INNO-Views Policy Workshop “Innovation Culture”Eindhoven, December 13th, 2007

Kristina Wagner

Characteristics of Leading Innovators

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The „European Best Innovator" contest raises awareness for innovation management and condenses Best Practi ces

Participating Industries

• Engineering• Automotive • Financial institutions• Construction • Chemicals • Electrics/High tech• Consumer goods• Health care

Participating Countries

Participating Countries

• Pharmaceutical• Process industries• Software • Telecommunication • Tourism • Transportation• Insurances • Utilities

Winners (selection)

• BarclayCard• BMW• BoschSiemens

Appliances• Brembo• Credit Suisse• Clariant• Danone• ENEL• Ferrari• France Telekom

• Faurecia• Henkel• Kühne & Nagel• Pirelli• Phonak• SEB• Siemens Medical• Smith&Nephew

Wound Mgmt.• TAGHeuer• Volkswagen

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� More profitable growth of revenue compared to competition

� Large share of turnover by new products

The innovation management capability assessment is structured along the A.T. Kearney House of Innovati on

Enabler, et al. HR Mgmt., Controlling and IT (supporting factors)

Innovation Life Cycle Management(Processes)

IdeaGeneration

Launch/ Cont. Improvement

Inno-vation Strategy

Innovation Organizationand an Innovative Culture

Product/ Processdevelopment

1

2

4

3

Innovation success5

House of Innovation

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Innovation leaders base their strategy innovation p rocess on profound analysis

Remark: Extrapolation and Retropolation are complementary tools

Extrapolation

Short-term Medium-term Long-termToday

StrategyOngoing business activity Initiative II

Initiative I

Initiative III

Food

Cleaning & Maintenance

Clothing &Hygiene

Health, Leisure, Wellness

Warehousing & Logistics

Technology

Micro-technology Sensors

Automation and Robotic

Newmaterials

HomeNetworks

...

Robotic

Beauty/Well-being ...

Serve@home

Shaping Factors

Application Fields

Product marketsegments

SearchFields Society

Politics

Economy

Environment

Technology

Customer

Competition

Retropolation

Example Consumer Goods

Source: Best Innovator 2007 Competition

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Innovation leaders implement a communication-driven innovation culture in their corporations

• Innovation is reflected in the vision and embedded in the company

• Communication is systematic and takes place company-wide

• Financial resources are available for innovations

• Successes are celebrated, failures are worked out

• Employees have time for innovative activities

• Innovators are provided with career opportunities systematically

The best companies "live" innovation

Innovation environment and culture

Features of an innovation-driving

environment

Competence of innovation management

Values and norms

Motivation

Creativity

Inno

vatio

nre

adin

ess

Inno

vatio

nca

pabi

lity

2-31-20-1 3-4 4-5

DegreeBad Very good

Leading companies within the dimension Average of all participants

Source: Best Innovator 2007 Competition

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Tag Heuer incorporated the drive for exploration in its culture

� Cooperation with other companies and with design universities are sought pro-actively

� Lead user suggestions (e.g. sport professionals as Tiger Woods) serve as research missions for Tag Heuer

� The drive to constantly explore new technology spheres is a key element of the company culture

Source: Tag Heuer, A.T. Kearney

Innovative luxury watches for special

applications

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Innovation leaders systematically optimize their ti me-to-market

Duration of time-to-marketTime-to-market in relation to average

life cycle duration

10%

30%

Innovation Leaders

Average of all participants

Reduction of time-to-marketbetween 2003 and 2005

20%

10%

Source: Best Innovator 2007

Innovation Leaders

Average of all participants

Significant levers to reduce time-to-market• Product strategies that stimulate the consistent application of platforms/modules• Application of virtual technologies in product development (avoiding prototypes) and the development of

production and assembly processes

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• Fewer late changes thanks to more effective customer involvement

• Better project management tools

• More realistic objectives

• Culture of permitting red lights, more open communication and more constructive problem-solving

Innovation leadersharness benefits from:

Innovation leaders have an excellent project manage ment

% of projects deviating from the original target

13%

16%

27%

2%

7%

8%

0% 10% 20% 30%

Deviation from quality targets

Deviation from cost targets

Deviation fromlaunch dates

Leading companiesAverage of all participants

Source: Best Innovator 2007 Competition

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Controlling is build around key drivers to effectiv ely and efficiently manage the lifecycle of innovations

Key success parameters

Source: Best Innovator 2007 competition

• …Define revenue with new products as a strategic key figure

• …Realize shares of revenue with new products that are almost twice as high in the first year as the average

• …Understand innovation as a task of the whole organization that is proactively spurred and requested by top management

Innovation leaders…

Ideageneration

and selection

Idea

Idea

Idea

Idea

Idea

Idea

Idea

Idea

Idea

Idea

Idea

Revenue

CumulatedProfit

TLaunch

Product lineextension

T0

TimeTProfit

EfficiencyEffectiveness

TEnd of Life

Time-to-Market

Time-to-Profit

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Summarizing, companies with successful Innovation Management grow faster and more profitable

Source: A.T. Kearney’s European Best Innovator Competition database with more than 500 companies

Commonalities among Innovation Leaders

Success of Innovation Leaders

EBIT as % of revenue

AveragePerformers Leaders

Significantly higher growthrate than peercompetition

� Long term innovation strategy as an integral part of the business strategy based on deep "Customer Intelligence"

� Responsibility for entire product lifecycle process (or at least until "time-to-profit")

� Efficient use of internal & external innovation networks

� Systematic generation of ideas and realization of a high transfer rate from development projects into successful products

� Applying most recent IT-technologies as enablers for "speed" and "quality"

+24%

37%

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For SMEs the IMP³rove platform was designed to enhan ce the Innovation Management performance

Approach

Bench-marking Consulting Follow-up

IMP³rove Consulting Process

Inno-vation

strategy

Innovation organization and culture

Product/ process

development

Enabler, e.g. Human Resource Management, Knowledge Management, Project and Program

Management, Controlling and IT

Ideamanage-

ment

Launch/continuous

improve-ment

Innovation lifecycle management

IMC listing and ranking

Benchmark database

Online self-assessment

Library

Toolbox

Trainings

Case studies

KPIs

Financial actors

Intermediariesand Consultancies

Policy makers

SMEs

SME= Small and medium sized enterprise; IMC= Innovation Management Consultancy; KPI= Key performance indicatorSource: IMP³rove Core Team 2006

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“Innovation distinguishes between leader and follower”¹

1) Steve Jobs, Apple

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Thank you very much for your kind attention!

Kristina Wagner

Tel: +49 (0)30 2066 3418Fax: +49 (0)175 13 2659 266Kristina.Wagner@atkearney.com

www.atkearney.com