Innovation Spends & Trends Report

INNOVATION SPENDS & TRENDS REPORT 2022

EXECUTIVE SUMMARY SPENDS AND TRENDS REPORT

The FEI and All Things Innovation community completed an extensive survey covering what folks are thinking, how they’re spending and the issues they face. Per the results, this is a senior-level, experienced, cross-industry group. The biggest strengths are helping the business do more with less and having an “impactful influence on the business.” The biggest opportunities are “creating new/next gen products” and “guiding enterprise strategy.” That said, the top challenges , weaknesses and threats are around “balancing short-term innovation with long-term thinking.” “Business resistance to change,” is a major issue. When it comes to collaboration , lack of time, money, and goals not being aligned are the top issues cited. These strengths and opportunities, weaknesses and threats are historically consistent for the innovation function. But there seems to be something else apparent within the results. There is a possibility that consultancies are taking budget with “innovation strategy” and “business model innovation” being the areas where most spend has occurred in the last six months. Coupling those investments with the noted issues around short-term focus vs. time and investment for breakthrough innovation points to money being spent but not by innovation leaders themselves. There is perhaps further evidence of that fact in that those answers do not remain consistent through aspirational answers regarding 2023. Spend on “Insights” goes from a middle-of-the- pack investment in the past six months to the top focus for the next six months. Incidentally this is completely in line with what we’ve found through our Insights Spend & Trends Report. When asked for their “current area of focus,” our Insights community’s highest response was to “support the product development & innovation teams.” So these Insights and Innovation Reports showcase a blending of our insights and innovation

communities but more importantly an alignment between the two functions. While it’s positive that the two functions are pointing towards each other, we may very well be at an inflection point for the innovation function. Are corporate leaders simply looking at the innovation function for iterative change and looking externally for transformational innovation? If that’s the case, what can innovation leaders do now to ensure that the internal innovation function remains the go-to team for transformational enterprise innovation? Mike Hatrick , Group Director IP Strategy & Portfolio, Volvo Group Trucks Technology, Volvo; Daniel Krauss , Director, Global Transformation Platform Leader, EY; Navin Kunde , Associate Director, Head of Open Innovation - The Experience Collaborative, Clorox; Zeinab Ali , Vice President R&D Transformation, Campbell and Gail Martino , Senior Program Leader, Unilever all provide expert commentary and answer some of those questions within this report. Moving forward, our innovation community now has this benchmarking report which can be used as a level-set tool. We’ll now take the next few months to continue to answer the above questions through coverage, interviews, intimate and larger-group gatherings as well as a next survey and eventual report which will be released at the very next FEI which is sooner than later.

Seth Adler All Things Innovation

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A look inside 04

The All Things Innovation Community

08 07 06

State Of The Function

Top Challenges

Refocus On Culture, by Mike Hatrick

10

Strengths

11

Opportunities

16 18 12 14

Weaknesses and Threats

Three Keys to Innovation in 2023, by Daniel Krauss

Collaboration

Short-Term Focus, Long-Term Vision, by Navin Kunde

22 26 28 32 34 20

Focus

Spend

Insights For Innovation, by Zeinab Ali

Team

Innovation Engagement, by Gail Martino Talent

ALL THINGS INNOVATION The Community

How many years of experience do you have in an innovation function?

What title do you hold at your organization?

The All Things Innovation community is high-level, extremely experienced and strikingly cross-industry. Over a third are with organizations of substantial size. The group is truly global with half in the US, nearly a third in Europe and a solid 1 in 5 in Asia.

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What region(s) does your organization operate in?

What best describes your job function?

What industry do you work in?

Approximately how many employees are there in your organization in total?

STATE OF THE FUNCTION

Do you feel as though the overall state of the innovation industry is improving?

There are decidedly mixed feelings on the direction of the state of the industry. Less than half of the community feels that things are improving. Nearly 1 in 5 feel that things are getting worse. See FOCUS , COVID TALENT for some background on why that might be the case.

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TOP CHALLENGES

What are your top challenges?

Far and away, the community feels that, “balancing short- term innovation vs. long-term thinking; ” “business resistance to change,” as well as, “resources and funding,” are the top three challenges facing innovation leaders. This is a historically consistent point of view. One note is that Motivating teams/ Overcoming Innovator Burnout is cited by only 13% as a top challenge. See Weaknesses & Threats and Talent for more information on this metric. Also, only 12% see Talent or hiring the right skill set as a top challenge.

REFOCUS ON CULTURE

Downturn and inflation, resistance to change, short-term innovation vs. long-term thinking balance, transformation, growth, and creativity are all at the forefront of an organizations thoughts. Taking a step back, responses seem to be suggesting the problem is more cultural than structural.

The community survey results indicate that people were thinking about downturn and economic stability when answering the questions. There are a number of results that seem to be historically consistent. In particular, ‘business resistance to change’ is always high. But the results indicating ‘resistance’ being present at the moment is interesting, considering the world we are in right now - where very many businesses are in a situation of needing to change. ‘Balancing short- term innovation’ versus ‘long-term thinking,’ is always a bit of an issue with innovation in that you want to show short-term bang for the buck through success. But that can often end up dominating so much that you don’t have time to do enough long-term thinking. The inverse of that is only doing long-term thinking and then failing to show short-term success, which is not good either.

“What the results are telling me, I think, is that people are feeling that their organizations are stressed to not be able to find the time or the priority to think about the future.” What the results are telling me, I think, is that people are feeling that their organizations are stressed to not be able to find the time or the priority to think about the future. They see the innovation function as actually having a role to not only create next generation products and services but to guide the strategy. Further, there is also a focus on transformation and growing the company in either new product or new service areas. The people that are answering this way are saying that innovation is important; their organizations are investing in it. It’s a lot to do with expanding the product or service portfolio and transforming the organization. There also seems to be quite a recognition that creativity is important, which is very positive. Taking a step back, responses seem to be suggesting the problem is more cultural than structural. Culture is about how people are feeling; the emotion in the organization. And if the emotion is ‘rush, rush, rush, we need to deliver

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“Culture is about how people are feeling; the emotion in the organization.”

a good result this year,’ then we’re not thinking about the long-term future. What’s needed, it seems, is a refocus on culture. Culture is about how people go about their everyday work. It’s their instincts, it’s how they react to things. You can write a process and build a structure that says Colleague A has to talk to Colleague B, their boss will tell them they have to abide by the process and they will comply. But culture is about doing the job in good spirit, in a positive way and so on. If a company says let’s change the innovation culture in two years, they’re dreaming. Culture is like a rubber band. You can stretch a rubber band and say, “Hey, now the rubber band’s completely different shape. We’ve done it.” But as soon as you let go of the rubber band, it goes right back to where it was. And I think that’s a metaphor for culture, whether it’s innovation culture or

any type of culture. The senior leaders who’ve answered this survey are saying that their companies are trying to transform, but it’s difficult to find the time for long-term thinking; difficult to find time for creativity. They’re putting more money into it and encouraging people to do more breakthrough-type work but the problem seems to be more cultural than structural. It very much matches my own historical experience. Creating, and maintaining, an innovation culture is the “Holy Grail,” and it’s not only elusive to find but difficult to retain.

Mike Hatrick Group Director IP Strategy & Portfolio Volvo Group Trucks Technology, Volvo

STRENGTHS

Within the Innovation function in your organization, which of the following are your biggest strengths?

At least half of the community shares that both “helping the business do more with less” and “impactful influence on the business,” are their biggest perceived strengths. “Helping the business do more with less,” points to iterative change in disruptive moments. We’ve got from the pandemic, straight into inflation and

a perceived economic downturn. “Impactful

influence on the business,” might also point to those indicators as there are supporting metrics around “breakthrough innovation,” on FOCUS . Interestingly, an “embedded stable of Start- up partners integrated into the business,” is the

strength least applied within the community.

This fact assists the possible investment in consultancies noted on page 19 and page 21.

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OPPORTUNITIES

What are the biggest opportunities within the Innovation function, in your opinion?

The community feels that the stand alone opportunity is to, “create new and next-gen products/services.” This seemingly leads to the biggest weaknesses. There is continued push from innovation to work on breakthrough innovation, while there is a continuing push from the organization for incremental innovation. This is a historically consistent point of view. The difference is that disruption used to come and go. Disruption is now constant. Thus in the past, the innovation function could adjust in the calm between disruptions, there is now constant pressure to simply iteratively innovate. That said, money is being spent on Innovation strategy, and Business Model Innovation as seen in spend data . That points to a potential desire for breakthrough innovation but for the context of that innovation to come from external voices. Incidentally only 12% feel that, “expanding the company’s partner ecosystem,” is an opportunity. This fact assists the possible investment in consultancies noted on majority of your time spent.

WEAKNESSES & THREATS

Within the Insights function in your organization, which of the following are your biggest weaknesses?

“Balancing short-term innovation vs. long-term thinking,” along with “business resistance to change” are noted as the biggest weakness for the innovation function. These are historically consistent points of view. That said, “motivating teams,” is seen by less than 10% as a weakness. If balancing short-term and long-term innovation is a weakness and the business is resistant to innovative change generally-how can innovation teams be motivated? This corresponds with other metrics found in Biggest Threats and on the COVID Talent report.

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What are the biggest threats to the Innovation function, in your opinion?

“Business only looking short-term,” and, “not enough time given to breakthrough innovation” are noted as the biggest threats. These are historically consistent points of view. That said, “innovator burnout” is seen by less than 20% as a weakness. If the business is only looking short-term and there’s not enough time given to breakthrough innovation- how can innovators not be experiencing burnout? This conflicts with possibilities other metrics uncovered within the Challenges.

THREE KEYS TO INNOVATION IN 2023 Jump starting the innovation capability, accelerating and streamlining activities to gain speed on the generation of output and achieving scale are the three keys for the innovation function in 2023. Cross-functional integration, aligning with insights and innovation literacy are the means to unlocking success.

We are seeing three key areas where organizations require support: jump starting, accelerating, and scaling innovation. All three are closely intertwined with the pressing need of organizations to continuously transform themselves. The first is about jump starting a dedicated innovation capability. Where it’s important to understand that this isn’t just jump starting because organizations haven’t done anything – it’s really about a recalibration or restarting, considering the experiences and learnings with innovation – good and bad – over the past years. The pandemic has really focused leaders on leveraging and orchestrating new partnership ecosystems to accelerate innovation efforts. We are now having an increased emphasis on breakthrough vs. incremental innovation and where and how to place the right bets. Innovation needs to be very collaborative with

– humans at the center – especially in today’s ‘work from everywhere’ environment, where individuals and functions are required to be better connected across the globe. So, this recalibration or restarting really means a focus on a cross-functional embedding of innovation deeper in the business. It means strongly understanding business and customer needs and aligning innovation efforts to those business and customer priorities in a continuous manner. The second key area is about accelerating and streamlining activities to gain speed on the generation of output. To do this, there must be a synchronization of customer, market, ecosystem, competitive, and investment insights. The survey results illustrating that innovation leaders expect to spend most on Insights in the next six months perfectly lines up with what we’re seeing. Corporate development, strategy, innovation, and technology teams have all been doing their individual research efforts for a long time. We are doing a lot of work at the moment with organizations globally to help connecting the dots and understanding future scenarios. We’re supporting them to understand and prioritize different trends, such as sustainability, and new technologies, such as the metaverse, with a focus on

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“We’re seeing a much more collaborative, transparent and digital near future where everyone throughout the organization is more engaged in innovation.”

mindset, capabilities, and leading practices as well as learning and training, so that everyone in the organization can speak a common language, understand the best possible opportunities, and is empowered to make an impact in their regional market realities. Leveraging the right set of capabilities and digital tools is critical for an organization to better engage people and drive more impact in the market, and to meet new priorities, such as sustainability goals. These concepts have been discussed for a long time, but companies are recalibrating, resetting how they are doing it and looking to streamline some of the classic innovation approaches and processes. We’re seeing a much more collaborative, open, and digital near future where everyone throughout the organization is more connected in innovation as a core lever to drive transformation.

differentiated and innovative use cases. These use cases are developed and selected on what can make a significant difference for the business in the market and what are the right means accelerate development of new products and services and their launch into the market.

The third key area is about scaling. The focus is on scaling the required

Daniel Krauss Director, Global Transformation Platform Leader EY

COLLABORATION

How often do the following cause Innovation process issues at your organization?

Money and time are the primary inhibitors of innovation for the community. These are

historically consistent

points of view. The third most frequently cited inhibitor to success

is a, “lack of alignment/

shared vision with internal partners.” This is an informative metric based on conflicting information seen on internal

innovation structure.

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What is your biggest challenge when working with: INTERNAL PARTNERS

Time and money. Those are the biggest issues facing innovation leaders when it comes to working with internal partners. Expectations seem to be either unrealistic or not being effectively managed. Growth is nestled in there- that is the outcome that the business and innovation team are both gunning for, but on which they don’t seem to be aligned.

EXTERNAL PARTNERS

Goals not being aligned points to the growth hypothesis above. Resistance to change likely means core change. The business is asking for iterative innovation- short term wins. But the innovation team is attempting breakthrough innovation- without enough time for new ideas. Goals are certainly not aligned.

SHORT-TERM FOCUS, LONG-TERM VISION

We, as innovation leaders, need to figure out how to make things that truly deliver on the longer term relevant to the business and yet serve the business in the short term. However, the nature of the expectations by the businesses that are funding innovation is that they always expect it to happen quickly, and the long term stuff takes a long time.

Survey results showcasing the highest increases in spend being on ‘business model innovation’ and ‘Innovation strategy,’ might mean that the company leadership is wondering how to innovate, and they feel that there are fewer people on the inside who can drive that change. So, it seems they might be going external. It seems that the internal innovation people are not being included in building the strategy. An external entity is coming and dictating how to innovate and how to build the strategy, and then the internal people are just executors. The results around breakthrough vs. short-term innovation showcase that the community is pointing to the correct underlying challenges, but they’re not connecting those challenges to what’s happening to their people. ‘Not enough time is

being given to breakthrough innovation’ due to the ‘business looking short term,’ is a usual reality. We, as innovation leaders, need to figure out how to deal with it, and how to make things that truly deliver on the longer term relevant to the business and yet serve the business in the short term. Breakthroughs happen rarely, at least in CPG, where I sit. But I wouldn’t call that fact a threat to the innovation function. It’s more a reality of being in the innovation function, that you can’t put all your eggs in that long- term breakthrough bucket. You’ve got to keep innovating even on the less breakthrough, more short term projects, because the business is what is funding you throughout. It’s one of the age-old challenges of innovation. That said, eventually you need to drive revenue, and those new products and services need to drive revenue. Right in the beginning though, they don’t often drive revenue, they start out very small. But if you have met the customer and consumer needs, eventually they will drive revenue. Any organization that has driving revenue as a major innovation goal right off the bat is either in a short- cycle business like fashion or tech, or they’re just thinking about innovation not in a sort of breakthrough type of manner but more of an incremental innovation type of manner.

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“You’ve got to create the atmosphere and create space and time for your people and manage up to ensure the plug doesn’t get pulled on the long-term because you’re delivering on the short term.”

Balancing short-term and long-term is typically cited as a significant weakness. But the fact that these results show it as a significant weakness along with the fact that ‘innovator burnout is not a significant threat,’ - that does not make sense, that does not jive. The nature of the expectations by the businesses that are funding innovation is that they always expect it to happen quickly, and the long term stuff takes a long time. They are always willing to pull the plug on the resources if they don’t get their results quickly. You always feel like you are under a clock to innovate. It happens with creativity too. People say, “Okay, create. Come up with ideas. Come on.” But people will just freeze. You’ve got to create the atmosphere and create space and time for your

people and manage up to ensure the plug doesn’t get pulled on the long-term because you’re delivering on the short term.

Navin Kunde Associate Director, Head of Open Innovation The Experience Collaborative, Clorox

FOCUS

How has COVID changed your company’s innovation mindset/way of operating?

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Where is the majority of your time spent?

The community reports a 60/40 split in favor of incremental innovation vs. breakthrough innovation through the pandemic and to the moment. That said, the majority of time spent by the community is on Breakthrough/Transformational innovation. This seems to be counterintuitive. If COVID changed the mindset/ way of operating to focus on incremental innovation, why would the majority of time spent by the innovation function be on breakthrough/transformational innovation. Of course more time needs to be spent on breakthrough/transformational innovation to make it come to fruition, so that could be a reasonable factor in what seems like a conflicting set of metrics. Though if this is actually an issue, it could speak to the mixed State of the Function results in State of the Function . It could also speak to the fact that there’s a possible encroachment into the innovation function by consultants. See strengths and spend for metrics that speak to that possibility.

SPEND

SPEND: Last Six Months

How has innovation spend changed over the last six months?

“Innovation strategy,” and

“business model innovation” have seen the biggest increases in spend over the past six months. But at the same moment the community is noting not enough time given to breakthrough innovation being seen as one of the biggest threats on threats page, coupled with “Balancing short- term innovation vs. long-term thinking, along with “business resistance to change” on the weakness page, for innovation strategy and business model innovation to be getting the biggest increases in budget seems like consultancies must be getting in on the budget action.

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SPEND: Next Six Months

For the next six months, how do you expect innovation spend to change?

Insights is the biggest expected growth area of spend over the next six months. This is good news considering Zeinab Ali’s commentary. Interestingly this finding showcases crossover with our Insights Spend & Trends Report findings where the biggest area of focus currently for Insights leaders is to, “support the product development & innovation teams.”

SPEND

What is the Innovation Technology & Services budget that your group owns?

With 35.72% over $1M and 14.28% over $500K- exactly half of the community oversees a budget of substance. That said, as noted in Last Six Months , the Next Six Months , as well as on Talent page, there is a question though as to whether budgets are sufficient.

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SPEND

Did your innovation budget increase or decrease in 2022?

For a solid 2 in 5, budgets did not budge in 2022. But for over a third of the community, budgets were up. And for just slightly over 1 in 4, budgets did decrease-only roughly 11% of those

decreases being more than 10%.

Did you plan to increase or decrease your innovation budget in 2023?

For just over half of the group, innovation budgets seem to be on the rise for 2023. That stubborn 2 in 5 of remain the same,

remain the same. And less than 10% see 2023 budgets decreasing.

INSIGHTS FOR INNOVATION When innovators take time to gather the necessary insights, not only does the process go smoother and faster- they also gain the necessary foresight for breakthrough innovation to happen.

At the start of innovation you either do have enough insights or you don’t- either way you still start. But when you take that line and stretch it out- without the insights- it takes double the time than if you’ve done it right- with insights. So rushing in [as Elvis referenced English poet Alexander Pope - only fools rush in], you are always doubling the time. When I was a Dean of Product Development for PepsiCo, that was a graph I always used. You will spend a year and a half longer than you would’ve, had you done it right the first time. The head of R&D at Pepsico at the time was Mehmood Khan. Indra [Nooyi, Pepsico CEO at the time] came to my lab. And I had known her because I had run programs for her. So we were on a first name basis. I was always harping on, “I’m not touching anything until we have the

data. Why would the consumer want this product? What are they going to replace?” And jokingly Mehmood said, “Yeah, Zeinab has transitioned from R&D to Insights,” So I said, “I’ll wear that as a badge of honor Mehmood.” And Indra said, “Good. We’ll get her into marketing and she’ll be CEO one day.” She was of course teasing him- they teased each other because they knew each other. But that is still a problem at organizations; not doing enough insight work to gain foresights. Breakthrough innovation can’t be done without foresights, because by the nature of it, the consumer has no knowledge that they need breakthrough innovations. That said, there are a lot of startups out there which make big organizations fearful. The startups are out innovating them; they’re nimble. They can get to the market fast. They can fail fast and learn, and then go back. Big organizations cannot fail fast. A global corporation was not designed for that. “But when you take that line and stretch it out- without the insights- it takes double the time than if you’ve done it right- with insights.”

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“...That is still a problem at organizations; not doing enough insight work to gain foresights. Breakthrough innovation can’t be done without foresights...”

And so open innovation needs to be managed. There are a lot of open innovation people who do the work. But the people who do open innovation, do it on the side. I’ve been part of it- when I was doing open innovation- I had my day job too. Because Sales would be calling about products that needed help or marketing would call about a campaign that needed to be launched. And R&D all the while is doing open innovation as a side thing. It is a side job that doesn’t get appreciated a lot, because of ten things that you look at, one may come out as a winner. But you spent a lot of time on those ten things. Organizations do not have time. It just falls to innovation to get it done, on the side. Just a note on collaboration; my thinking is that COVID made people collaborate more. Even though people are saying that you collaborate when you’re in the

office, I think there’s more collaboration online- on a Zoom call- than in person; people don’t want to walk to people’s offices- that’s not how it works anymore.

Zeinab Ali Vice President R&D Transformation at Campbell

TEAM Which of the following statements most accurately reflects your company’s internal Innovation structure?

Just about two thirds of the community Innovation believes that the function frequently collaborates with cross-functional team members. When adding ‘sometimes collaborates,’ the result is 90%. On Collaboration , when asked, “How often do the following cause Innovation process issues at your organization?,” the community noted that a, “lack of alignment/shared vision with internal partners,” was the third most impactful reason for process issues. There seems to be a straightforward disconnect between these two facts.

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How is your innovation team organized?

What function does your Innovation/R&D group report into?

Half of the community is organized between either R&D or being dispensed among other teams. Over a third of the community reports into a Strategy function. And about a quarter of the community reports into a greater innovation function. Another roughly quarter of this particular community reports into the Marketing/Insights function. But that might have more to do with All Things Innovation, FEI and All Things Insights - who produced the survey and this subsequent report, being run by the same organization.

TEAM

Understanding Innovation is described differently in different parts of the organization, how many Innovation/R&D professionals do you think are in your overall team?

Half of the community has an overall innovation organization of less than twenty members. That said a solid 20% have 100 or more members. This doesn’t quite line up with the demographics showcased on the community demographics. With an estimate of nearly half of the community coming from Forbes Global 2000 organizations, it seems that the innovation function at organizations within the delta between 20% and 50% of are perhaps short- staffed. This would lead to the fact that innovators are facing a higher rate of burnout than usual.

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TEAM

How many Innovation/R&D members are on your team?

When diving into Innovation/R&D, just over a third have ten or more members. That does of course point to the fact that roughly two thirds are less than ten. With the overall Innovation function seemingly short-staffed, it corresponds that

that’s the case further down the line.

INNOVATION ENGAGEMENT

Folks in innovation tend to be intrinsically motivated; they like tough problems, they feel a lot of passion for new solutions and so forth. Keeping those folks engaged will enable them to continue to deliver and make a real impact on the business.

The survey results show that budgets were up this year and expected to be up next year. But I assume the feedback on 2023 is aspirational at this point. We’re going into a tricky phase right now. Folks are unsure what their budgets are going to look like next year, how the business is going to do, and so forth. On the one hand respondents feel that their budgets are increasing, but if they’re saying that there’s not enough attention on the long term, that means that it’s their perception that money is going towards short term innovations and not investing in longer term innovations. Folks need to show the impact of their technology, their product idea, etc. and how that impact is going to be realized for the business- so that they can get their share of that budget. There’s more money there, but they don’t seem to be claiming it.

As far as strengths, we’re seeing a fair amount of focus on ‘doing more with less.’ That goes along with the feedback on budgets and resources. The community is getting creative in how they solve problems. And respondents seeing ‘impactful influence on the business’ as a strength makes sense; you always want to be number one on that. Regarding what’s causing issues, ‘lack of alignment, shared vision with internal partners,’ sticks out to me. That could mean that the strategy isn’t playing out in an aligned way across the organization. ‘Talent/Hiring the right skill’ set being a challenge makes sense. It kind of tracks with what we’re seeing currently; people are moving around; they’re ‘quiet quitting.’ So, that makes sense. But, it also is a real opportunity for folks who want to be in the innovation space. If they’re visible, if they’re connected, if they’re connecting with people, there may be some real opportunities for them to join organizations. Folks who are working on next generation technologies, oftentimes those people are in the R & D function, but not always. And we’ve learned through these results that the community is about a third, maybe less, that are in an R & D function. Perhaps

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“...it sounds like they’re currently motivated and yet frustrated that they can’t get their new products to market.”

they’re in a brand function as well. But, it sounds like they’re currently motivated and yet frustrated that they can’t get their new products to market. Folks in innovation tend to be intrinsically motivated; they like tough problems, they feel a lot of passion for new solutions and so forth. So, I think, the opportunity here is for the organization to keep those folks engaged so that they can continue to deliver and channel that engagement so that they can make a real impact on the business. The questions being asked through these results are, ‘How do we get to our new normal?’ and ‘What is that going to look like?’ Overall, I think my innovation leader colleagues can feel good that others are struggling with some of the same issues that they may be facing.

That it’s the budget, it’s the time, it’s the short versus the long term. I think those are the things that we should have seen and we did.

Gail Martino Senior Program Leader, Unilever

TALENT When it comes to building out your Innovation team, what’s your biggest challenges?

Well over half of the community finds the

insufficient budget being the biggest issue with growing the team. This corresponds with metrics found on function does your Innovation/R&D group report page. It also begs the question, are innovation budgets high enough? Although budgets were either flat or up as seen on your Innovation Budget Increase or Decrease , and Budgets for 2023 are looking to be increased further as innovation teams are seemingly short- staffed and the community is telling us here, it doesn’t look to be getting any better anytime soon.

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How are you sourcing new talent?

How has COVID affected team member turnover?

Once the budget issue is overcome, the actual process of finding innovation talent that will prosper within a particular organization begins. There doesn’t seem to be alignment from HR on what is needed in Innovation with only 1 in 5 utilizing that function to source talent. Postings coupled with word of mouth currently comprise nearly half of the sourcing that happens in innovation.

The fact that feelings were mixed in the State of the Function leads to the top challenges page, which leads to the spend changed page which in part leads to the Innovation/R&D professionals page which all leads to nearly 50% being hit with COVID team member turnover.

TALENT

What are your Innovation talent plans moving into 2023?

Despite budget issues and the difficulty in finding talent and talent that fits, over half of the community expects to add staff. That said, a strong 2 in 5 expect to reallocate staff from within the organization. This might point to internal sourcing being a particularly bountiful place to look for ‘new’ innovation talent.

How does your company incentivise innovation?

While 30% noted “incentivization comes through recognition” among broader business and 24% noted “my company doesn’t incentivise for innovation,” looking through a cynic’s viewfinder, those two could be construed as the same thing. That’s over 50% where innovation is rewarded with either a pat on the back or nothing.

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TALENT

For what new titles/skill sets are you hiring for?

With Technical and UX/UI being the top skill sets, one might assume that lower-level, tactical support is needed for the iterative innovation the business demands. Business Development and Design Thinking point to higher-level folks. The fact that None is so prominent might mean folks aren’t so confident in the fact that budgets will actually rise. Or it might mean, with goals not aligned- inertia is the most cogent approach to this moment in time.

TALENT

In what area of development would you like some help/assistance/guidance?

Hiring and help are two different things- with the previous word cloud, innovation leaders were sharing on what skills they could bring into the organization. These thoughts are more about what innovation leaders themselves need- transformation, change, future thinking and to further innovation culture. This does seem to potentially be an inflection point for the innovation function.

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SPENDS & TRENDS REPORT

REPORT PRESENTED BY:

The #1 Destination for Corporate Innovation and R&D Leaders Hundreds of corporate leaders across the innovation value chain are come together annually to strengthen the connections and fuel the conversations that contribute to a thriving ecosystem. From ideation to commercialization- we’ll tackle the new art of serious innovation.

With a consistent cadence of content, All Things Innovation is a year-round resource for R&D and Innovation leaders in the trenches. With constant connection to new content and new perspectives, you get the tips and tricks you need to stay agile and opportunistic in your approach to innovation, adaption, and disruption. The answers today look a lot different than the answers a year ago. All Things Innovation is designed to ensure our global network becomes your global network. Connect with a diverse member community in real time to forge new relationships, spark conversations and create tomorrow’s best practices.

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In EY Consulting, we are building a better working world by transforming businesses through the power of people, technology and innovation. It’s our ambition to become the world’s leading transformation consultants. The diversity and skills of 70,000+ people will help clients realize transformation by putting humans at the center, delivering technology at speed and leveraging innovation at scale. These core drivers of “Transformation Realized” will create long-term value for people, clients and society. For more information about our Consulting organization, please visit ey.com/consulting.

MassChallenge is a non-profit organization dedicated to supporting innovation and entrepreneurship through collaboration and development. We have more than a decade of experience accelerating startups, industry, and innovation ecosystems. We work across sectors to drive a stronger future through collaborative innovation.

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