generated by each group, below? chiming in much: Over half of respondents (59.2%)
said fewer than nine percent of their ideas came from
None 20% to 49% customers, and even more than that (69.3%) said the
1% to 9% 50% to 74% same was true of partners.
10% to 19% 75% to 100%
The “Partners” category includes startups, a source of
great interest for large companies. But many are still in
Employees the exploratory phase, trying to figure out the right ways
Innovation Team to interact. Says Kapoor at P&G, “How do we think about
accelerators, incubators, and other startup activity that
Innovation Center / Lab
represents external innovation? Where does the value lie
Business Lines in those types of activities, and how do you engage with
Executive Management them sustainably and scalably?”
Customers But open innovation is making some inroads: The data
Partners show that 15.1% of respondents say that about a quarter of
their ideas come from customers [between 20% and 49%].
0% 20% 40% 60% 80% 100%
General Mills, for example, has a widely champi-
oned Open Innovation initiative called G-WIN, which
stands for the General Mills Worldwide Innovation Network. “We believe there are innovation partners
outside our walls who have the expertise and capabilities to help us more effectively meet the needs of
our consumers,” General Mills’ Mike Helser told Innovation Leader. “Simply put, open innovation helps
us deliver bigger innovations to the marketplace more quickly.”
Of those respondents who said more than 20 percent of their ideas came from customers, a plurality
(45.5%) came from two industries: Healthcare and Technology.
KEY TAKEAWAY
While many companies have developed techniques for capturing ideas within their walls,
sourcing ideas from business partners, customers, and the startup ecosystem is an import-
ant competency most are still developing.
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INTRODUCTION
STRUCTURE PROJECTS
MEASUREMENT
& ANALYSIS
MEASUREMENT
& ANALYSIS
Metrics Used
Among the most common question asked at forums hosted by Innovation Leader and Innosight is this:
“How should we measure success?”
Not surprisingly, the majority of respondents to our survey (68.5%) use revenue as a measure of
success; many others noted other financial measurements, such as impact on the P&L (56.2%), internal
rate-of-return (33.2%), or another scoring system such as Earned-Value Analysis or “EVA” (21.9%).
Within that broad “revenue” category, there was disparate thinking. Some respondents tracked
new revenue attributed to distinct new products sourced from the innovation group. Others said they
more broadly tracked “the impact to the overall business, rather than individual projects.” Another
noted that his company’s metrics for success include “year over year growth from new and existing
solutions and sales pipeline activity.” Another cited an internal innovation scorecard, which tracked
– among other things – a “Return on Product Development Expense,” or the revenue generated by
investments in new product development.
At Pitney-Bowes, Romansky says that the metric “that really matters is the percentage of revenue
from products that have been in market for less than three years, or whatever you think is ‘new’ in your
industry.” But revenue, Romansky notes, “is a lagging indicator” that only enables you to adjust strat-
egy slowly. “Number of projects in different stages of the pipeline is a little more real-time,” he says.
At the non-profit Metropolitan Museum, Srinivasan says that when his group invests in a project,
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MEASUREMENT & ANALYSIS
they develop metrics such as “are we going to see a more engaged audience, more people becoming
members, people returning more frequently to the museum.”
“No two companies are going to do this exactly the same way,” noted Scott Anthony of Innosight.
“The key is understanding what your particular strategy requires, and what your particular culture and
personnel can achieve.”
Project volume and the progression of those projects seemed to also be a common metric used to
track innovation program success. For example, 67.4 percent of respondents claimed they tracked proj-
ects in the pipeline, and 58.4 percent said they tracked how those projects progressed through stages
or gates. One noted that his company gauges success on the “transition to Market Phase and success of
[the] hand off,” while another tracked the “number of ideas/prototypes assessed”; still another tracked
the “number of ideas killed.”
More than one-third of respondents said that patent applications were an important metric (37.6%),
while a smaller cluster said they’re tallying media mentions of their work (17.4%). Many others noted
that they track soft data related to their innovation programs, such as “lessons learned” and “customer
satisfaction impact.”
At large companies, “day to day operations are based on objective metrics,” says Shaw at Intel. “In
innovation, there are things you
can’t prove right now, but you
Metrics Used know are worth investing in. How
do you sell that to a business lead-
Revenue generated from innovation products 68.5%
er who wants to talk about ROI and
hard revenue?”
Projects in pipeline 67.4%
Romansky says he sees very few
Stage-gate specific 58.4% companies establishing a target of
“what it looks like to be a serious
P&L impact, or other financial impact 56.2% player” in some emerging market
that is deemed important, perhaps
Number of ideas generated 45.5% using analyst data. “You could say,
‘Let’s try multiple things to move
Patent applications, or patents received 37.6% the needle in that market, and if we
start to make progress, then let’s
Internal Rate of Return, or similar metric 33.2% build on that.’”
Earned-Value Analysis (EVA), or other scoring 21.9% “It’s very easy to put too much
process and rigor around [innova-
Media references or press mentions 17.4% tion], to the point where you stifle
the creativity,” says Jake Chambers
at Nationwide Building Society.
Total exceeds 100% as many respondents cited more than one metric. “We feel passionate about not let-
ting that happen.”
At Merck, Vandenhouweele describes measurement as “a continual struggle. But management isn’t

pushing me too hard at this moment — they want us to keep experimenting.” Mona Vernon, Vice
President of the Data Innovation Lab at Thomson Reuters, adds that “you need clarity-of-mind with
2015
JUNE
MAY

PROGRAM INNOVATION
INTRODUCTION
STRUCTURE PROJECTS
MEASUREMENT
& ANALYSIS
your management team, of what they want you to deliver. It can be hard to measure what I do, espe-
cially when it’s about relationship-building or capability-building. Not everyone is Google or Amazon,
where you can tweak a search box and instantly see the results.”
KEY TAKEAWAY Who tracks revenue impact?

Large companies 76.9%
Senior management at public companies Medium-sized companies 77.4%
clearly cares most about revenue and other Small companies 51.4%
“hard” financial measures, and that is re-
flected in the metrics that innovation teams
are using. But some worthy projects may not Who tracks P&L impact?
have obvious revenue potential at their earli- Large companies 59.6%
est stages, or even during a pilot test — and Medium-sized companies 64.2%
keeping those projects alive will be a chal-
Small companies 60.0%
lenge for many innovation teams.
Who tracks stage-gate specific metrics?

Medium-sized companies 56.6%
Who tracks projects in the pipeline?

Who tracks media references or press mentions?

Who tracks patent applications or patents received?


2015
JUNE

33
Cost, Time to Kill Projects

To many companies, “cost to kill,” or the amount of money companies spend before killing projects,
is a good measurement of their effectiveness in identifying opportunities, assessing their potential or
impracticality, and moving on.
According to respondents, a plurality (32.8%) spend less

than $24,999 on innovation projects before killing them.
Cost to Kill And most (58.2%) spend less than $100,000.
Only 18.3 percent of respondents spent more than

$100,000 on innovation projects before killing them, and
23.7% most of those were under the $250,000 threshold.
32.8% Not surprisingly though, a large percentage of respon-

dents (23.7%) claimed that they didn’t know the answer to
the question. “Cost to kill is not widely collected, tracked,
1.7%
or even recognized as a metric for measuring success,”
2.8% noted Scott Anthony of Innosight. “This is a tough number
13.6% to understand, though we suspect companies will pay in-
creased attention to it over time.”
15.3%
10.2% Most innovation team projects have very short lifes-
pans. The majority of respondents (65.5%) kill innovation
projects within six months, with nearly half (49.2%) killing
Less than $24,999 projects in less than three months.
$25,000 to $49,999
$50,000 to $99,000 Fewer than one-quarter of respondents (24.3%) stated
$100,000 to $249,000 that projects take more than seven months to kill. But that
$250,000 to $499,000 shouldn’t be construed as a failure. “The reality is that some
More than $500,000 innovation projects simply take longer to assess,” added
Not sure Anthony. “Just because it takes one company longer to kill
projects doesn’t mean they’re less efficient; rather, it may
mean their R&D efforts are more intensive, their products
are more complex, or their internal processes are more rigorous.”
Or they may be higher risk. We cross-referenced “kill times” with company size, and found some-
thing interesting: It’s not the bigger companies that take longer to kill projects. Of the respondents
who said their companies take more than seven months to kill projects, the majority (58.1%) were
smaller companies with less than $4.9 billion in revenue. The numbers were even more pronounced
when we looked at the companies that took more than one year to kill projects: 75 percent of those
were smaller companies.
Under Armour has coined a We cross-referenced “kill times” with

great term: “full-speed mistakes.”
Jason Berns explains, “We want to company size, and found something
be going full-speed. We’ll take risks interesting: It’s not the bigger companies
that other companies wouldn’t
that take longer to kill projects.
2015
JUNE

PROGRAM INNOVATION
INTRODUCTION
STRUCTURE PROJECTS
MEASUREMENT
& ANALYSIS
take.” Sometimes that leads to bringing ideas to market Take more than 7 months to kill projects
more quickly, and sometimes it leads to discovering dead- Smaller companies
ends at a faster pace. 58.1%
While the data make most companies look ruthlessly effi- Larger companies
cient when it comes to killing projects, and not spending too 41.9%
lavishly while they’re alive, anecdotally most innovation ex-
ecutives can tell stories about “zombie projects” that live on Take more than 1 year to kill projects
too long and are difficult to kill, consuming resources while Smaller companies
never making any sort of positive contribution.
75.0%
Larger companies
0% 10%20%30%40%50%60%70%80%90%100%
KEY TAKEAWAY 0%25.0%
10%20%30%40%50%60%70%80%90%100%
Companies are smart to conduct lots of experiments, but keep a tight lid on the time and
resources they dedicate to projects that aren’t feasible or have very limited potential. Scott
Anthony of Innosight recommends instituting “zombie amnesty,” whereby innovation lead-
0% 10%20%30%40%50%60%70%80%90%
ers can admit that their idea isn’t working and doesn’t justify 100%
further funding. Make it clear
0% 10%20%30%40%50%60%70%80%90%100%
that there will be no penalty for purging a project.
2015
JUNE

35
Why are Projects Killed?

The most common reason projects die highlights one of the most important relationships for inno-
vation executives: with leaders of the business units. Just over 50 percent of respondents said that
innovation projects get axed because of “no business unit buy-in.” Other common reasons seem less
avoidable, including “technically unfeasible” (49.7%) and “limited upside” (46.3%).
“Innovation leaders that don’t

Why Projects Get Killed work well with the business units,
aren’t tied to their strategies, and
No business-unit buy-in 50.9% aren’t woven into the fabric of their
culture, see high abandonment
Technically unfeasible 49.7% rates for innovation projects,” not-
ed Scott Anthony of Innosight.
Limited upside 46.3%
“It’s what I call ‘organ rejection’,”
Low priority 43.4% Transamerica Chief Innovation Offi-
cer Aaron Proietti recently told Inno-
Don’t hit deliverables 42.3% vation Leader. “You try to transplant
a fully-formed idea into a business
No senior buy-in 33.7% unit that doesn’t have passion for it,
and it tends to get rejected.”
Conflict with businesses 22.3%
“Conflict with business units”
was also frequently cited by respon-
Total exceeds 100% as many respondents cited more than one reason. dents (22.3%), as was lack of exec-
utive buy-in (33.7%). Many respon-
dents also provided added commentary, nothing that “re-organizations and/or shifts in priorities” are
also common reasons why innovation projects are killed. Other reasons cited were simply business-re-
lated: customers rejected the product in tests; financial models proved the innovation unfeasible; or “it
was too far outside our core business.”
At Under Armour, Berns says that perhaps 70 percent of ideas get killed because of conflicts or no
buy-in from the business units. “You need strong relationship management people who are constantly
interacting with the business units,” he says. “All product development and innovation is personal.
Building that ownership is key.”
KEY TAKEAWAY
Relationships with the business units are paramount, and innovation leaders need to un-
derstand the subtle organizational and personality dynamics that might cause “organ
rejection.” In addition, innovation leaders can benefit from effective CEO air cover, so that
ownership conflicts or threats to existing revenue streams don’t terminate their highest-po-
tential projects.
2015
JUNE

PROGRAM INNOVATION
INTRODUCTION
STRUCTURE PROJECTS
MEASUREMENT
& ANALYSIS
Who is Killing Projects?

By far, the most frequently cited individual or groups terminating projects were “Other C-Level Executives” (45.4%) and “An
Innovation Committee” (44.2%).
This suggests that it is either a committee or

the CEO, CMO, COO, or CFO who gets to give the Who Kills Projects
thumbs-up or thumbs-down to projects devel-
Chief Innovation Officer 28.5%
oped by the innovation team. But it also hints at
the challenging politics of keeping projects alive
VP Innovation 30.8%
and moving forward.
“We have a committee called the Integrated An innovation committee 44.2%

Product Management Team,” says Brian Roman-
sky of Pitney Bowes. “If you do super-impress Sub-group of employees 37.2%
them with something, you can get something
put on the hot list, and get resources moved Survey-based decisions or input 2.9%
around.” But Romansky notes that there’s no
target about how many ideas should make it Chief Executive Officer 16.3%
through the committee, so members “don’t
get dinged for not passing things forward.” Other C-Level Executive(s) 45.4%
And since the committee consists of product
managers from around the company, ideas that Total exceeds 100% as many respondents cited more than one reason.
have “a different client base, business model, or
go-to-market strategy” face strong headwinds. “With those, you may need a CEO-level override, and there have been many
cases where we’ve gotten that,” Romansky says.
Interestingly, it’s usually the projects that encounter headwinds that provide the greatest return on investment. “If you
ask venture capitalists which investments produced the best returns, almost always they are the ones that polarized their
investment committee,” says Scott Anthony of Innosight. “The more widely you disperse the power to kill an idea, the less
likely you are to get anything truly disruptive.” The problem, notes Anthony, is that not enough companies have defined
criteria for how to handle this part of the process, so it ends up being a political battle, “with short-term concerns trumping
long-term value creation possibilities.”
Fewer than one-third of respondents said a VP of Innovation made the call on whether to continue with or kill projects
(30.8%), and even fewer cited a Chief Innovation Officer (28.5%). At 17 percent of companies, the CEO is making the call about
which projects live or die.
Very few companies said that they sought input from surveys or a broad swath of employees about a project’s future,
even though one could argue that groups of employees, customers, or partners might be better at green-lighting ideas
that ought to make it to the market.
KEY TAKEAWAY
While there may be a single C-level executive deciding whether certain projects live or die, more often there is a
group or committee involved. That situation can present real challenges to ideas that conflict with existing business-
es or distribution relationships. And it underscores the need for innovation leaders to be good at presenting their
projects; gathering compelling market data; and maintaining strong relationships throughout the organization.
2015
JUNE

37
Conclusion
Even when innovation leaders report directly to the CEO, they typically fight for their budgets, operate
with lean staff, and struggle with priorities and metrics. And while many are enjoying success, it’s clear
that key challenges include sourcing the right ideas, working well with the business units, and advanc-
ing or killing projects with relative speed. “That’s totally logical, considering most respondents felt that
their innovation programs were in the early stages of maturity or sophistication,” says Innosight’s Scott
Anthony.
It’s also not a news flash to any executive who has been in their role for several years. But in the time
since we began work on this report, we’ve encountered many leaders who are brand new to the job.
We think most will quickly learn the dangers of trying to do too much, and the necessity of building
strong relationships throughout the organization.
On that first issue, focus, here’s Adam Yaeger of Assurant: “Our job isn’t to teach the company about
innovation. It’s to create transformational new businesses that drive growth. Period. That’s our mis-
sion.”
On the importance of relationships, here’s Moisés Noreña, Director of Strategic Innovation at All-
state: “One of the key roles of the innovation leader is you have to be able to manage upwards and talk
strategy. At the same time, you have to be working with the teams executing the project, trying to get
inspired, and [get them to] understand how the innovation process works on a step by step basis. It’s
almost like a dual life that we have to create to be successful at innovation.”
Those issues of focus and strong relationships tie back into what we see as the five central challeng-
es facing innovation leaders:
1. The mission thing.
Define your mission clearly,

and make sure it’s completely
aligned with corporate strate- “There are always some ad hoc and
gy, executive vision, and busi-
ness-unit planning.
unpredictable elements [to innovation]
2. The idea avalanche.
… You don’t want to miss out on the
real paradigm-shifting stuff that’s weird
Don’t trawl for more ideas
than you know what to do and makes people uncomfortable. Our
with … you’ll ultimately waste
time and frustrate participat-
biggest successes all make people squirm
ing employees and partners. across the organization, make them feel
Instead, focus idea collection
on a specific problem or op-
challenged. The message there is, if people
portunity. are in their comfort zones and you’ve got
3. Speed + buy-in. all this process that seems logical and
Get business unit execu- repeatable, you’re just not innovating.”
Jason Berns, Director of Open Innovation, Under Armour
2015
JUNE

INTRODUCTION
tives and others throughout the organization engaged in your work and your strategy — without
getting bogged down by process and approvals.
4. Fly or die.
Advance or kill projects quickly, cheaply, and for the right reasons. (The best reason? Customers are
willing to pay for it … or not.)
5. Metrics.
Create metrics that are aligned with what senior management truly cares about.
We believe the job of innovation leader — whether you are in IT, R&D, a business unit, or a stand-
alone innovation lab — is one of the most difficult in the company. But it also can be among the most
rewarding, as the organization is implicitly placing responsibility for its future in your hands. In many
cases, you’re being given a blank canvas, and lots of leeway to create something new, working with
smart and driven colleagues and outside partners. That’s exciting.
But there’s a high degree of difficulty, since you’re being asked to operationalize creativity and en-
trepreneurship, and shift the company’s mindset when it comes to change. “Organizations are de-
signed for the status quo, and not for change,” warns Pitney Bowes’ Brian Romansky.
Next Steps
Innovation Leader and Innosight will be working together to create forums for sharing, learning,
and networking in the coming weeks and months. Please keeps your eyes out for opportunities to
explore these issues further, and we are always available to answer questions or brainstorm over a cup of
coffee.
In addition, if you have ideas for improving or expanding our 2016 survey, we’re all ears ...
Innovation Leader Innosight

855-585-0800 781-652-7200
http://www.innovationleader.com http://www.innosight.com
info@innovationleader.com inquiries@innosight.com
2015
JUNE

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INNOVATION

Innovation Leader convened an informal advisory group of corporate in-

It’s hard to be a training organization and an idea-development “skunk-

2 © Innovation Leader 2015. All rights reserved.

2. The idea avalanche

© Innovation Leader 2015. All rights reserved.

About the Data

15.3% Technology That process yielded 197 qualified responses

8.3% Insurance Industries

Respondents by Company’s Total Revenue

24.8% More than $50 billion

4 © Innovation Leader 2015. All rights reserved.

panies with less than $999 million in revenue.

1. Large Companies, with revenue greater than $10 billion

2. Mid-Sized Companies, with revenue between $1 billion and $9.9 billion

3. Small Companies, with revenue less than $999 million

Respondents by Company’s Total Employees

11.0% LARGE COMPANIES

27.1% More than 100,000

© Innovation Leader 2015. All rights reserved.

6 © Innovation Leader 2015. All rights reserved.

team of three people based in Silicon Valley and London

Each structure has its own drawbacks and benefits.

“We identify new champions through different

© Innovation Leader 2015. All rights reserved.

Examples of transformational innovation might include Amazon’s development of a web services

8 © Innovation Leader 2015. All rights reserved.

© Innovation Leader 2015. All rights reserved.

At the $41.3 billion health-

While innovation groups aren’t often

10 © Innovation Leader 2015. All rights reserved.

© Innovation Leader 2015. All rights reserved.

“That’s right where we are,” says

“We’re definitely in that larger cat- Indirect Resources on Innovation Team

12 © Innovation Leader 2015. All rights reserved.

One shouldn’t assume that large

© Innovation Leader 2015. All rights reserved.

According to respondents, only two catego-

A plurality of companies with the largest

14 © Innovation Leader 2015. All rights reserved.

battle for budget is never-ending. “We have a stan-

© Innovation Leader 2015. All rights reserved.

16 © Innovation Leader 2015. All rights reserved.

Idea management tools are “great for operational

© Innovation Leader 2015. All rights reserved.

AD HOC EMERGING DEFINED IN TEGR ATED OPTIMIZED

That’s no surprise, as many corporate innovation

18 © Innovation Leader 2015. All rights reserved.

© Innovation Leader 2015. All rights reserved.

20 © Innovation Leader 2015. All rights reserved.

Just over one-third of respondents claimed to have more than

“We have a goal of getting one project launched

© Innovation Leader 2015. All rights reserved.

RE S E A RCH PROTOT YPE P ILOT IN MA R K E T

Time in Each Stage

“Everyone in corporate innovation wants to be faster,”

22 © Innovation Leader 2015. All rights reserved.

Nearly three-quarters of respondents (72.9%) say

© Innovation Leader 2015. All rights reserved.

RE S E A RCH PROTOT YPE P ILOT IN MA R K E T

Budgets & Staffing per Project

We provided a set of budget ranges for each of our stages:

Similar findings can be seen in all other ranges, with

Research Stage We saw the same dynamics with staffing levels.