innovation leaders analysis summary 2011 12

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Lessons from the Leaders

2011/12 Analysis Summary

18 April 2011


Background Context on the InnovaBon Leaders Analysis


For the past ten years we have analysed the innovaBon performance of over 1500 firms and profiled the leaders

Eight key areas are examined as input into the annual assessments:

1.   OrganisaBonal culture and supporBng structure 2.   Strategic focus on innovaBon and its role in driving corporate growth 3.   Number of major new product launches and relaBve success raBos

4.   Growth in revenues, profits and market capitalisaBon

5.   Average margin per product or customer

6.   Investment in innovaBon-‐related acBviBes such as R&D and markeBng

7.   Brand value and human capital growth

8.   Peer review from within the sector


At the core of the analysis, for each sector we look at a raBo of innovaBon impact to the resources being deployed

Each algorithm is based on: InnovaBon Output

InnovaBon Input

Company CapabiliBes

InnovaBon Input InnovaBon Output

Together this provides what we believe to be the most accurate assessment of current innovation impact


Ten years ago, the capabiliBes that made a difference in innovaBon were clearly idenBfiable and a focus for all

The tradi*onal areas for a0en*on have been:

1.   Clear strategic focus on building and exploiBng core competences

2.   Using mulB-‐funcBonal teams to drive innovaBon across the organisaBon

3.   AdopBng stage-‐gate processes to manage new product development

4.   Engaging the voice of the customer and new sources of consumer insight

These are now hygiene factors – everyone uses similar approaches so they make no real difference


In recent years, InnovaBon Leaders have variously been developing new capabiliBes to shi\ performance up a gear

Recent areas of focus include:

•  Open InnovaBon especially around external sourcing of innovaBon

•  Strategic collaboraBon between companies across sector boundaries

•  Engaging customers in the heart of the innovaBon process

•  Using longer term foresight to be]er inform on emerging opportuniBes

These will also become commodities so organisations are looking at the new leaders for inspiration


We assess 25 sectors and cover a wide range of businesses so we can highlight the successes in different industries

Aerospace

Airlines

AutomoBve

Chemicals

Consumer Electronics

Energy

Fashion Retail

Food and Drink

General Retail

Household Goods

Hotels and Leisure

Insurance

IT Hardware

IT Services

LogisBcs

Media and Entertainment

Medical Devices

Office Equipment

PharmaceuBcals

Retail Banking

So\ware

Sports Goods

Telecom Equipment

Telecom Operators

Toys and Games


Throughout the past decade, the InnovaBon Leaders have consistently out-‐performed peers and major share indexes

Start Yr End Yr FTSE 100 2yr NASDAQ 2 yr IL Poreolio 2yr Change

2001 2003 -‐15% -‐1% 0%

2002 2004 +26% +60% +68%

2003 2005 +26% +12% +65%

2004 2006 +29% +11% +39%

2005 2007 +15% +21% +58%

2006 2008 -‐32% -‐37% -‐20%

2007 2009 -‐16% -‐15% -‐16%

2008 2010 +40% +73% +130%

2009 2011 +3% +15% +33%

Average +8.4% +15.7% +39.5%

This tracks the share performance of companies over the 2 years after Innovation Leaders analysis


The 2011/12 InnovaBon Leaders


Across the 25 sectors the current innovaBon leaders are clear and show how innovaBon pracBce is evolving


Amazon is very much a technology-‐focused company using and sharing capabiliBes well beyond its core retail business


Apple conBnues to use its design, brand and user interface prowess to (re)invent and grow new categories


ARM is the hidden ingredient in many mobile devices and earns growing revenues from technology licensing deals


BASF is growing well through simultaneously creaBng new technology plaeorms and reducing environmental impact


BharB Airtel’s unique business model is allowing for rapid expansion with none of the usual telecom barriers to scale


BMW is enhancing the travel experience for drivers and passengers while also launching a series of new plaeorms


Canon’s focus on building on its four core technology plaeorms maintains its leadership in Office Products


In a challenging environment, Chevron is shi\ing from oil to gas and acBvely promoBng cleaner energy technologies


Google conBnues to innovate disrupBvely across the board with notable impact in mobile, imaging and corporate apps


Humana is improving its customers’ health and wellness through innovaBve partnerships with other companies


IBM has delivered a decade of growth a\er reinvenBng its business while maintained world-‐leading R&D investment


ICICI’s growth is being driven by delivering compeBBve retail products across a highly efficient network


Inditex and its Zara brand is opening 10 new stores a week as the supply-‐chain-‐driven customer experience wins out


LEGO set the standard in fan-‐based innovaBon and is now pushing the envelope of acBviBes into a]racBve markets


With new lounges, new seats, new routes and new planes, Europe’s largest airline is flying ahead of the compeBBon


Medtronic conBnues to lead in partnership-‐driven innovaBon to address a wider range of chronic diseases


Microso\ conBnues its highly profitable business by invesBng heavily in research across many opportunity areas


Having reposiBoned its poreolio, Nestle is focused on innovaBon across its brands and emerging market growth


Nike has regained leadership in sportswear through technical performance and driving the sustainability agenda


Qualcomm is developing key wireless technologies for the next generaBon of global telecom networks


Recki] Benckiser’s 13th year of constant growth is driven by fast incremental innovaBon and power-‐brand expansion


The leader in biopharmaceuBcals and in-‐vitro diagnosBcs developing targeted medicines for personalized healthcare


Rolls Royce’s technology leadership coupled with its Total Care business model makes it a preferred partner for many


New brands such as alo\ and element have added extra twists as Starwood sets the pace in the hotel / leisure space


With over 8.5m customers a day, UPS is growing its logisBcs services globally with a highly tuned process at the core


Across all 25 companies, we can see the next tranche of innovaBon capabiliBes emerging onto the global scene

These include:

•  Technology partnerships focused around shared growth plaeorms

•  OpBmising delivery engines to give consistent global consumer experiences

•  ReinvenBng the status quo and challenging exisBng business models

•  ProacBvely realigning product poreolios ahead of emerging changes


Further InformaBon


The InnovaBon Leaders analysis is used to sBmulate thinking in different companies in a number of ways

Follow us on twi]er #innovatnleaders

To discuss the research: [email protected]

To request a keynote speech: [email protected]

To organise a workshop: [email protected]

Or to get in touch directly:

Dr Tim Jones

Director of Research -‐ InnovaBon Leaders

[email protected]

+44 780 175 5054


Lessons from the Leaders

2011/12 Analysis Summary

18 April 2011

innovation leaders analysis summary 2011 12

Economy & Finance