New research from CEO leadership organization YPO confirms that the majority of global business leaders (57 percent) feel an urgent need to innovate now. And where do they look to find inspiration to innovate? Appropriately, from their customers.
Why is it so important to keep this key constituency happy? Obviously, this is the group that spends money on products and services, but just as important: Nearly one in five respondents cite customer experience as their primary business area most needing innovation now. This ranks ahead of products, data/business intelligence and technology.
The firm’s new 2019 Global Pulse Innovation Surveyreveals that nearly half of global business leaders cited customers as their top source of innovation inspiration (48 percent) with employees (36 percent) ranking second. Consultants (10 percent) and think tanks (7 percent) lag far behind in the minds of respondents.
According to additional findings, geographic location, industry, company size and length of job tenure greatly inform business leaders’ opinions and go-forward innovation action plans.
What’s hindering innovation?
While the need to innovate is a top priority for global business leaders, only 4 in 10 strongly believe they have the appetite for experimentation.
While 57 percent of chief execs strongly believe there is an urgent need for their business to be innovative, more than one-third of this group (37 percent) however indicated they are not likely to invest in innovation over the next 12 months.
Industry plays a significant role in business leaders’ attitudes toward risk in business, with those executives in the IT & Software, Healthcare and Advertising & Marketing industries embracing risk (more than 55 percent have an appetite for experimentation and risk), while leaders in the Distribution, Automotive and Apparel industries are more risk adverse (only 35 percent have an appetite for experimentation and risk).
Where are CEOs investing in instead?
Over the next 12 months, global business leaders who are extremely likely to invest will be doing so in products (45 percent), internal processes (44 percent) and technology (42 percent) to help them win customers.
- Respondents in Africa (45 percent) cited their spending will be focused on product innovation.
- Business leaders in Latin America (26 percent) and Asia (19 percent) are more likely to invest in business model innovation compared to their peers in the United States (16 percent) and Canada (13 percent).
- S.-based business leaders (34 percent) are slightly more likely to invest in talent compared to all others (29 percent).
- Leaders who have been at the helm three years or less are less likely to invest in talent (26 percent) compared to those who have been at the helm longer (32 percent).
- Leaders of larger organizations ($250 million+) indicate that innovation investment in the next 12 months will be targeted toward data/business intelligence (47 percent), while leaders of $25-250 million businesses plan to invest in technology (42 percent). Leaders of smaller organizations ($25 million or less) reported they will be focusing their spending in the next 12 months on product innovation (45 percent).
What’s driving these investments?
More leaders strongly agree that changing market conditions are redefining their business (36 percent) than technology (24 percent) and new competitors (20 percent).
- UK respondents (43 percent) were much more likely than their European peers (31 percent) to strongly agree that changing market conditions are redefining their business.
- Business leaders in Latin America (19 percent) and Asia (15 percent) are more concerned that technology changes are making their business model obsolete, especially when compared to their peers in Europe (9 percent) and the United States (7 percent).
- Leaders of large organizations ($250 million+) cited new competitors threatening their traditional business model as a strong concern, well more than chief executives of smaller businesses (27 percent for large companies compared to 19 percent for all others).
- Chief executives who have been at the helm of their business one year or less believe their competitors are innovating faster than they are (18 percent), especially when compared to all executives (6 percent).
- Regionally, chief executives in Middle East/North Africa (10 percent) and Asia (9 percent) are more likely to strongly believe their competitors are innovating faster compared to leaders across all regions (6 percent).
YPO conducted its survey of its members in over 130 countries to get their latest thoughts on innovation and its implications for the future of their businesses. The survey was conducted from April 29-May 6, 2019 with more than 1,600 chief executive respondents.The sample included members in 105 countries and representing 34 industry sectors. The margin of sampling error is plus or minus 2.3 percentage points at the 95 percent confidence level.