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Booz & Company October 22, 2013
Navigating the Digital Future The 2013 Global Innovation 1000 Study
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact
Pack.pptx
Booz & Company
Introduction
R&D Spending Trends Analysis
Digital Enablers across the Innovation Value Chain
1
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
In 2013, Booz & Company is publishing its 9th Global Innovation 1000 study focusing on the impact of Digital Enablers
2
2013: Navigating the Digital Future
2009: Profits Down,
Spending Steady
2005: Money Isn't Everything
2006: Smart Spenders
2007: The Customer
Connection
2008: Beyond Borders
2010: How Top Innovators
Keep Winning
2011: Why Culture
is Key
Previous Global Innovation 1000 Studies
2012: Making Ideas
Work
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company 3
Furthering the Innovation Dialogue
2005
Initiated study to better understand how organizations can maximize their
return on innovation investment
Found no statistical relationship between R&D spending and success
2006
Defined “High Leverage Innovators” who produced
better results per R&D dollar than industry peers
Awarded “2006 Special Achievement Award
for Advancing Innovation” by Innovate Forum
2007
Identified and defined three innovation strategies (i.e. need seekers,
market readers, and tech drivers)
Examined the connection between performance and and alignment of
corporate and innovation strategies
2008
Identified characteristics of global innovation networks (i.e. R&D
footprint) that correlated with higher performance
Awarded “Best of Visions” award from PDMA
2009
Reported impact of 2008-09 global recession on R&D spending
2010
Identified the critical capabilities required for successful innovation and
their relationship to corporate performance
2011
Examined the links between business strategy, innovation strategy and
culture
2012
Examined the early stages of innovation, i.e. generating ideas and
converting them into actionable projects
Selected Media Coverage Highlights
Covered by ABCNews and MSNBC television
Featured on NPR radio in US and BBC Radio in UK
Cited in over 180 publications across 27 countries
Called “The most comprehensive assessment of the
relationship between R&D investment and corporate
performance” by The Economist
Over the years, our study has become a recognized contributor to better understanding what drives innovation success
Representative Publications
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Understanding application of digital enablers
Usage of large set of digital enablers across the
innovation value chain
Effectiveness of digital enablers and impact on
performance
R&D spending on digital enablers
Success factors for leveraging digital enablers
Usage of digital enablers by innovation strategy
Methodology
Web-based survey of nearly 400 senior
managers and R&D professionals to understand
impact of digital enablers on innovation results
(productivity, innovations outcomes, etc.)
Interviews with clients and a subset of survey
respondents
This year’s study, in addition to our annual R&D spend analysis, focuses on “digital enablers” across the innovation value chain
2013 Global Innovation 1000 Study
4
R&D Spending Trends
Analysis of R&D spending
Annual R&D spending across the 1000 largest
R&D spenders globally (publicly-traded firms)
R&D spending by region and industry (absolute
spending, growth and proportion of total)
R&D intensity (spending as percent of revenue)
Top 20 R&D spenders globally
10 Most Innovative Companies
Methodology
Spending determined based on companies‘
annual reports from their most recent fiscal year,
as of June 30, 2013
“Most Innovative Companies” determined based
on web-based survey of nearly 400 senior
managers and R&D professionals
Digital Enablers across the
Innovation Value Chain
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact
Pack.pptx
Booz & Company
Introduction
R&D Spending Trends Analysis
Digital Enablers across the Innovation Value Chain
5
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Executive Summary – 2013 R&D Spending Trends
After two consecutive years of 9%+ growth, global R&D spending returned to the long-term
growth trend and grew at 5.8% in 2013 to the highest total ever, $638 billion
The top three industries by R&D spending continue to be Computing & Electronics, Health, and
Auto
The Software & Internet, Health, and Auto sectors accounted for 74% of the overall growth in
spending; Chemicals & Energy decreased its R&D expenditures
Spending in North America grew at an above average rate of 8.6% while Europe grew at a below
average rate of 4.5%; Japan reduced its R&D spending by 3.6%
China increased R&D spending at the highest rate, 35.8%, but deceleration of R&D growth in
China compared to previous years is significant (5-year annualized growth rate of ~ 64%)
Tesla Motors and Facebook are new entrants on the 10 Most Innovative Companies list, and
Samsung rose in the ranking for the fourth straight year, reaching third place
For the fourth year in a row, the 10 Most Innovative Companies outperformed the Top 10 R&D
spenders across key financial metrics – revenue growth, EBITDA margin, and market cap growth
6
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
R&D spending grew 5.8% in 2013, to its highest level ever—but this is a slower growth rate than the two prior years of 9%+ growth
Global Innovation 1000 R&D Spending
2002–2013; $ Billions
$638$603
$550
$503$521
$495
$450$417
$391$369$355$353
2004 2005 2003 2011 2007 2009 2002 2008 2012
5.53%
2006 2010 2013
1-year
CAGR 0.6% 6.5% 7.9% 10.0%
11-year CAGR
= 5.5%
3.7% 6.2% 5.4% -3.5% 9.3%
7
9.6% 5.8%
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
The three industries that spend the most on R&D continue to be Computing & Electronics, Healthcare, and Automotive
2013 R&D Spending by Industry $638 Billions
2012 R&D Spending by Industry $603 Billions
8
7%
7%
10%
16%
4%
21%
28%
Other
2%
Telecom
2%
Consumer
3% Aerospace
& Defense
Software &
Internet
Chemicals
& Energy
Industrials
Automotive
Healthcare
Computing
& Electronics
6%
8%
10%
16%
22%
27%
3%
Other 2%
Telecom
2%
Aerospace
& Defense
3% Consumer
Chemicals
& Energy
Software &
Internet
Industrials
Automotive
Healthcare
Computing
& Electronics
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Nearly three-quarters of the $35B spending growth in 2013 came from the Software & Internet, Healthcare, and Automotive sectors
9.3
9.2
7.4
3.4
3.4
2.6
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
32
34
36
38
Change in R&D
Spending
($ Billions)
Total Chemicals
& Energy
-2.0
Aerospace
& Defense
0.1
Other
0.7
Consumer
0.8
Telecom Computing
& Electronics
Industrials Automotive Healthcare Software
& Internet
Change in 2012-2013 R&D Spending by Industry
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
34.8
Represents 74%
of growth in
R&D spending
9
While Computing & Electronics is
the largest spender, Software &
Internet experienced the largest
absolute spending increase
Increases
Decreases
Chemicals & Energy was
the only sector to
decrease its R&D
spending this year
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
The Software & Internet industry increased its R&D spending at a higher rate than any other industry
10
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
-5
0
5
10
15
20
25
Industrials Chemicals
&
Energy
2.0%
Aerospace
&
Defense
0.5%
-4.8%
5.8%
Consumer Computing
&
Electronics
5.4% 3.7%
Software &
Internet
22.1%
7.8%
Healthcare
6.9%
21.1%
7.1%
Telecom Automotive Other
Change in R&D Spending by Industry 2012–2013
Weighted
Average
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
China continues to increase its R&D spending at a higher rate than Rest of World (ROW), North America, Europe, and Japan
R&D Spending by Region 2008 - 2013
11
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
5
-5
65 15 10 5 0
0
35
45
40
20
15
10
ROW
5-Year CAGR (%)
1-Year
Growth Rate (%)
North
America
Europe
China
Japan
43,949.9
20,526.2
135,681.4
189,136.9
248,469.3
2013 R&D Spending
($ Billions)
-5
0
5
10
15
20
25
30
35
40
17.5%
China
35.8%
5.8%
Japan
-3.6%
Europe
4.5%
North
America
8.6%
ROW
Change in R&D Spending by Region 2012–2013
Weighted
Average
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
China has steadily gained revenue share among the Innovation 1000 companies – but is gaining R&D share at an even faster rate
12
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
19.1%
10.8%
8.7%
R&D
2013
39.0%
29.7%
4.9%
0.4%
21.3%
6.9%
3.2%
Revenue
2012
27.3%
34.2%
20.1%
10.8%
7.6%
R&D
2012
37.9%
30.0%
23.3%
6.2%
2.5%
Revenue
2011
27.4%
32.9%
21.1%
11.9%
6.6%
R&D
2011
38.3%
30.2%
23.3%
6.1%
2.1%
Revenue
2010
29.0%
35.3%
21.2%
9.9%
4.6%
R&D
2010
38.5%
32.3%
22.6%
5.3%
1.4%
Revenue
2009
31.0%
36.7%
19.9%
9.2%
3.3%
Revenue
2013
40.4%
31.9%
21.7%
5.2%
0.8%
Revenue
2008
29.1%
34.4%
R&D
2009
10.2%
5.8%
R&D
2008
43.5%
29.7%
21.5%
27.1%
34.3%
20.5%
North America
Europe
Japan
ROW
China
Revenue and R&D Spending by Region: 2008-2013 China’s R&D share has nearly
increased by 8X since 2008
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
-15
-10
-5
0
5
10
15
20
CAGR (%)
12-13
5%
0.2%
11-12
7%
10%
10-11
8%
15%
09-10
-4%
-11%
08-09
5% 6%
Given strong R&D spending increase combined with very modest revenue increase, R&D intensity has increased significantly
R&D Spending CAGR
Revenue CAGR
3.80
3.60
3.40
3.20
3.00
Intensity (%)
2013
3.60%
2012
3.43%
2011
3.52%
2010
3.73%
2009
3.42%
2008
3.42%
R&D Spending and Revenue CAGR1)
2008-2013
R&D Intensity2) 2008-2013
13
1) Innovation 2013 yearly R&D spending comparison for the 911 companies for which R&D spending available for 2012 and 2013
2) R&D intensity is the share of revenue spent on R&D
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Overall R&D spending grew at a higher rate than revenue and increased R&D intensity
1.181.131.16
1.23
1.111.131.121.141.201.22
1.35
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
3.2
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Indexed to 1998
R&D Spending
as % of Revenue
R&D Spending
Revenue
1.23 1.22 1.19
1.05 1.00
R&D, Revenue, and Intensity Indexed to 1998
14
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles strategy + business; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Google (#12) & Sony (#20) are new Top 20 R&D spenders in 2013
15
Increase or decrease within Top 20
ranking compared to 2012
Rank Company Geography Industry
2013 R&D
spending
($B)
1 Volkswagen Europe Auto 11.4
2 Samsung ROW Computing & Electronics 10.4
3 Roche Holding AG Europe Health 10.2
4 Intel Corp North America Computing & Electronics 10.1
5 Microsoft Corp North America Software & Internet 9.8
6 Toyota Motor Corp Japan Auto 9.8
7 Novartis AG Europe Health 9.3
8 Merck & Co Inc North America Health 8.2
9 Pfizer Inc North America Health 7.9
10 Johnson & Johnson North America Health 7.7
11 General Motors Co North America Auto 7.4
12 Google Inc North America Software & Internet 6.8
13 Honda Motor Co Japan Auto 6.8
14 Daimler AG Europe Auto 6.6
15 Sanofi Europe Health 6.3
16 IBM North America Computing &Electronics 6.3
17 GlaxoSmithKline Europe Health 6.3
18 Nokia OYJ Europe Computing & Electronics 6.1
19 Panasonic Corp Japan Computing & Electronics 6.1
20 Sony Corp Japan Computing & Electronics 5.7
Total $159.2
2013 Top 20 R&D Spending Ranking*
NEW
NEW
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Rank Company Geography Industry
2012 R&D
spending
($B)
1 Toyota Motor Corp Japan Auto 9.9
2 Novartis AG Europe Health 9.6
3 Roche Holding AG Europe Health 9.4
4 Pfizer Inc N. America Health 9.1
5 Microsoft Corp N. America Software & Internet 9.0
6 Samsung ROW Computing & Electronics 9.0
7 Merck & Co Inc N. America Health 8.5
8 Intel Corp N. America Computing & Electronics 8.4
9 General Motors Co N. America Auto 8.1
10 Nokia OYJ Europe Computing & Electronics 7.8
11 Volkswagen AG Europe Auto 7.7
12 Johnson & Johnson N. America Health 7.5
13 Sanofi Europe Health 6.7
14 Panasonic Corp Japan Computing & Electronics 6.6
15 Honda Motor Co Japan Auto 6.6
16 GlaxoSmithKline Europe Health 6.3
17 IBM N. America Computing & Electronics 6.3
18 Cisco Systems Inc N. America Computing & Electronics 5.8
19 Daimler AG Europe Auto 5.8
20 AstraZeneca PLC Europe Health 5.5
Total $153.6
2012 Top 20 R&D Spending Ranking
Cisco Systems Inc moved to #24
AstraZeneca PLC moved to #26
*Note: The methodology for calculating R&D spending changed this year, so some rankings are a result of methodology change rather than actual spending change.
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Tesla Motors is a new entrant among the 10 Most Innovative Companies, Facebook rejoined the list
16
10 Most Innovative Companies 2013
Rank Company
2013 R&D
Spending
($M)
Overall
Spending
Rank
Industry
Spending
Rank
2013
Revenue
($M)
Spending as % of
Revenue
(Intensity)
1 Apple Inc $3,381 43 14 $156,508 2.2%
2 Google Inc $6,793 12 2 $50,175 13.5%
3 Samsung $10,447 2 1 $178,621 5.8%
4 Amazon.com Inc $4,564 30 4 $61,093 7.5%
5 3M Corp $1,634 85 7 $29,904 5.5%
6 General Electric Co $4,520 31 2 $144,796 3.1%
7 Microsoft Corp $9,811 5 1 $73,723 13.3%
8 Intl Business Machines Corp $6,302 16 3 $104,507 6.0%
9 Tesla Motors Inc $274 377 45 $413 66.3%
10 Facebook Inc $1,399 101 7 $5,089 27.5%
Increase or decrease within “Most
Innovative” ranking compared to 2012
NEW
NEW
Procter & Gamble moved to 13th; Toyota moved to 16th
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Samsung rose in the rankings for the fourth straight year, displacing 3M as the 3rd most innovative
17
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Change in the 10 Most Innovative Companies Ranking 2010-2013
2010 2011 2012 2013
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
As in previous years, there are significant differences between the 10 Most Innovative Companies and the Top 10 R&D spenders
Rank Company
2013 R&D
Spending
($B)
Region
R&D/
Revenue
(Intensity)
Industry
1 Volkswagen $11.4 Europe 4.6% Auto
2 Samsung $10.4 ROW 5.8% Computing &
Electronics
3 Roche Holding
AG $10.2 Europe 21.0% Health
4 Intel Corp $10.1 N. America 19.0% Computing &
Electronics
5 Microsoft Corp $9.8 N. America 13.3% Software &
Internet
6 Toyota Motor
Corp $9.8 Japan 3.7% Auto
7 Novartis AG $9.3 Europe 16.5% Health
8 Merck & Co Inc $8.2 N. America 17.3% Health
9 Pfizer Inc $7.9 N. America 13.3% Health
10 Johnson &
Johnson $7.7 N. America 11.4% Health
Total R&D
Spending $94.8B
2013 10 Most Innovative Companies 2013 Top 10 R&D Spending Ranking
Rank Company
2013 R&D
Spending
($B)
Spending
Rank
R&D/
Revenue
(Intensity)
Industry
1 Apple Inc $3.4 43 2.2% Computing &
Electronics
2 Google Inc $6.8 12 13.5% Software &
Internet
3 Samsung $10.4 2 5.8% Computing &
Electronics
4 Amazon.com
Inc $4.6 30 7.5%
Software &
Internet
5 3M Corp $1.6 85 5.5% Industrials
6 General
Electric Co $4.5 31 3.1% Industrials
7 Microsoft
Corp $9.8 5 13.3%
Software &
Internet
8 IBM $6.3 16 6.0% Computing &
Electronics
9 Tesla Motors
Inc $0.3 377 66.3% Auto
10 Facebook Inc $1.4 101 27.5% Software &
Internet
Total R&D
Spending $49.1B
18
Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Companies appearing on both lists
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Consistent with prior years’ findings, the 10 Most Innovative Companies outperform the Top 10 Spenders
19
10 Most Innovative Companies* vs. Top 10 R&D Spenders
66%71%
54%
45%
69%
45%
EBITDA as a
% of Revenue
(5-yr. Avg.)
Revenue Growth
(5-yr. CAGR)
0%
50%
100%
Market Cap
Growth (5-
yr. CAGR)
Top 10 R&D Spenders 10 Most Innovative Companies Insights
Among the Most Innovative Companies, all
but GE, Microsoft, and Google outperformed
their industries on market cap growth
The high market cap growth of the Most
Innovative Companies was driven by high
performance from Samsung, Apple, and
Amazon
Apple, Samsung, and Amazon also saw the
greatest revenue growth among the Most
Innovative Companies
The Top 10 Spenders lag their industry peers
on revenue and market cap growth
Among the Top 10 Spenders, only
Volkswagen and Samsung outperformed their
industries on all three financial measures
Highest
Possible
Score:
Lowest
Possible
Score:
Normalized
Performance
of Industry
Peers:
*Only 8 of the 10 Most Innovative Companies were
included in this analysis. Tesla and Facebook were
removed as they did not have Market Cap data
spanning back 5 years. Sources: Bloomberg data; Capital IQ data; Booz & Company Innovation 1000 articles in strategy + business; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact
Pack.pptx
Booz & Company
Introduction
R&D Spending Trends Analysis
Digital Enablers across the Innovation Value Chain
20
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Executive Summary – Survey Findings Overall, companies spend an average of 8.1% of their R&D budget on digital enablers; the Software
& Internet, Aerospace & Defense, and Health industries spend the highest proportions
These tools fall into two categories: “Productivity Enablers“ and “Market and Customer Insight
Enablers”
– Productivity Enablers are commonly used, must-have enablers to establish baseline productivity
– Market and Customer Insight Enablers are emerging enablers focused on understanding market and customer needs
Our survey results show that usage and effectiveness of these tools aren’t correlated– some heavily
used Productivity Enablers simply aren’t very effective, while several less used Market and Customer
Insights Enablers turn out to be highly effective
Only ~26% of digital enablers are used significantly and also considered strongly effective by survey
respondents
However, companies using enablers significantly are ~77% more likely to report that they outperform
competitors than companies using them moderately
We found significant differences in terms of usage based on companies’ overall innovation strategy
with Need Seekers claiming highest usage frequency of digital enablers
21
Sources: Bloomberg data; Capital IQ data; Booz & Company Global Innovation 1000 survey; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company 22
Productivity
Enablers Commonly used, must-
have enablers to
establish baseline
productivity
Market and
Customer Insight
Enablers Emerging enablers
focused on
understanding
market and customer
needs
Sources: Booz & Company Global Innovation 1000 survey; Booz & Company analysis
Companies use a wide variety of digital Productivity and Market & Customer Insight enablers across the innovation value chain
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Total
Spending
8.1%
Oth
er
8.6%
0.9
Com
puting
& E
lectr
onic
s
5.7%
9.7
Auto
6.3%
6.5
Tele
com
6.9%
1.0 In
dustr
ials
7.1%
4.7
Chem
icals
& E
nerg
y
7.2%
2.9
Consum
er
7.9%
1.7
Health
10.0%
13.8
Aero
space
& D
efe
nse
12.0%
2.6
Soft
ware
&
Inte
rnet
15.0%
7.7
Spending on digital enablers, in % of R&D spending and in $B1)
Average weighted by # of responses per % spend category2)
Among all industries Software & Internet companies spend the highest proportion of their R&D budgets on digital enablers
1) Calculated by applying the Average of % Spending (as determined by survey respondents) on the left to the overall industry R&D spending (as calculated from Bloomberg and Capital IQ data)
2) % spend categories: <5%, 6-10%, 11-20%, 21-30%, 31-40%, 41-50%, and >50%
Sources: Bloomberg data; Capital IQ data; Booz & Company Global Innovation 1000 survey; Booz & Company analysis
Average
23
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
Companies using digital enablers significantly are 77% more likely to report that they outperform competitors than moderate users
Respondents with perceived overall financial outperformance relative to competitors
(in %)
24
Minimal Usage 1 2 3 4 5 Significant Usage
“Used Moderately” = 1, 2, or 3
“Used Significantly” = 4 or 5
Significant usage of digital enablers
53%
Moderate usage of digital enablers
30%
+77%
Sources: Booz & Company Global Innovation 1000 survey; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company 25
Need Seekers – Consistently strive to be first
movers; Proactively engage customers to
determine needs and shape new innovations;
Determine new innovations market back from market
need identification
Market Readers – Adopt a 2nd mover strategy;
Focus on driving value through incremental change;
New innovations determined market back; although
not as proactively as Need Seekers
Technology Drivers – Drive innovation via
technological achievement; Leverage technology
for both incremental and breakthrough change.
The least proactive of the three strategies in directly
contacting customers
Three Innovation Strategies Example Companies
In 2007 we defined three distinct innovation strategies which we further explored in subsequent studies
Sources: Booz & Company Innovation 1000 articles in strategy + business
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
In 2011 we found that Need Seekers possess the highest level of strategic alignment and cultural support
Innovation Strategy Alignment with
Business Strategy
Innovation Strategy Supported by
Company Culture
Not Aligned
Highly Aligned
Does not
Support
Strongly
Supports
26
Sources: Booz & Company 2011 Global Innovation 1000 survey
19.8% 17.1%15.2%
34.7%50.9%
32.9%
8.4% 7.9%
4.4%3.6%
37.7%
34.2%
30.3%
0%
20%
40%
60%
80%
100%
% of Respondents
Technology Driver Market Reader
3.0%
Need Seeker
15.8%
33.7%
33.8%
31.2%
28.5%
6.9%14.0%
6.1%6.9%0.6%
17.5%21.3%
3.6%
38.8%
41.2%
0%
20%
40%
60%
80%
100%
% of Respondents
Technology Driver Market Reader Need Seeker
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
In 2012 we found that the innovation models use idea generation tools and mechanisms at the front end that support their strategies
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Technology Foresight Tools
1.21
0.90
0.85
Market Insight Tools
0.91
1.16
0.91
End User Insight Tools
0.96
0.92
1.17
Indexed average value across all survey respondents
“Which of the following tools and mechanisms, if any, does your organization
use to generate new ideas?” (1)
(1) Responses reflect the indexed value of the likelihood that respondents are choosing a value higher or lower compared to the average across all responses. An index value of
“1” represents the indexed average of responses
Need Seekers
over-index on
tools/mechanisms
that provide deep
end-user insights
Market Readers
over-index on
tools/mechanisms
that provide
market insights
and demand leads
Technology
Drivers over-index
on tools/
mechanisms that
guide where/ how
they can push the
tech frontier
End-User Insight Tools
Idea Work-Out Sessions
Social Network Data Mining
End User / Customer Focus Groups
Direct Customer Observation
Market Insight Tools
Feedback from Sales & Customer Sppt
Traditional Market Research
Seed Funding for Exploratory Research
Technology Foresight Tools
Periodic Meetings of Technical
Community
Technology Road Mapping
External Technology & Idea Scouting
Cross B.U. Communities of Practice
Sources: Booz & Company 2012 Global Innovation 1000 survey
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
In 2013 we found that Need Seekers claimed the highest usage of digital enablers, with 62% of respondents using them significantly
Respondents using digital enablers significantly in innovation processes
and product development cycles in %, N = 381
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62%
48%
25%
Market Readers Need Seekers Technology Drivers
Sources: Booz & Company 2013 Global Innovation 1000 survey; Booz & Company analysis
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company 29
Need Seekers
Market Readers
Tech Drivers
Monitoring tools
Idea capture tools
Simulation tools All Three
Discussion platforms
Rapid prototyping
Visualization and
engagement tools
Social media management dashboards
Enhanced PLM
systems
Big data tools
Customer profiling
Co-design tools
Project management
Crowdsourcing
Collaborative environments
CRM systems
ERP platforms
Most Used Enablers by Innovation Strategy
While priorities differ slightly by innovation strategy, companies demonstrate a high level of agreement on most used digital enablers
Sources: Booz & Company 2013 Global Innovation 1000 survey; Booz & Company analysis
Color Key:
Productivity enabler
Market and customer insight enabler
Booz & Company's 2013 Global Innovation 1000 Study_Navigating the Digital Future_Fact Pack.pptx Booz & Company
For the complete study and additional
information on the annual
Booz & Company
Global Innovation 1000 Study
Please Visit:
www.booz.com/innovation1000
(official release on October 22nd)
For media or other inquiries, please contact
Katrina Grochocki
+1-212-551-6415
+1-908-642-3766
30
The 2013 Global Innovation 1000 Study: Navigating the Digital Future