Chief Innovation Officer - The Innovation Enterprise

ie.
White Paper
Rise of the
Chief Innovation Officer
An Executive Whose Time has Come
Contents
Executive Summary
Introduction
| 1
| 2
What Is The Role Of A Chief Innovation Officer?
| 3
Why Are Companies Now Appointing Chief Innovation Officers
| 4
Which Companies And Industries Are Using Chief Innovation Officers?
Difficulties With The Spread Of The Chief Innovation Officer Role
Key Takeaways
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The Rise of the Chief Innovation Officer
Executive Summary
Innovation is a legitimate and vital business
process that is essential for companies
looking to evolve at a pace that elevates them
above the competition.
Due to the complexity of innovation, there has
to be the infrastructure and business direction
in place to ensure that innovation can prosper
smoothly. This infrastructure is put in place
by the Chief Innovation Officer, who identifies
areas where change is necessary.
The Chief Innovation Officer has to be multiskilled and comfortable in a number of
situations and understand that innovation is
essential to solving organizational problems.
In this whitepaper we will discuss:
•
If the Chief Innovation Officer is an important catalyst to ensure that innovation can come
from anywhere in the organization, not just the top of the hierarchy. What delivery methods
could be considered as an alternative to the current outreach.
• Whether a creative environment is a pre-requisite for innovation and the necessity of
valuing innovation as an effective way of reforming the organization.
• The evolving definition of the Chief Innovation Officer. We will also evaluate the key roles
of the Chief Innovation Officer and how they impact organizational processes on a daily
basis.
• How the Chief Innovation Officer is now a necessity and what competitive advantages
they bring to the organization.
Through the examination of the points above, this research will look at the role of the Chief
Innovation Officer and how it is changing approaches to innovation and the wider implications
this has to companies.
1
The Rise of the Chief Innovation Officer
Introduction
‘Innovation is now seen as
a vital cog in the ways that
companies grow, with many
claiming that it is the single
most important way for
companies to expand today’
Chief Innovation Officers (CINOs) are now found in companies all over
the world, bringing new ideas and creating new cultures. The role is not
formally established across industries, meaning that the specific tasks of
any CINO can vary considerably from company to company.
The role has a wide remit and can include anything from improving
communication channels to promoting entrepreneurism at all levels. Due to
the lack of a formal and defined set of roles and responsibilities for CINOs,
other processes are often included in the role, such as marketing, IT or
sales. Much of this is dependent on the career history of the individual.
Innovation is now seen as a vital cog in the ways that companies grow,
with many claiming that it is the single most important way for companies
to expand today. 3 It is for this reason that the creation of a formal position
focused around innovation has become a priority for business leaders.
This whitepaper aims to discuss the rise of the role in the boardroom, as
well as investigate factors that are currently slowing the pace of hires for
this position. We will look at which companies are utilizing the position the
most and why the role is increasing in popularity.
2
The Rise of the Chief Innovation Officer
What is the Role of a Chief Innovation
Officer?
The role of Chief Innovation Officer is relatively
new and due to this, many are establishing
what duties the position should include. The
role generally sits within the C-Suite, often
reporting to the Chief Executive Officer (CEO)
and Chief Marketing Officer (CMO). This allows
the CINO to have a holistic approach across
the organization, creating processes and best
practices throughout almost every department
and division.
The duties of a CINO are non-formalized
across companies due to many who hold the
position being the first to do so. This situation
means that many CINOs will be establishing
the duties as they go and adopting new
responsibilities as situations occur throughout
their tenure. Some CINOs see the role as
taking another 5 to 10 years to either formalize
across industries or develop into something
different. 1
The role normally constitutes the creation
of processes which allow new ideas and
innovations within the company to be quickly
reviewed and either implemented or rejected.
The purpose of this is to allow companies to
incubate new practices or products to gain
market prominence or maintain performance.
Often an idea needs to be implemented
quickly in order to have maximum impact and
one of the CINO’s key roles is making this
process as fast as possible.
Innovations and changes can often represent
risk, especially with disruptive technologies
or practices that change the core functions
of a company. A primary role for CINOs is
minimizing the risks involved with innovating or
making the transitions between old and new
processes as smooth as possible, allowing
for transfer with minimum disruption to the
functions of the company.
3
An important role for the Chief
Innovation Officer is also to make sure
that the ideas that come through the
company are not purely to create
a new process but that they have
commercial value. 4
This is a vital aspect of the role and one of the
founding pillars of why this is now a position
often required in companies - as ideas are
brought forward the evaluation process needs
to be both thorough and fast, meaning that an
established role needs to be created in order
to take full advantage of potential innovations.
The Rise of the Chief Innovation Officer
Why Are Companies Now Appointing
CINOs
‘If innovators didn’t establish new ideas
and game changing technologies, there
would never have been any successful
companies or technological advances’
The importance of innovation has always been obvious: if innovators didn’t establish new ideas
and game changing technologies, there would never have been any successful companies
or technological advances. However, it is only within the past few years that we have seen
the formalized role of CINO, or similar, become moew prevalent in companies. Indeed 70%
of executives have now listed innovation within their top five priorities and 18% as their most
important. 4
There are several reasons for this:
Allows For Real Game
Changing
Due to the unpredictability of worldwide
economies and the huge costs that mistakes
can have, there is a real need to support
game changing ideas. A recent Accenture
report found that companies have become
more conservative with innovations, making
incremental changes that may extend a line or
make small changes to an existing product.4
The gains from these kind of innovations are
often negligible and do not typically break
new ground, meaning that progress and
advancements are slower, resulting in smaller
overall business results.
A formalized system of innovation is needed
to allow for pipelines to be created where real
ideation can be supported both professionally
and financially. 4 A prime example of this is
Google, where this process of innovation (at
one point their employees could take 20% of
all working time to work on projects outside
4
of their primary role) produced both Gmail
and AdSense, two of the company’s most
profitable divisions. 3
CINOs allow for this process of
formalization to occur smoothly
and have the expertise to create
avenues in which innovations can be
communicated and implemented.
Quick Evaluation
One of the major business developments
of the past decade has been an increase
in the speed of change. With the rise of
global connectivity, the pace that companies
need to implement changes has increased
exponentially. This speed, combined with the
necessity to produce business results from
new ideas, has meant that established roles
to both evaluate and implement new ideas
have become vital.
The Rise of the Chief Innovation Officer
This responsibility falls on the CINO and
represents a key element in the overall
business impact of new innovations. The
success of a new idea or product often
comes down to timing and whether it can
be implemented before a competitor. Due
to this, many companies have found that
without proper evaluation, new ideas can have
negative effects on the company.
A CINO sits in a position
that allows them to quickly
evaluate new ideas and
make decisions about
whether to support
them.
Previously this kind of
work would fall to a
senior executive who had
additional responsibilities,
meaning that, if speed was
required, the evaluation process
would not be as thorough. If it needed to be
extensively evaluated, it would take longer.
Promote Group Thinking and
Employee Support
The Accenture survey indicated that 60%
of respondents believed that the best
ideas come from a collaborative effort, 3
meaning that creating environments in which
employees can work together is an important
process. Fostering these environments
requires an innovation strategy with linear
communication channels, which is a key role
for any CINO.
Having somebody with the ability to bring
people together means that companies can
benefit from the improvement of ideas and
the increased profitability that this brings. The
importance of this goes beyond increased
profitability and moves into employee
retention, as 49% of people asked believed
that managerial support is very important
for the generation of new entrepreneurial
5
ideas. However, only 20% believed that their
company delivers.3 Bridging this gap through
the hiring of a CINO means that employees
feel more empowered and supported in their
new entrepreneurial endeavors within the
company.
The failure to effectively support these
entrepreneurial activities can see companies
losing some of their most promising
employees. The survey found that
93% of those who had started
their own company had pursued
an entrepreneurial idea at their
previous company. 57% of these
had found their previous company
had not been very supportive or not
at all supportive and 30% had started
their own company to have the freedom to
pursue their ideas without having to focus on
other subjects. 3
If a CINO can foster a culture where these
projects can be undertaken within a company,
there would be an increased chance of
keeping their most passionate and forward
thinking employees.
Increase Inclusivity
53% believe that their company did not
support ideas from all levels of the workforce,3
which implies that leadership restricts its
innovations to business decision makers
alone. This exclusivity of sources limits the
potential new ideas that could come from
outside of the existing decision makers,
meaning that new innovations could easily be
missed. With one of the key responsibilities of
a Chief Innovation Officer being the creation
of effective communication pathways and
confidence in employees to put forward new
ideas 1, this would allow those groups outside
of the normal decision makers to have a
genuine contribution to new innovations.
The Rise of the Chief Innovation Officer
Reward Effort
Although the ultimate goal of innovation is to
bring business success and increase profits,
the reality is that many ideas will fail before one
becomes a success. Therefore, it is important
to have a process in place to reward initiative
and the process of attempting something new.
A CINO can create a reward system, meaning
that employees will have more confidence to
come forward with potential ideas.
77% said that new ideas are only rewarded
after they have been implemented and proven
to work, while 27% also said they had avoided
pursuing an idea due to a fear of a negative
impact. 3 Having a formal system in which
employees come forward with all ideas may
mean dealing with unachievable or unrealistic
propositions from many, but
will mean good ideas will not
be missed.
6
‘It is important to have a
process in place to reward
initiative and the process of
attempting something new.’
The Rise of the Chief Innovation Officer
Which Companies and Industries are
using CINOs?
As the formal role of CINO is relatively new, it
is interesting to observe who has been the
biggest adopters of the role and who have
been utilizing the position for strategic benefits.
evaluating ‘innovation activities’, with 87%
of respondents now claiming that this is the
case. This is up from 64% of respondents
saying the same thing in 2009. 4
Traditionally the retail and high-tech
communities have seen a high level of
investment in innovation as this is one of the
keys to dominance in their markets. This has
meant that the process of new initiatives,
designs and processes have become
ingrained within their culture. This is why they
have consistently been in the top bracket
for spend on product development and
innovation. 4
The position is now most prevalent in utility
companies (73%), electronics & high-tech
(71%) and manufacturing (70%). 4 These
results are relatively unsurprising regarding
electronics & high tech and manufacturing
because of the inherent nature of product
development and the necessity of innovation
in order to improve sales, but that utility
companies have the highest percentage is
interesting.
However, the use of Chief Innovation Officers
is now focused on fostering the processes
and platforms that allow for innovation to
spread throughout a company. Traditional
companies who have not had this focus on
innovation and new products are therefore
looking at these roles in a way that they
previously had not.
Accenture Survey 2012
CINOS employed
60%
Of Respondents
Employ A CINO or
similar position
Increase in CINOS per industry
since 2009
73% Utility Companies
71%
Electronics & High-Tech
70%
Manufacturing
The Accenture survey found that 60% of
respondents now employed a Chief Innovation
Officer (or similar position) but there were
industries which had a higher uptake than
others4. The survey, which was conducted
in 2012, found that there was an increase
of 6% in the uptake of Chief Innovation
Officers since the previous survey in 2009. 4
Equally, there has been a significant rise in
the number of companies who were actively
7
This is perhaps a sign that CINOs
are seen as a necessity when
implementing new ideas within older
and more traditional industries.
Utility companies have increasingly seen the
need for new innovations with pressures on
resources and in several cases the ability to
distribute to a growing population.
What is clear is that the spread of the role
throughout several industries is likely to
continue for the next few years. This kind
of growth has seen the importance of the
position recognized across almost all sectors,
despite the lack of formal duties across
companies and industries.
The Rise of the Chief Innovation Officer
Difficulties In The Spread Of The CINO Role
The role of the Chief Innovation Officer, despite rising in popularity, does have some difficulties in
rolling out to some businesses. When companies appoint a CINO for the first time there can be
several hurdles to get over before the full benefits can be realized.
No Previous Experience
Misunderstanding Of Role
Due to the role being new in scope, both in
the company and in the corporate world in
general, many who adopt it will not
have held a similar position in any
other company previously,
meaning that the reality of
performing certain duties can
often be underestimated. 1
As previously mentioned, the role of the
CINO is unformulated in its specific roles and
responsibilities. This can lead to confusion
when implementing new ideas and initiatives,
as it will be unclear to both the CINO and
the other executives exactly what remit
the CINO has. With the unpredictability
of the role and the pace of change
within the company, it can often
lead to a situation where certain
responsibilities will be given back to
their original owners and others will
be added to the CINO’s remit.
It also means that it takes
time to acclimatize to
the role before any major
changes can be made,
which can cause tensions
when certain expectations
aren’t met in the anticipated
time frame.
Board Room Roles
The CINO role often includes
responsibilities that others within the executive
team would have adopted as part of their
position and this can cause tensions when
the CINO takes these on. With a new position
that requires a holistic view over the company,
it will require not only working alongside
those in the C-Suite but also maneuvering
responsibilities to the CINO without treading
on the existing executives’ toes.
This can cause tension within
company management, hindering or
slowing down the work of the CINO in
their primary role.
8
Especially in companies where
the roles and responsibilities
of senior executives have
been set and adhered to for
a long time, this may cause
major disruption and a certain
degree of animosity towards
the new CINO.
Establishing Systems
A key role held by newly appointed CINOs
is the establishment of new systems and
practices within a company, including new
ways of performing certain tasks, new
communication pipelines and ways in which
employees work. 1 The implementation of
these systems can often disrupt the ways
that people operate, causing tensions and
difficulties in the adoption of these new
processes.
The Rise of the Chief Innovation Officer
These challenges often mean that successes
from new systems are not as instantaneous as
many would like.
It takes time for employees who have
become accustomed to existing
systems to become proficient with new
processes, and as such, their output
will often drop before it improves.
Changing Company Culture
Arguably, the CINO’s most important role is
the changing of company culture. This task is
done mainly through the use of new systems
and pipelines, but also requires patience
and communication to make sure that it is
implemented as smoothly as possible.
With the level of understanding required
from employees at all levels of the company,
approachability and problem solving is going
9
to be one of the most important aspects
to concentrate on. Examples of where
companies have tried to change a culture
and system too quickly and without patience
are numerous. The CINO and other senior
members of the company need to be patient
and responsive in order to create the kind of
culture where innovation and entrepreneurial
ideas can prosper.
The Rise of the Chief Innovation Officer
Key Takeaways
The Chief Innovation Officer role is undoubtedly increasing in popularity and scope,
with more industries and individual companies now making the most of the new
role and the potential it has.
The work being done by Chief Innovation Officers may not be identical at each
company, with roles being relatively fluid but holistic on an individual basis. This
means that the skill set for CINOs is not universal, but can incorporate many
facets depending on industry or even individual companies.
As we have looked through some of the elements that the increasing popularity of
the role incorporates, in addition to the challenges that it faces, there are three key
takeaways to reflect the current climate in which CINOs operate:
The Importance of Innovation Has Fuelled Its
Popularity
Innovation has become a key driver to company success in the past few years.
Companies like Google and Apple have made billions of dollars from diversifying
their products or coming up with new ones from the entrepreneurial drive of their
employees. With surveys pointing to the importance that employees believe
innovation to have on a company’s fortunes, it is little surprise that companies
employ CINOs.
If a role that was so vital were left as an extra task in an existing role,
then companies would be putting their future success at risk. This is
a key reason for the popularity of CINOs increasing in boardrooms
across the globe.
The Lack of a Formalized Role
As the role is in its infancy, it is important to note that the roles and responsibilities
of individuals differ vastly from company to company. This lack of a formalized
process could create problems in the future, not only in individuals moving
between companies as a CINO but also for companies looking for a new CINO.
If moving company, the roles may differ considerably given the lack of universally
recognized responsibilities across companies. This means that expectations
and reality need to be balanced from both sides, perhaps meaning a longer
adjustment period.
Only if and when the role becomes more formalized in roles and responsibilities
across multiple companies will this stop being an issue and will allow for those
working within this new role to be able to fully develop and bring experiences from
multiple sources.
10
The Rise of the Chief Innovation Officer
Minimizing Risk And Establishing Communication
Channels
Despite the role not having a fully formed set of formalized roles and
responsibilities, one of the key elements of the role is the minimizing of risk and
improvement of communication channels throughout the organization. Businesses
have recognized that innovation does not always create success and in many
instances could be an overly disruptive and ultimately fruitless endeavor.
A widely accepted role of CINOs is the minimizing of this risk through knowledge
and experience backed assessment of new ideas. Alongside this is the support to
those who want to come up with the new ideas, creating an environment in which
new ideas and products can be supported rather than feared.
Despite the relatively short time that the CINO role has been around compared
to other board level positions, it is becoming increasingly important for innovative
companies. Despite the lack universal roles across companies and industries, it
should not detract from the impact that this position can have at a company and
it is only a matter of time before they are mentioned in the same breath as Chief
Operating Officers, Chief Financial Officers and Chief Executive Officers.
11
The Rise of the Chief Innovation Officer
References
1.
Interview with Johnny Ryan, CINO at The Irish Times
http://hbr.org/2007/10/the-chief-strategy-officer/ar/1, 2007Gartner.
2.
Incubators, Accelerators, Venturing, and More, How Leading Companies Search for Their Next Big Thing, Boston
Consulting Group
3.
Corporate Innovation Is Within Reach: Nurturing and Enabling an Entrepreneurial Culture, Accenture
4.
Why “Low Risk” Innovation Is Costly, Overcoming the Perils of Renovation and Invention, Accenture
Acknowledgements
The authors would like to thank all the members of the LinkedIn group - Big Data / Analytics /
Strategy / FP&A / S&OP / Strategic Planning / Business Analytics / Innovation
The Rise of the Chief Innovation Officer
Authors
George Hill
Managing Editor of Chief Strategy Officer, a magazine dedicated to the spread of new ideas
and technologies within strategy and innovation. He has been writing and researching around
the subject for the past 4 years as well as collaborating with and interviewing some of the major
players within the space.
Simon Barton
Simon is an Editor at Chief Strategy Officer and has been writing about the subject for almost a
year. He has had the pleasure of speaking with some of the field’s major players, learning from
their insights in the process.
Featured Contributors
The authors would like to thank all the members of the LinkedIn group - Big Data / Analytics /
Strategy / FP&A / S&OP / Strategic Planning / Business Analytics / Innovation for the continuing
sources of new information and discussions around data.
The Rise of the Chief Innovation Officer
Contacts
George Hill
Michaela Jeffery-Morrison
Managing Editor & Online Director
Innovation Divisional Head
+1 (415) 992 7586
[email protected]
+1 (415) 692 5477
[email protected]
Deanna Notice
Hannah Sturgess
VP, Marketing
Director, Demand Generation Partnerships
+1 (415) 992 5561
[email protected]
+1 (415) 992 7502
[email protected]
The Rise of the Chief Innovation Officer
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