By Scott Kirsner and Meghan Hall, InnoLead
If top leaders in your organization have been getting less supportive and more skeptical about long-term projects, that’s not an aberration. New data shows innovation focus in the “pandemic era” — the years from 2020 to the present — has been shifting to near-term, more incremental activities.
Our company, InnoLead, surveyed innovation, R&D, and strategy leaders in the fourth quarter of 2022 to better understand budget and staffing dynamics, and innovation challenges they were facing, as part of a regular report we publish called Benchmarking Innovation Impact. We received more than 200 qualified responses. We also conducted qualitative interviews with senior leaders at companies like Kimberly-Clark, Mastercard, Colgate-Palmolive, and NASCAR.
Here are five of the key dynamics from the report.
1. Perhaps the most interesting longitudinal data from this report is that the biggest obstacle to large organizations doing a better job of getting new things to market is… the people who work there. We’ve now asked about the biggest challenge that innovators and R&D leaders face in three separate surveys since 2018, and the top answer is consistent politics, turf wars, and lack of alignment. That’s followed closely by a similar answer, cultural issues, in the number two slot. Lack of CEO support shows up much further down the list. So even when the CEO says she’s a champion of fresh, new ideas and products, you’ve still got to figure out how to work with everyone else in the org chart to get those ideas out into the world.
2. As innovators wrapped up 2022 and looked ahead to 2023, they anticipated more pressure on their budgets than in prior years. About one-quarter of our respondents were expecting budget cuts — a much larger share than in a similar survey we fielded in 2019 — but 39% were expecting a budget increase. Overall, people were slightly more bullish about staffing growth this year than budget growth.
3. If you feel your colleagues or direct reports are less productive when working remotely, or in a hybrid blend of in-person or remote, you’re in the minority. Our respondents were fairly senior — nearly 70% work at the director level or above in their organizations, with 20% at the SVP, EVP, or C-level. But despite plenty of hallway talk and skepticism about how much really gets done when someone is not present in the office five days a week, just 15% of our respondents said they felt their team’s productivity was down relative to the pre-pandemic era. Forty-three percent described their team as more productive. One respondent from the consumer-packaged goods industry explained that new product development was siloed based on geography before the pandemic: “During the pandemic, the entire team met virtually, [which] increased cross-site collaboration. Now, two years later, it has become a norm.”
4. In our qualitative interviews, and in comments from survey respondents, we heard that sustainability, conservation, and the circular economy are rising on the priority list for many innovations and R&D execs — whether they are leading those initiatives or supporting colleagues with “sustainability” in their titles.
Kimberly-Clark’s chief R&D officer, Robert Long, told us that his team’s “biggest challenge is to meet the needs of consumers for better products, taking advantage of technological innovations that are coming — but doing that in a way that also reduces our environmental impact…”
Ann Tracy, Colgate-Palmolive’s first-ever Chief Sustainability Officer, said that the company is seeking to have all its plastics be recyclable, compostable, or reusable by 2025. That includes the first recyclable toothpaste tube, the design of which Colgate-Palmolive has shared with others. Tracy sees the company’s R&D and technology teams as key partners to her work: “We’re at a juncture where we need to take the R&D element of designing more sustainable products to the next level.
5. As we mentioned in the opening, we’ve been asking survey respondents about the resources they dedicate to incremental, adjacent, and transformational activities — which some people call Horizon 1, Horizon 2, and Horizon 3. When we asked that question in 2019, respondents said that 26% of their activity fit into that longest-range category. The number shrank a bit in 2020, in the first year of the Covid-19 pandemic, which was not surprising, given that year’s challenges in keeping business operating amidst lockdowns and keeping products on store shelves or in the e-commerce pipeline. But by the end of last year, respondents estimated it had dropped further, to about 18%.
We have some hypotheses about why this might be. In a tight talent market, is it simply hard to fill these “big thinker” types of roles, which often relate to cutting-edge technologies like artificial intelligence, quantum computing, or autonomous systems? Are companies ceding this terrain to startups, with a fantastic fundraising run in 2020 and 2021? Or are companies simply falling victim to executive impatience with anything that pays off over a longer time horizon, rather than delivering results next quarter?
One thing the data makes clear: at many companies, the innovation and R&D pipeline is continually under scrutiny, and in need of defending. That requires getting buy-in and alignment — while navigating political minefields — about why it’s important for your organization to remain committed to medium- and long-term innovation work. Selling your vision about how your industry will change over the next five years, with data to support it, has never been more important.
Scott Kirsner is CEO and Co-Founder of InnoLead. Meghan Hall is InnoLead’s Assistant Editor.