Over the summer, InnoLead fielded our inaugural survey about how the innovation function is structured within mid-sized and large companies. What we found: a growing number of companies are using the title “Chief Innovation Officer” for their top innovation executive. The bulk of those executives (45 percent) are reporting to the CEO. Sixty percent tell us their innovation strategy is a blend of internally-focused and outward-looking initiatives. And 27 percent of our respondents say they are still working on ways to measure the success of their innovation programs, while 58 percent say metrics are already established.
The informal survey asked 50 innovation executives about a number of key issues, from board reporting to the title they held. Slightly more than half of the survey respondents (54.2 percent) held the title or function of Chief Innovation Officer or CINO; most others were at the director, SVP, or VP level, or had business-unit responsibility for innovation.Here’s more detail on the findings. (You can download or share the presentation slides here.) As usual, we seek your input on the data and its implications in the comments.
More CINOs
Sixty-three percent of respondents said that their company has a Chief Innovation Officer in title or function.
That number is up from the 43 percent reported in a 2012 study, which was itself up from 33 percent in 2011.
The increase is likely coming as companies seek to put more emphasis on innovation — both inside the organization and for external constituencies like shareholders and Wall Street analysts. More than half of our survey respondents (54 percent) said they themselves held the title of Chief Innovation Officer.
Reporting
Nearly half of the respondents (45.5 percent) said their CINO reports directly to the chief executive officer. This likely indicates that many CEOs are creating the role themselves, and also how seriously companies are taking innovation.
“A company must embrace change if they want to innovate,” notes David Moore, VP of Innovation & Engineering at Charlotte, NC-based SnapAV. “In my experience, this only happens if you have a champion that has the authority to truly implement change through process, training, and accountability.” (See Saul Kaplan’s recent article on this topic: “Is the CEO really serious about innovation?“)
Daniele Fiandaca, Head of Innovation at global marketing agency Cheil Worldwide, agrees. “Innovation cannot happen as a silo,” he says. “It must be ingrained into the culture of the whole organization. From my perspective, unless the position of Chief Innovation Officer reports into the CEO, this is never going to happen.”
But every organization is unique, and our survey found myriad other reporting relationships. In addition to the CEO, CINOs most frequently reported to the chief marketing officer (15.9 percent), business-unit or product heads (13.6 percent), or strategy/strategic planning executives (11.4 percent).
What was quite interesting were the reporting relationships we didn’t see represented in our survey results. Not a single innovation officer stated that they reported to the chief information officer. Only 6.8 percent reported to the CTO. In other words, companies seem to be viewing innovation as strategic and linked to the business, rather than something technical that should report to IT or the CTO’s office.
As a sign of the CINO’s high profile, 60.5 percent of respondents said they have the opportunity to report to the board of directors at least once per year. Twenty percent said they haven’t yet presented a report to the board.
Metrics
Of great interest to innovation executives are methods for measuring the success of their programs. According to the survey, 58.3 percent of respondents currently use metrics to gauge the success of their innovation efforts, and another 27.1 percent say that such metrics are “in development.”
The use of metrics varies widely depending on the company, culture, and approach to innovation, according to our prior research. The most commonly-cited metrics are related to revenue; often, the percentage of revenue generated by products or services launched by innovation programs. Former VMware VP Innovation Julia Austin cited revenues in a recent interview with InnoLead, as did the CINO of Paris-based DBApparel Group. Others, like Boston ad-agency Mullen, have avoided adopting specific metrics to gauge program success.
While revenue is clearly a key metric, other innovation executives tell us they track patent applications, their product pipeline, prototypes developed, field tests conducted, and various other data points to gauge success.
Focus
Our survey asked respondents about the focus of innovation at their companies, and found that the majority (60.4 percent) described it as a “hybrid.”
We defined internally-focused programs as concerned mainly with new product development, employee idea-sourcing, companywide hackathons, and other internally-oriented corporate innovation efforts. One-third of respondents said their innovation efforts are predominantly internal.We defined “external” as focused on corporate venture investing, acquisitions, funding academic research, running or participating in startup accelerators, or other activities that rely on third parties. Only 6.3 percent of respondents said their program fit this description.
In some cases, one approach is used to fuel the success of another. For example, at private bank Brown Brothers Harriman, external relationships with third parties are meant to model internal innovation. “External focus is mainly around ways to accelerate product development and showing the organization what’s at the cutting edge,” said the firm’s SVP and Head of Innovation Phil Swisher.
Questions for You
These survey results seem to point to several trends that may be solidifying into standard practices: use of the “Chief Innovation Officer” title; a reporting relationship to the CEO; the importance of metrics (likely beyond just revenue generated by new offerings); and a hybrid inside-outside focus.
What’s your take on these trends? What would you like to see us dig deeper on in the future? Post a comment below.
