C-suite execs big on innovation, but not its budgeting
Nearly half of C-suite executives claim their organizations spend more than 5 percent of their budgets on innovation; however, 42 percent of these executives also cite budgeting as innovation's biggest hurdle, according to a new survey by Big Four firm Ernst & Young.
Conducted by Wakefield Research, the poll questioned 500 C-suite executives from U.S. companies about their views regarding innovation, implementation plans within their respective organizations, and the effect on hiring. The survey found that while executives generally see the importance of innovation practices and technology, their devotion to these ideals is mixed.
“In our work with clients, we often see a disconnect between an organization’s investments in innovation and their ability to integrate the results of those new technologies and capabilities into their business to create value,” stated EY Americas Advisory and Financial Services Organization innovation leader Roger Park. “In many cases, organizational fragmentation creates the risk of ‘trapped assets,’ where investments aren’t being used effectively across silos to realize their full potential. Leaders may feel they need to increase budgets to drive more innovation in their organizations, but unless they are also prepared to transform their businesses to fully reap the benefits of those new ideas, it will be like pouring more water into a leaky bucket.”
Budgeting and market volatility were cited as the biggest roadblocks to innovation, according to the executives polled. Yet 75 percent of respondents still saw their organizations as outpacing their competition in terms of innovation expectations.
Innovation was ultimately seen as the responsibility of business leaders, with 38 percent of respondents saying their senior leadership team is directly responsible for implementing change.
“There is no question that the tone from the top is a critical component of any innovation strategy,” said Michael Inserra, EY Americas senior vice chair and deputy managing partner. “Ultimately, there is tremendous value to gain from empowering all individuals within an organization to play an active role in driving innovation forward, in particular, more junior-ranking personnel who may be closer to customers or new trends. One of the major challenges with this type of flat, collaborative approach, however, is establishing a balance between empowering a broad spectrum of the workforce while adding an element of oversight, coordination and escalation.”
Other notable findings from the survey include:
- 46 percent of respondents claim their businesses are changing their hiring strategies to find candidates with "diverse, future-focused skill sets."
- 44 percent of respondents said the percentage of their talent pool with these future-focused skills is the best measurement of their innovation strategies, followed closely by the number of innovative products/services offered by the organization.
- More than 25 percent of those polled claimed to have some sort of innovation leader (such as a "chief innovation officer") within their organization. Another 42 percent said they plan to add this role in the near future.
- 44 percent of respondents reported their organizations offer incentives for employee innovation, with another 43 percent offering external workshops and training.
- 81 percent of those polled said their businesses have implemented cloud computing.
- Nearly 25 percent of respondents see AI as the greatest improvement to their organizations moving forward, followed closely by machine learning.
For more information, head to EY's site here.