This year’s University of Michigan-Dearborn Innovation Confidence Study continues the research focus on the changing dynamic of the value chain relationship across manufacturing companies in all major industries (aerospace, pharmaceutical, automotive, chemical, high tech, and many other representative market segments). 2008 proved to be a challenging year as the confidence by and large across most major manufacturing industries and across what we measure as overall Innovation Confidence Index (ICI) fell from the previous year, coinciding with the economic recession which officially commenced its cycle during the study collection window of late 2007. In this year’s study, the research suggests that 2009 will emerge as a year of focus with an increase in confidence levels across a number of areas. This focus will drive core process attention in key areas that have historically suggested a high degree of executive uncertainty.
In summary, executives do not have time to put these issues off any longer. Given the current economic conditions, the research suggest that executives will meet these challenges “head on” in what one executive describes as “the year we finally clean out the closet.”
While the research does not validate the particular actions of the companies and what they are or are not doing to become highly innovative companies, it does cast an image of the perceptions of the senior management. These middle and top executives, who are responsible for attracting the talent and creating the culture of innovation within their organizations, maintain beliefs about what their organizations are or are not doing well in the pursuit of excellence. The survey team conducted qualitative post-survey interviews revealing examples of actions which by and large validate survey findings. The 2009 Innovation Confidence Study has matured greatly over previous years based on the nature of the organization areas covered and the qualitative information gathered from these interviews.
In our discussions with companies striving to become “highly innovative” we have arrived at a framework, an Innovation Constellation, which describes the ecosystem of innovation confidence and the six key areas of the organization which can be leverage to create a climate of “high innovators.” Our research has been born out of several diagnostic studies and qualitative discussions with organizations seeking to create environments where innovation thinking and behavior are supported, rewarded, encouraged, and cultivated.
While improvements in each organizational area can and does lead to an overall increased executive confidence level in the organization, research and diagnostic studies find that the inter-linking of multiple area initiatives creates the organization synergy required to create highly innovative companies. Historically this has proven challenging. Functionally many of these key areas are driven by management indicators and management positions in multiple departments, operations, and business units. Indeed, only when a comprehensive review of an organization’s business is made can clarity of the required inter-relationships expose opportunities for innovation.
Developing new operating s lending to increased innovation performance is not driven by simple economic spend in R&D initiatives. In fact it has been shown by independent research that there can be inverse relationships between the levels of R&D spend in organizations on innovation related activities and the resulting internal rate of return (IRR) from those investments. Simply put, throwing money at innovation does not create performance returns. Likewise, the 2009 Innovation Confidence Study demonstrates that simply creating actions in one or more areas of the organization does not necessarily lead to an overall increase in ICI levels. The Innovation Constellation, like all ecosystems, requires nurturing in and between each key area to achieve comprehensive results across the entire organization.