Innovation Strategy - MAPI Strat… · Innovation is a driving force at many manufacturers as they try to compete in today’s markets. Companies are starting or expanding innovation

Innovation Strategy MAPI Council Survey | December 2016

Manufacturers Alliance for Productivity and Innovation

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1600 Wilson Blvd., Suite 1100, Arlington, VA 22209 | mapi.net MAPI Council Survey | 1

Authors and Contributors

Authors John R. Miller

Council Director

Erika Ruiz

Research Analyst

About this publication The Manufacturers Alliance for Productivity and Innovation (“MAPI”) and its affiliated Manufacturers Alliance Foundation (“MAPI Foundation”) provide this publication and the information contained herein “as is” and for general guidance only. None of the information, data, analysis, or other materials included in this publication is intended to serve as business, legal, tax, or other professional advice or services. Although we strive to provide accurate and useful information, nothing contained herein is intended to be nor should it be used in lieu of professional advice or services. As such, MAPI shall not be responsible for any loss whatsoever sustained by any organization or person who relies on this publication or the information herein. In addition, the views and opinions expressed in any survey findings are those of the survey respondents and do not necessarily represent the views and opinions of MAPI.

About MAPI By leveraging the experiences of their peers and global market data, members use MAPI to make their enterprises more competitive and to increase their personal effectiveness.

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Innovation Strategy

Table of Contents

Introduction .................................................................................................... 3

Key Survey Results .......................................................................................... 3

Business Drivers for Innovation ......................................................................... 4

Organization and Team Building ........................................................................ 6

Training and Engagement ............................................................................... 11

Strategy Deployment ..................................................................................... 13

Appendix ...................................................................................................... 14


Introduction Innovation is a driving force at many manufacturers as they try to compete in today’s markets.

Companies are starting or expanding innovation programs and processes that in some cases involve

every employee. In this study, we looked at many aspects of the innovation process, including

targets, the people involved, and keys to success.

MAPI’s survey was completed by 90 member companies; 71% indicated that they have a formal

innovation strategy. Responses came from members of MAPI’s Manufacturing Council, Engineering

R&D Council, and Information Systems Management Council.

Key Survey Results

Most key business drivers for developing innovation strategies are centered around the

manufacturer’s growth function; common goals include achieving growth (97%), developing new

products (85%), and generating sales (65%). Other goals include saving money through process

improvement (41%) and saving costs (56%).

To support the growth and cost savings goals, innovation strategies are applied to products

and/or services (71%), partnership models (65%), business models (62%), and business

processes (59%). This is achieved through engagement with engineering, R&D, sales, marketing,

and manufacturing. Common indicators of success are revenue generation (65%), increased

number of new products (59%), new business generated (47%), and cost savings (44%).

Training is an integral part of a successful innovation strategy. The growth functions of

engineering and product development (65%), R&D (59%), marketing (59%), and general

management (50%) are often involved in the process. Employees tend to be responsible for

conducting training, often with help from consultants.

Some manufacturers provide incentives in the form of awards, recognition, and advancement for

those involved in the innovation process.

78% of companies surveyed think their innovation strategies are an effective means of achieving

their stated goals.


Business Drivers for Innovation

Many companies are deploying innovation strategies to help generate growth, improve processes, and

reduce costs. Products and services are the business activity most commonly targeted for innovation

(71%). All of the top business activities focus on growth and model development and most also

involve revenue generation and cost savings.

Figure 1: Key Business Activities Considered for Innovation

Response percentage (n=43)

Innovation strategies can be applied to many aspects of the business. MAPI’s survey found that the

strategy is most likely applied to products and processes that affect company revenue, with 100% of

respondents saying it is important or very important in the success of their businesses.

Almost all (97%) indicated that growth is a key goal for their strategies. The three next most common

goals are also centered around growth—product development (85%), new business opportunities

(79%), and sales growth (65%).

71%65%

62%59%

21%

3%

Products

and/or services

Partnership

models

Business

models

Business

processes

Organizational

structures

Other


Figure 2: Innovation Strategy Goals


Other: Improve brand reputation; differentiate us in a commodity market; enter new market spaces.

The methods manufacturers use to measure the effectiveness of their strategies also show the

connection between innovation and growth. Revenue generation (65%) was the most common metric,

followed by the number of new products (59%) and new business generated (47%).

Figure 3: Key Indicators Used to Measure the Effectiveness of the Innovation Strategy


97%

85%

79%

65%

56%

41%

32%

29%

Achieve growth

Develop new products

Identify new business

opportunities

Generate sales

Save costs

Improve processes

Improve employee

engagement

Change employee

mindset

9%

65%

59%

47%

44%

35%

32%

12%

Other

Revenue generation

Increased number of

new products developed

New business

opportunities

Cost savings

Improvements to

current products

Improvements in

processes

Employee engagement


Other: Sales of products less than five years old; customer satisfaction feedback; vitality and core

growth; increased market share; new products as a percentage of sales; formal funnel and tracking

system.

Innovation programs help employees think differently about how they do their jobs. While less than

50% of ideas become projects, innovation strategies get employees thinking more creatively.

Figure 4: Percentage of Ideas From the Innovation Strategy That Become Projects


Many companies measure the effectiveness of their innovation programs against the increase in

growth, product development, and cost savings targets; 78% consider their programs to be effective

or very effective.

Figure 5: Effectiveness of the Innovation Strategy in Achieving Stated Goals


Organization and Team Building

With manufacturers’ focus on growth and cost savings through process improvement, it’s

understandable that engineering and product development (68%) most often leads or co-leads the

innovation strategy. Dedicated teams (53%) and other growth functions such as R&D (41%) and

marketing (26%) are also key leaders. These functions are essential in the innovation team process

and the most likely to be on innovation teams.

14%

23% 23% 23%

9% 9%

<5% 5%-10% 11%-20% 21%-30% 31%-40% 41%-50%

5%

73%

18%

5%

Very effective Effective Neither effective nor

ineffective

Ineffective


Figure 6: Functions That Lead Innovation


Other: Three individuals from the businesses and a team focused on engineering and technology;

everyone; product management.

Common roles within the innovation strategy are customers (97%), engineering (94%), R&D (88%),

marketing (88%), manufacturing (74%), and sales (71%). It is clear that working in teams and

closely with customers is key to success.

Figure 7: Roles Involved in the Innovation Strategy


Other: Consultants; all.

12%

6%

6%

6%

9%

9%

21%

26%

41%

53%

68%

Other

Quality

Finance

Purchasing

Sales

IT

Manufacturing

Marketing

R&D

A dedicated

innovation team

Engineering and

product development

3%

18%

38%

38%

41%

44%

47%

71%

74%

88%

88%

94%

97%

Other

HR

Suppliers

Quality

Purchasing

IT

Finance

Sales

Manufacturing

R&D

Marketing

Engineering and product development

Customers


Most innovation teams are housed within the engineering and product development function (88%).

Engineering is a central function for growth through R&D, new product development, and design, and

therefore this structure makes sense.

Figure 8: Functions Where Innovation Teams Reside

Response percentage of companies with dedicated innovation teams (n=36)

Other: Dedicated innovation team reporting to director of innovation; all divisions; they are

multidisciplinary teams; independent department at corporate headquarters; corporate—innovation

leader reports to CEO; cross-functional in the business; innovation center—reporting to the CMO,

innovation center composed of product managers and development engineers; multiple locations—

decentralized in the business units; the teams are cross-regional and cross-functional in a virtual

environment.

29%

3%

6%

9%

12%

24%

26%

44%

88%

Other

Purchasing

Quality

Sales

IT

Marketing

Manufacturing

R&D

Engineering and

product development


Almost half of the surveyed companies have dedicated innovation teams.

Figure 9: When Innovation Teams Are Formed


Other: No comments.

Figure 10: Description of the Innovation Team


Of our surveyed manufacturers, 38% say engineering and product development employees have time

set aside specifically for innovation, compared with 24% for R&D. This dedicated time may bring new

thoughts or products into the portfolio that may not otherwise have been initiated by customers,

sales, or marketing.

45%

32%

14%

9%

Permanent teams

exist ideas and/or

projects when

they arise

When ideas are

identified

When projects are

started

Other

Cross-functional innovation teams

pursue ideas/projects

68%

Innovation teams within functions

pursue

ideas/projects32%


Figure 11: Employees with Designated Time for Innovation

Response percentage of employees with designated time for innovation only (n=17)

Other: Lean Rangers for process improvement, three individuals from the businesses and a team

focused on engineering and technology, have a team at our innovation center that supports

innovation projects, product management.

Figure 12: Correlation Between Innovation and Employee Engagement


9%

3%

3%

15%

24%

38%

Other

IT

Manufacturing

Marketing

R&D

Engineering and

product

development

68%

23%

9%

Yes, it has positively affected

employee engagement

We aren’t able to make a correlation between

innovation and employee engagement

No influence on employee

engagement


Training and Engagement

Training and engagement are two critical pieces of innovation strategy. Engineering and product

development is the most likely group to be included in training (65%), as are other growth groups

such as R&D (59%) and marketing (59%). Other functions included in the training process are general

management, sales, finance, IT, and HR.

Figure 13: Groups Included in Innovation Training

Response percentage of companies providing training (n=26)

Some manufacturers (41%) rely solely on employees to facilitate training; it’s more common to use a

combination of staff and consultants (50%). Very few (5%) use only consultants for training.

Figure 14: Facilitators of Innovation Training

Response percentage of companies providing training (n=26)

Other: Dedicated innovation team; internal training program with employees.

Surprisingly, 41% of surveyed companies say they provide incentives to at least some of the

employees participating in the innovation strategy. Rewards take the form of awards, recognition,

advancement opportunities, and money.

24%

24%

26%

26%

29%

32%

38%

50%

59%

59%

65%

Purchasing

HR

Quality

IT

Finance

Sales

Manufacturing

General management

R&D

Marketing

Engineering and product development

41%

5%

50%

5%

Employees Consultants Both Other (please specify)


Figure 15: Incentives Provided to Employees Who Participate in Innovation

Response percentage using each metric (n=43)

Figure 16: Rewards Offered to Participants in the Innovation Process

Response percentage of companies providing incentives (n=14)

18%

41%

18%

23%

No, it’s a mandatory part of work

No, it’s an optional part of work

Yes, for all

employees

Yes, for some

employees

32%

26% 26%

Awards/recognition Advancement opportunities Financial rewards


Strategy Deployment

Most programs (59%) were deployed by division or business unit. Very few (9%) were rolled out to all

groups at once.

Figure 17: How the Innovation Strategy Is Deployed


Other: Overarching corporate strategy, but each division is also responsible for deploying an

innovation strategy; global innovation centers with links to business units; different paths depending

on whether it is product or process driven; it is enterprise-wide but is done in stages by business and

region.

Most innovation programs are deployed by division or business unit and widely deployed in developed

markets.

Figure 18: Where the Innovation Strategy Is Deployed


9%

59%

18%14%

At once to all groups By division and/or

business group

In stages to several

groups

Other (please specify)

97%

71%65%

26%

6%

U.S. and

North America

Asia Europe South America Africa


Appendix

Figure A1: How the Innovation Strategy Is Organized


Figure A2: Barriers to Progress on Innovation Objectives


Other: Risk aversion, particularly from finance; talent; getting people to think that they are

innovative—stopping the idea that innovation is about R&D, projects, products, etc.

5%

41%

50%

5%

Creative (design

thinking, etc.)

Traditional (i.e., stage

gates, six sigma, etc.)

Both traditional and

creative

Other (please specify)

6%

9%

12%

21%

21%

24%

35%

53%

56%

74%

74%

Employee buy-in

Other progress (please specify)

Costs associated with managing innovation

Executive buy-in

Middle management buy-in

Clearly defining the scope of innovation

Time limitations

Selecting the most impactful innovations

Challenges showing quick results

Competing priorities)

Resource limitations

Documents

Innovation Strategy - MAPI Strat… · Innovation is a driving force at many manufacturers as they try to compete in today’s markets. Companies are starting or expanding innovation