Our good friends at KPMG have recently released a report detailing the impact Innovation has had in 2020. I have included some of my favorite highlights below. You can also download the full report here, or directly from KPMG.
Background on the Report
First, a bit of background on the report. KPMG collected data from 215 respondents. In their report, they reference this group as “All Respondents.” But, they also focused on 25 “Role Model” companies. These are the firms that have separated from the pack and have a more advanced innovation management process. The report then goes through and compares the results between these two groups.
The report was then broken down into five sections:
- Think through how to create a winning strategy.
- Layout the appropriate resources and funding you will need.
- Work through the inevitable barriers and obstacles.
- Measure your progress.
- Understand what approaches have (and haven’t) worked for our survey respondents.
Highlights
Below are just a handful of our favorite insights from the report.
Confidence in Innovation is on the Rise
Respondents were asked to rate their confidence in their company’s ability to remain competitive in their chosen market space. And on the whole, respondents were optimistic as you can see in the image below. Breaking into the numbers a little bit, 41.5% of all respondents said they had more confidence this year than last. While only 18.1% of all respondents said their confidence went down.
A couple of thoughts here. One, it’s interesting to see how much higher the Role Models confidence was. This is the first indication in the report where having a structured Innovation Management approach improved employees’ confidence. Second, let’s also remember that this confidence question is asked in a year when we saw record-high stock market valuations and record low unemployment numbers. It’s easy to be confident when things are going well.
Innovation Investments Expected to go up in 2020
56% of those surveyed are expecting their firms to increase their “innovation investments” in 2020. What does that mean? Well, that’s less clear. The report highlights that 48% of the investments by “All Respondents” are going towards Incremental improvements. One could argue that minor improvements to existing products and services, while necessary, aren’t innovative. But also notice that the “Role Model” group has a larger focus on “Transformational” innovations.
To make sense of the pie charts, it would help to provide insights into how KPMG broke down Incremental, Adjacent and Transformational. For the most part, they align with the widely accepted “3 Horizons” model – which is broken down nicely by Andrea Hill here, and as far as I can tell, first popularized by McKinsey & Company. For this report, Incremental aligns with Horizon 1, Adjacent aligns with Horizon 2 and Transformational aligns with Horizon 3.