There are 3 areas or business units that are most often involved in bringing innovative ideas to market, finds the Economist Intelligence Unit [pdf], in a November study produced in partnership with Oracle. Asking 226 senior executives worldwide to select up to 3 areas that participate, 47% named the product development team, 45% the marketing team, and 44% the research and development unit. No other unit was cited by more than one-quarter of respondents. That includes IT, surprising given the preponderance of technology in these executives’ innovation processes.
In fact, just 19% of the respondents said their IT department is involved in bringing innovative ideas to market. Instead, these executives see the role of that department most often as supplying technologies that foster the innovation process, such as cloud computing and mobility (51%), and enabling business units to adapt processes rapidly (37%).
Social Media for Customers; Big Data for Processes
That the IT department is relatively ignored in matters of innovation is a missed opportunity, especially as many respondents report that a lack of staff or talent is a barrier to innovation in their organizations. Given its familiarity and ease with newer technologies, the IT department has a unique perspective to offer to the conversation. Indeed, technologies that the IT department is expected to provide – such as cloud computing and mobile services – have a role to play in developing new products and services, improving business processes, and developing new channels to market, according to the respondents.
Still, when it comes to different strategies for innovation, big data analysis and social media appear to be the areas of most focus. Asked which of 4 technologies would best be suited for helping their company’s business units innovate effectively, a plurality chose big data analysis for developing new products or services (38%), improving business process (38%), and developing new pricing models (60%). Social media took the lead for developing new channels to market (44%) and improving customer experience (43%).
New Products Favored Over Better Customer Experiences
Further details from the report, “Cultivating business-led innovation,” reveal that organizations are more likely to be prioritizing innovation in new and existing products and services than in improving the customer experience. In terms of how they focus their innovation efforts on the customer, most respondents collect customer feedback via surveys or interviews (54%) and analyze customer data for trends (53%).
Relatively fewer involve customers in product testing (44%) or in product design (37%), and only 3 in 10 gather customer ideas using social media.
Involving Customers in Innovation Fuels Performance
The organizations that aren’t including direct customer input in their innovation processes are missing out on potential opportunities for new ideas. According to a Cognizant report released in July [pdf], organizations that structure their innovation processes by combining internal teams with customer input report higher satisfaction with a variety of innovation areas than companies that don’t employ this structure.
For example, those 41% of respondents who combine their internal and external resources are more likely than the other organizations to be satisfied or very satisfied with their consistency in innovation performance (84% vs. 74%) and their implementation of innovative concepts and ideas (81% vs. 74%), among others.
Respondents to the Cognizant survey (311 executives; almost half from the US) were more likely than respondents to the EIU study to use social media to gather information and ideas for innovation. 54% reported using social media for this purpose, with another 26% considering doing so. Still, the predominant ways that companies are gathering information and ideas are through internal collaboration systems (65%) and by encouraging customer input (60%). One to watch for: crowdsourcing. 47% are using crowdsourcing tactics to get ideas – and another 27% are considering doing so in the next 2 years.
About the Data: The EIU study is based on a global survey of 226 senior executives conducted in April 2012. The respondents were based primarily in North America (27%), Western Europe (27%) and the Asia-Pacific region (27%), with the rest from the Middle East and Africa, Latin America and Eastern Europe. In terms of seniority, 24% were at the CEO level, 15% at the managerial level, and 13% at the director level. With respect to organization size, 56% were from companies with revenue of US$500m or more annually, with 17% of those with revenue of US$10bn or more.
The Cognizant report is based on a survey of 311 executives. Almost half of the executives (153) came from the United States, and the rest were from Europe. They represented all major industries, including manufacturing (62), technology (49), professional services (28) and financial services (21). The respondents’ companies’ had at least $1 billion in revenues, with roughly a third with revenues between $1 billion and $5 billion, a third with revenues of $5 billion to $10 billion, and the rest with revenues over $10 billion. Two-thirds of the respondents were C-level executives, including 57 chief executives, presidents or managing directors. The largest group (136 executives) had roles in the IT departments, followed by executives from operations and production (61), general management (53), and research and development (24).