Business white paper

The innovation
agenda
Mapping the new frontier in businessan HP and Aecus paper

Business white paper | The innovation agenda

Table of contents
1 Review the results
2 Develop a proactive innovation agenda
2 Learn what this paper is about
3 Review survey details
4 Question 1. What is innovation?
5 Recognize the diversity of innovation
5 Map innovation projects
6 Define innovation
7 Question 2. Does innovation matter?
7 Innovateits enriching, exciting, and necessary to survive
9 Review the benefits of innovation
9 More work to do
10 Question 3. What tools and technologies are driving innovation?
11 Watch these tools, techniques, and technologies
13 Question 4. What factors enable achieving innovation?
17 Hear the many voicesone idea
18 About HP
18 About Aecus

Business white paper | The innovation agenda

Innovationcreating value by doing things differentlyis not

a new concept. But its never been more important to business
success. In this age of rapid technological change and market
turbulence, we set out to explore what this vital concept really
means to business. What is innovation? Why does it matter?
What technologies are driving it? How can it be achieved?
Review the results
HP and Aecus conducted an Innovation Survey, asking decision-makers from across the
business world for their views on innovation. The resulting picture is striking:
Innovation is not one thing; its a spectrum of ideas. It can impact all levels of a business, and
beyond. And it can take the form of a simple change to how a team works, a major IT program,
or even a life-saving new medical treatment. It can be driven internally, with external partners,
or in an open eco-system of collaborators. But in all forms, innovation is driven by value.
Businesses see innovation as a critical factor for future success. Some 91% of respondents
said that innovation is important or critically important. Over the next five years, 82% of
organizations expect it to become even more so.
Making innovation happen can be difficult; but where it does happen, its because a series of
deliberate steps were taken. Innovation depends on funding, resourcing, and sponsorship.
A proactive innovation agenda is required to overcome inertia and bring together the
capabilities required for success.
The goal of this report is to give a snapshot of what innovation means at a practical level
for businesses today. We also want to provide a frame of reference for approaching it; this
includes our Innovation Heat Map, a simple diagnostic tool to help you step back and place your
innovative activities in context (See Figure 16).
We recognize innovation is a broad and ever-evolving topic. Every organization will have a unique
innovation perspective and agenda. But this report shows that there is near-universal energy
and enthusiasm from organizations willing to push into the new frontiers of innovation
to maximize their vast potential benefits. We look forward to continuing the conversation.

Business white paper | The innovation agenda

Develop a proactive innovation agenda

Which of these challenges is your firm facing?
Do your customers demand better services at
lower prices year on year?
Are your margins under pressure as the world
around us changes rapidly?
Is new regulation forcing your organization to
take on new obligations and liabilities?
Is customer loyalty under pressure as the
Internet of Everything fundamentally changes
expectations?
How can you get your products updated faster
than ever before?
Do you agree that its an imperative to delight
your customers with exceptional new levels of
service, at no extra cost and with a re-shaped
value proposition?
Are your shareholders looking for an
improvement on last quarters record-breaking
results? Is this good enough in the battle for
investment capital and investor loyalty?
Are you worried about nimble start-ups entering
your markets with breakthrough technologies
that challenge your legacy business and
operating model?
How do you win the war for talent in a techsavvy environment where C-level professionals
only want to work with the most cutting-edge
companies?

At first glance, the challenges in the sidebar seem like disparate business challenges. But
theyre linked by a common thread. For each of the challenges, responses such as business as
usual, incremental process improvement, or continuing excellence will not guarantee success
as lightning fast technological breakthroughs create great leaps forward in how businesses
work, interact with consumers, and impact society.
Waves of technology change bring greater levels of immediate connectivity and interactivity,
and offer a scope, scale, and depth of customer insight thats unprecedented. But it has
also created more intense competition. In an age of austerity, global competition, and everincreasing expectations, continuing to do the same thing a little bit better each year is simply
not enough to survive or prosper. Our research has led us to conclude that developing a
proactive innovation agenda is required for any sustainable competitive business strategy.
So, how can youas a team, organization, or industryachieve more, when the resources at
your disposal are limited and you are under threat from new ideas and entrants? For each of
the challenges described, doing things differentlyinnovatingoffers a potential answer: a
response thats disruptive and secures a competitive advantage.

Learn what this paper is about

HP and Aecus believe a drive for innovation must be a priority agenda item for every executive
leader. Change, new ideas, and novel ways to reshape the way we live and work has historically
fallen within a goal-oriented continuum. Whats different today is the phenomenal speed
at which this is taking placethe level of global visibility, mass collaboration, open access
to shared intellectual property, and the flat world we now live in. It doesnt matter if an idea
originates in Tianjin, Minsk, Miami, or Londonentrepreneurs, consultants, and business
leaders rapidly embrace and exploit it at Internet speed. This is different from everything that
has gone before.
That said, innovation can be elusive, misunderstood, and difficult for many to come to terms with.
This paper, and the survey behind it (see Figure 1) was commissioned to help organizations like
yours orientate themselves and target new innovation opportunities. In particular, we wanted to
shed light on four fundamental questions:
1. What is innovation?
2. Does innovation matter?
3. What tools and technologies are driving innovation?
4. What factors enable achieving innovation?
At HP and Aecus, we think that a better understanding of these questions is a priority for all
organizations today. This report provides our perspective, basing our conclusions on input from
over 80 respondents.

Business white paper | The innovation agenda

Review survey details

HP and Aecus conducted a survey, supplemented with a series of follow-up interviews.
The analysis is based on 84 responses.
Figure 1. Survey highlights*

Approximate number of employees in respondent organization

1% (250,000+)
14% (50,001250,000)

18% (050)

20% (10,00150,000)

12% (51250)

10% (2511,000)
24% (1,00110,000)

Industry sector

2% Communication, 1% Travel and

media, entertainment transportation
5% Industrial
17% Financial services
6% Technology
8% Energy
14% Manufacturing

10% Retail and

consumer goods
11% Public sector

13% Health and life sciences

13% Services

Job function

4% Administrative
4% Sales
6% Business development

4% Engineering

6% Program and
project management

35% Information technology

8% Consulting

14% Other
18% Finance

Role

2% Partner
8% Technical manager
7% CXO

30% Director

13% VP

18% Other

*Survey data collected November, 2014

21% Functional manager

3

Business white paper | The innovation agenda

Question 1. What is innovation?

To start our analysis, we asked our respondents for recent examples of innovation they had
implemented in their organizations. Surprisingly, there was no shortage of examples.
Immuno-oncology treatment. A treatment that tags cancerous cells to get them
eliminated by the immune system Some patients with Melanoma have seen their
life extended, and this has opened a new class of treatment, probably giving more
options for cancer treatment in the future.
Operations director, pharmaceutical company, UK
Creation of social/e-commerce channels. In partnership with a retail chain,
to deliver products for special events. The impact was revenue growth, increase
(in) traffic, and win-win.
IT director, global food conglomerate, U.S.
Introduction of collaboration platforms. Resulting in digitized manual processes,
central knowledge sharing, and improvement of project and team collaboration.
Enterprise IT architect, industrial manufacturer, Germany
Patient-specific technologies. Custom-cutting blocks for knee operations.
Resulting in improved outcomes for patients, reduced assets in the operating room.
Finance VP, health and life sciences company, UK
Providing insurance for voluntary nonprofits. This fills a societal need while
increasing business.
HR VP, insurance company, Canada
Using Design Thinking. To take an outside-in view of the governments trades
licensing process. We now have a better understanding of what our customers
(prospective and current trainees) value in the service delivery value chain and why
there is such resistance with the current industrial-aged process ... and where we
can innovate to improve outcomes (more trainees, better compliance, increased
satisfaction, reduced cost ... ).
IT and innovation director, public sector, Australia
Implementing a conference room booking system. User-friendly interface plus
easy way to find and book a conference room.
Service management and infrastructure VP, telecom company, Sweden
Implemented new processes to drive how IT does work. Communications that
work, and responds to requests. Leading to better productivity and more internal
customer satisfaction.
CIO, bank, U.S.
Recently implemented an AP imaging system. Our initial details indicate that we
have fewer late fees and disconnect notices since we are receiving invoices and are
able to turn them around more quickly.
Care provider, UK
Introduction of a bespoke on-line application system. This streamlined the
candidate application system and led to higher levels of candidate satisfaction, higher
candidate placements, increased revenue, and increased capability for the client.
Strategic planner, human resources company, Australia
Improving the efficiency of the Source-to-Pay process. More automation,
less manual work, and cost savings.
Procurement manager, retail/consumer goods company, UK
Improved process/software. To track potential customers, customer inquiries,
and follow-up contact. Impact: easier to communicate information across
organizational lines.
Functional manager, energy company, U.S.
4

Business white paper | The innovation agenda

Recognize the diversity of innovation

Its clear from these examples that people have very different perspectives on innovation
ranging from developing new life-saving medical treatments, to major IT programs, and simple
process changes at a team level. This presents an immediate challengeare we all talking
about the same thing? The potential permutations are many:
SourceIs it driven in-house, through partnering, or other channels?
ImpactIs the innovation for a team, company, industry, or society?
ScaleIs it incremental or transformational?
TechnologyIs the innovation driven by technology or is technology used
to meet other objectives?
MaturityIs there a relative level of innovation?
In our view, the first challenge of innovation lies in accepting that there are many different
types: its not one thing. Its a family of approaches, each with its own opportunities, barriers,
and dynamics.

Map innovation projects

One way of thinking about innovation is to ask where its coming from, and where its going.
We asked respondents to identify:
The main level of impact being targetedDoes the innovation primarily seek to impact a
team/process, business, industry, or society?
The main source of innovation in the organizationIs innovation primarily driven forward
internallyfrom within the organization, via partneringsuch as with a service provider, or
via open collaboration with a wide range of entities?1
By logging the survey responses, we produced an Innovation Heat Map of where most interest
and effort was being invested. This shows that while every combination of source and impact is
relevant, the focus is on innovation to make change at the business leveleither internally
or via partnering.

Figure 2. Percentage of respondents by source and impact of innovation

Source?
How is the
innovation
delivered?

Such as Procter & Gambles innovative

relationships with suppliers and contractors.
P&G launched its Connect+Develop R&D program
more than a decade ago and states that half its
innovations come from outside the organization.
pgconnectdevelop.com/

1

Open/ecosystem
(more collaborative)

3%

5%

4%

1%

Partnering

10%

20%

11%

5%

Internal/closed
(more core)

9%

22%

7%

4%

Team/process

Business

Industry

Society

Impact? (scale)
What level does innovation impact?

Business white paper | The innovation agenda

Define innovation
Moving beyond specific examples, we asked respondents to define innovation in general terms
and we received a similar wealth of opinions. No two answers were the same; but on closer
inspection, a few basic types of view predominated. Our respondents see innovation primarily as
cost and efficiency focused, products and services focused, or in transformational terms.
Despite the variety of definitions and examples uncovered by the survey, its clear that a
common thread runs through all of them. All suggestions uncovered in this research are
creating something of valuean outcome such as efficiency, customer satisfaction, or a
transformed business. And they achieve this by doing things differentlythrough technology,
process redesign, or in many other ways. Although each respondent provided a different focus
and example, they all fit under the umbrella definition of innovation as the creation of value by
doing things differently. Innovation produces a myriad of applications; but at its core, one idea
provides a common link.

Figure 3. Common thread feedback from respondents

Innovation is... is...

Innovation
Type 1. Cost and eiciency focused

Doing things faster, better, cheaper.

Driving eiciency without loss of control or quality.
Improving the way we work.
More bang for the buck.
Looking for better and more eicient ways to accomplish business tasks.

Type 2. New products, services, and customer experience focused

Finding better products (and services) for our consumers that exceed their expectations.
The creation of creative solutions that add value to our clients experience.
Leveraging technology with vision to provide the most eicient services and products.
Serving our customers.
Delivering better service and solutions to our customers.

Type 3. Transformational

Doing things dierently to get a dierent result to the norm.

Something that has not been done/tried before.
New ideas, processes, and technologies that provide major progress for the enterprise.
Utilizing something that is new, possibly disruptive, that delivers value and
helps my company achieve its business objectives.

Business white paper | The innovation agenda

Question 2. Does innovation matter?

The survey revealed a striking consensus. Some 91% of respondents said that innovation is
critically important or important now. Then, over the next five years, 82% of organizations
expect it to become more important. No respondents said it would become less important.
Does innovation matter? Yes.

Innovateits enriching, exciting, and necessary

to survive
When asked why innovation is important, we were struck by the passion and intensity of the
responses. For manybut not all, innovation is a matter of competitiveness, success, and
survival. It conveys a sense of urgency and passion not often found in other business issues.
For others there is also a strong personal and emotional angle to innovation, such as, I was
born to do it. This dimension is picked up by author Dan Pink as he explains employees
derive satisfaction from innovation for reasons that go far beyond rational economic
considerations. They do it for a sense of autonomy, mastery, and purpose.2
Figure 4. The importance of innovation

How important is innovation

to your organization

Will innovation
important in th
18% No change

1% Not important
7% Some impact

40% Critically important

our future depends on it

51% Important
it will determine
how successful we are

important is innovation
our organization

Note: 0% Less impo

Will innovation become more or less

important in the next five years
18% No change

1% Not important
7% Some impact

40% Critically important

our future depends on it

Important
ll determine
successful we are

82% More important

Note: 0% Less important

Dan Pink Drive: The Surprising Truth About

What Motivates Us, 2011, Riverhead Books

2

Business white paper | The innovation agenda

Figure 5. Respondents widely varying explanations on why innovation is important to them and
their company

Innovation equals success.

To keep the company relevant to our consumers.
The future of the banks depends on the future innovative services they
can develop.
It is enriching, exciting, and necessary to survive.
Innovation is critical to our organization as our core business is to develop and
give access to new drugs to help patients prevail over serious diseases.
Survival.
Innovation is the basis for future development of business.
It is what my customers are asking for.
Product commoditization and increased competition.
We need to stay at the forefront of change; otherwise we will end up
out of business.
I was born to do it.
New ideas are the lifeblood of our firm.
As VP of finance transformation and it is central to my role.
Stay on top of innovation to avoid the bottom.
Competitive advantage.

But not everyone agrees:

I find the whole label of innovation to be overblown and misinterpreted. It is one of those
generic labels people use to make mundane and often trivial changes sound more important
or fundable or marketable.

Business white paper | The innovation agenda

Review the benefits of innovation

Underlying this sense of urgency are the many perceived benefits of innovation, which the
survey quantified. The original driver of business changecost reductionwas only 8th out of
the 12 benefits provided, with 44% of respondents citing it as very important. Its clear that cost
reduction is just one of many drivers, and many others scored higher.

Figure 6. Perceived benefits of innovation

Very important
Important
Not important
n/a /dont know

Improvements to products/services

70% 24% 2%

4%

Dierentiation

64% 25% 8%

2%

Revenue growth

63% 26% 7%

4%

Speed to market

60% 25% 11%

5%

Productivity

58% 37% 1%

4%

Operational flexibility

52% 40% 2%

5%

Quality improvement

45% 50% 2%

2%

Cost reduction

44% 44% 8%

4%

Access to skills/labor

40% 46% 8%

5%

Compliance

33% 40% 19%

7%

Financial flexibility

30% 48% 13%

10%

26% 54% 13%

7%

Access to assets/resources
0

20

40

60

80

100

This mixed set of business outcomes reflects the earlier analysis of the definition of
innovationwith some views focusing on cost and productivity, and others on customer
outcomes such as product development and differentiation.
The key point is that innovation is seen as important because its viewed as the gateway to a
wide range of business outcomes. In the words of one respondent, innovation equals success.

More work to do
However, this is not a basis for complacency. Only 6% of respondents believed that their
organizations are world class at innovation, while 25% felt they achieved regular and major
innovative achievements. But the majority still believed they had achieved only some, limited,
or no success in innovation48%, 18%, and 4% respectively.

Business white paper | The innovation agenda

Figure 7. Harnessing innovation

How successful do you feel your organization is in

harnessing innovation
4% Not at all successful

6% Very successful; world class

18% Limited success

25% Successful; regular and
major innovation achievements

48% Some success

So while almost everyone surveyed thinks innovation is important, and all can see the wide
range of benefits that innovation promises, most feel their organizations need to work harder
at it. The job is not yet done.

Question 3. What tools and technologies are

driving innovation?

The telephone, from its invention in 1876, took

25 years to reach 10% market penetration and
39 more years to reach a mature state with 40%
of the market owning the device. Fast forward a
century or so and we can see the accelerated pace
of technology change. Mobile telephones took
11 years to move from penetration to maturity,
the Internet went one better and took just
a decade. Smart phones took just 2.5 years.
This is truly a stunning rate. In essence, every
one of the 1+ billion people owning smart phones
in the world are early adopters.3, 4, 5, 6

Behind every innovation is an idea thats the source of new opportunity. Its always easy to
visualize this in terms of technology. A new type of infrastructure, software, or a social media
channeleach driving new possibilities for value creation. Particularly in business today,
technology seems to be the engine room of innovation.
The challenge for companies in the digital age is to stay abreast of the new frontiers in
technology. New technologies that were just on the horizon a decade ago are now used
by over half of the population. The computing power and networking potential of new
technologies continue to advance. Companies can now reach more customers, employees,
and stakeholders using applications and technology solutions that with previous concept-tocompletion timescales, would have still been in the idea incubation phase. Digital technology is
transforming the world at such a rapid pace, organizations must do more than just be aware of
new technologies; they need to understand how they can exploit and profit from them.
But innovation is not just about technology. There are other tools and techniques that can be
equally importantnew processes, business models, commercials, or combinations of old ideas.
We asked our survey respondents which tools, techniques, and technologies are most important
for innovation. The results showed a high degree of consistency: 15 out of 19 tools and
technologies listed were rated as very important or important by more than half the sample.

digitaltrends.com/mobile/mobile-phone-worldpopulation-2014/
4
businessinsider.com/15-billion-smartphones-inthe-world-22013-2
5
technologyreview.com/news/427787/are-smartphones-spreading-faster-than-any-technologyin-human-history/
6
http://mashable.com/2013/08/27/globalsmartphone-penetration/
3

10

Business white paper | The innovation agenda

Figure 8. The importance of tools, technologies, and techniques

Very important
Important
Not important
n/a /dont know

Analytics/Big Data

35% 42% 6%

17%

Application development and integration

37% 39% 6%

18%

Security

35% 36% 6%

23%

34% 37% 12%

17%

Mobility/mobile communications

44% 27% 8%

21%

New pricing/commercial models

36% 33% 8%

23%

Multi-channel engagement

29% 36% 8%

27%

R&D

Business model design

35% 28% 7%

30%

Cloud/SaaS

25% 38% 17%

20%

Social media

26% 37% 18%

19%

Digitization

24% 38% 12%

26%

21%

40% 14%

25%

21%

33% 12%

34%

19% 36% 18%

27%

Infrastructure improvement
Telematics/Internet of Everything
Human computer interaction
Global delivery model

33% 21%

25%

Energy and sustainability management

17% 30% 24%

21%

29%

Omni-channel engagement

19% 23% 21%

37%

Automation/robotics

13% 24% 33%

30%

Artificial intelligence

7%

25% 36%

32%

3D printing

4%

22% 42%

32%

20

40

60

80

100

The results also showed that new technologies and techniques such as analytics/Big Data,
mobility, and cloud, sit alongside mature concepts such as security and global delivery models.
Innovation is not just about the latest over-hyped technology: its about working with a wide
range of approaches and combining them in a new value-creating way.

Watch these tools, techniques, and technologies

Nowadays, ideas can meet

and mate very much faster
than before, and the Internet
is only accelerating this
process. So innovation is
bound to accelerate.
Matt Ridley, TEDGlobal 2010, July 2010

Analytics/Big Data78% of respondents see as important or very important

The increasingly digital nature of business is generating ever-more data about operations and
stakeholders. Mature analytical techniques and new analytical tools can translate this data
into insights, and better business decisions in areas such as pricing, marketing, and product
development. For example:
A global consumer goods company optimizing its web presence by analyzing online
buying patterns
An insurance company more effectively screening fraudulent claim applications by looking at
massive customer and market databases
Both organizations are able to make better decisions for their business by rapidly analyzing
deep, digital dataincreasingly in real time. Our respondents noted varied examples of
innovative use of analytics/Big Data from their organizations:
Created software algorithm to compare supplier data for improving market awareness.
We identified an IT-based technology to capture employee engagement data during a
research engagement with a global, nonprofit client. We collected a rich set of qualitative and
quantitative data that enabled us to make the case for change at the client organization.
11

Business white paper | The innovation agenda

Mobility/mobile communications70% of respondents see as important or very important

The proliferation of mobile devices, such as mobile phones and tablets, has gathered
momentum over the past 20 years; there are already over 5 billion mobile device users globally.
This shows little sign of abating, and it may even accelerate with the advent of wearable
devices. From a business perspective, and the ever-growing range of products and services that
are mobile enabled, this offers new opportunities to transform the structure and productivity of
the workforce. Examples include new point of sale devices and work-from-home approaches;
new ways of engaging with customers, such as near-field communications (NFC); and mobile
walletall are transforming expectations about accessibility and usability of corporate IT.

We created a virtual, shared Information & Communications

Technology (ICT) service across three partner local authorities,
innovatively procuring partners for a tower-based ICT
structure; introducing a Service Integration and Management
(SIAM) approach to manage a complex eco-system of cloud,
external managed services, and in-house delivery; and rolling
out mobile technologies such as tablets and smartphones to
encourage mobility and flexibility. It resulted in cost savings,
better service, customer satisfaction, and mobile working for
thousands of staff facilitated across the organizations.
IT director, public sector, UK

Multi-channel engagement65% of respondents see as important or very important

In tandem with the proliferation of mobile devices, organizations have an ever-growing
range of channels to interact with their customers, suppliers, and employeesfrom faceto-face, telephone, and post, to email, web, web chat, social media, and beyond. Integrating
these channelscreating an omni-channel approach and linking them to strong analytical
capabilitiesprovides a single view of the customer, and interactions can be more quickly
focused on providing what the customer needs.
For example, a leading hotel chain uses multiple channels to interact with customers to
increase bookings and revenue. All of the channels are integrated, including information from
social media channels such as Facebook; so, if the customers initial engagement is via the
web, then books via phone, the customers experience with the hotel is seamless. Full mobility
capabilities create end-to-end support of the customer touch points from booking through to
checkout, and any post-visit support. The customers stay is enhanced with augmented reality
to learn more about the specific hotels amenities, and local restaurants and attractions, based
on user preferences. Personalization is at the core of multi-channel engagementto provide
a personal experience based on preferences and customer recognition. Similar techniques are
also transforming company interactions with employees, suppliers, and other stakeholders.
Global delivery model53% of respondents see as important or very important
The globalization of sourcing is a very well-established practice, traditionally in manufacturing,
and more recently in the services industry. This entails offshoring of business processes via
outsourcing service providers and/or internal captive operations. According to the survey,
businesses still view this trend as significant for the future. This may take the form of deepening
outsourcing with global service providers, and/or the ongoing development of globalized
internal operations, such as global business services operations for corporate activities
including IT, finance, human resources (HR), and procurement. Many organizations have already
gone a long way down the global delivery pathinnovation in the future will probably lie with
industries that have not done so already, or in changes in the processes and locations used in
global delivery models.

12

Business white paper | The innovation agenda

Automation/robotics37% of respondents see as important or very important

Robotic process automationthe use of new lean software tools to rapidly automate
labor-intensive process workis one of the less cited items featured in the survey. However,
many commentators view this emerging technology as important for the coming years, and
expect interest to grow rapidly. Automation has been a feature of technology-driven change for
decades, but robotic automation differs in the speed with which it can be implemented, and the
breadth of potential applications that are potentially in scope. Robotics is still a new field, with
many different types of offerings, ranging from relatively simple productivity enhancing tools,
to more intelligent, cognitive systems. There is a growing list of use cases, including:
Ben Bernanke, former chairman of the
U.S. Federal Reserve Board, recently
told the graduating class at Bard College:
innovation, almost by definition, involves
ideas that no one has yet had, which means that
forecasts of future technological change can
be, and often are, wildly wrong. A safe prediction,
I think, is that human innovation and creativity
will continue; it is part of our very nature.
Another prediction, just as safe, is that people
will nevertheless continue to forecast the end
of innovation.7

A European manufacturer used a robotic tool to automate a series of finance and accounting
check processing activities that achieved results in a few weeks, rather
than months.
A UK retail bank used robotics for fraud detection in check processing. With specialized
robotics technology, very large volumes of checks were processed through intelligent
recognition, resulting in identification of significant attempt at bank fraud.
A global manufacturer had a sudden influx of 45,000 cash transactions that would have
taken months to process if done manually; but, through robotic process automation, these
transactions were processed in three days.

Question 4. What factors enable achieving innovation?

Review the barriers
So why dont all organizations achieve their innovation goals with ease? The answer: Innovation
isnt easy. The survey explored this by asking respondents to identify the main challenges they
have encountered. Strikingly, the biggest barriers related to very practical challenges, rather
than more conceptual or technical issues such as idea creation, intellectual property (IP), or
contracts. The four top scoring issueseach impacting over 40% of respondentswere lack of
internal resources, higher priority initiatives, unwillingness to accept risk, and bureaucracy.

Figure 9. What have been the main challenges to realizing innovation in your organization?

14%
Contractual barriers
24%
Cultural incompatibility
26%
Insuicient return
in business case
33%
Lack of talent among
available resources
33%
Lack of leadership to
drive or initiate innovation

36%
Lack of program funding

7%
IP issues
57%
Availability of internal
resources to implement

45%
Higher priority initiatives

43%
Unwillingness to accept risk
40%
Bureaucracy

Note: Multiple-answer selection requested from

survey respondents allows for total over 100%.

federalreserve.gov/newsevents/speech/
bernanke20130518a.htm

7

13

Business white paper | The innovation agenda

The fifth, sixth, and seventh most cited challengeslack of funding, leadership, and talent
complete a picture of innovation that is starved of resources, and depicts organizations
focusing their attention elsewhere.
This picture contrasts with the clear consensus that innovation is vitally important (See
Question 2, Does Innovation Matter?). It suggests a paradoxorganizations may grasp the vital
importance of innovation, but they dont always act accordingly. So where innovation fails to
flourish, it may be that the organization is simply not following through on its intentions with
sufficient investment on the ground.
Review innovation enablersideation, implementation, culture and people,
and operational frameworks
Looking in more detail at the drivers behind innovation success, we asked respondents to
assess a series of factors grouped into four categories: ideation, implementation, culture/
people, and operational frameworks.
Figure 10. Ideation

5
4
3
2

Range of importance
from very important (5)
to not important (1)

1
n/a /dont know

Understanding of business/client needs

70% 20% 6%

1%

1%

2%

Generation of innovation ideas

47% 29% 11%

7%

1%

5%

Clear view of world class/best practice

37% 30% 17%

11% 1%

4%

Filtering of innovation ideas

27% 37% 21%

10% 1%

4%

A clear plan/program

38% 25% 17%

12% 4%

4%

20

40

60

80

100

IdeationThe process of creating and developing ideas is a natural starting point. Where
do ideas come from and how are they shaped, filtered, and managed? Unsurprisingly, top
of the list is understanding business/client needs with 90% marking this as important or
very importantas early as the 5th century BC, Plato noted that necessity is the mother of
invention. This goes to the heart of the matterif innovation is about creating new value,
then understanding the need of internal or external customers is the first step in identifying
innovation opportunities. Significantly, this is being accelerated today with new tools and
techniques, in particular digitization and analytics, which is providing new insights into
customer needs.
Also highly rated is the formal process for idea generation, idea filtering, and having clear
innovation plans and best-practice thinking to set direction.

Figure 11. How does your organization invest in innovation?

Innovation
investment

Subject-matter expertise/talent

57%

Collaborating with clients

56%

Talking with customers

55%

Working with suppliers

52%

R&D facilities/investment

48%

IP/technology development

44%

Acquisitions of IP/technology

33%

Acquisitions of other companies

23%

Enterprise training programs

19%

14

20

40

60

80

100

Business white paper | The innovation agenda

ImplementationThe list of success factors goes beyond just those that are dedicated to
the innovation process itself. We identified five broader capabilities for an organization to
enable innovation, and the majority of respondents cited them as important or very important:
change and implementation capabilities, technology expertise, working with external
partners, process expertise, and a flexible infrastructure. Taken together, these are the most
important organizational aptitudes for making major change happenthe realization of
an idea. Without these, the business may be able to develop smart new ideas, but would be
unable to deploy them.

Figure 12. How does your organization enable innovation?

5
4
3
2

Range of importance
from very important (5)
to not important (1)

1
n/a /dont know

Change management and

implementation capabilities

42% 37% 14%

2%

0%

5%

Technology expertise

40% 26% 25%

2%

2%

5%

35% 31%

26%

2%

1%

5%

Process expertise

29% 33% 25%

6%

1%

6%

Flexible infrastructure

30% 28% 31%

6%

1%

4%

Working with external partners

20

40

60

100

80

Culture and peopleThe highest scoring of the four categories was culture and people.
For all four of the factors, 70% or more of respondents scored them as important or very
important. Some 86% saw attitudes to innovation as important or very important, followed
by 83% for executive sponsorship, and 76% for grass-roots input. Its not surprising that
innovation flourishes with active support of people across the organization; but it is surprising
that these factors outscored almost all of the other factors we looked at. Cooperation
between departments76% scored as important or very importantalso featured strongly,
echoing the all too common situation of new value-creating programs getting bogged down in
the politics between different groups in the organization.

Figure 13. What cultural/people factors are necessary for innovation?

5
4
3
2

Range of importance
from very important (5)
to not important (1)

1
n/a /dont know

Attitudes to innovation

68% 18% 12%

1%

1%

0%

Executive sponsorship

59% 23% 11%

1%

2%

4%

Grassroots input/culture of innovation

43% 33% 13%

5%

0%

6%

38% 38% 17%

1%

0%

6%

Cooperation between dierent departments

0

20

40

60

80

100

Operational frameworksFinally, there are the detailed mechanisms for sustaining an

innovative new arrangement, such as a new operating unit, outsourcing arrangement, or longterm investment. Topping the list is getting the funding/investment model right78% scored
as important or very important, followed by the putting in place the right incentives66%.
Funding is a central challenge of innovationwho pays for the effort, IP, and tools to
implement and run an idea. How do you incentivize members of a team, business units, or
external service providers to change their current ways of working, when the new world
could unravel some of the certainties and benefits of the status quo? There are good answers
to these questionssuch as a well-devised gain share mechanism, but they need to be
carefully crafted.
15

Business white paper | The innovation agenda

Figure 14. What mechanisms do you utilize to sustain innovation?

5
4
3
2

Range of importance
from very important (5)
to not important (1)

1
n/a /dont know

Appropriate funding/investment model

40% 38% 16%

Right incentives in place

24% 42% 24%

4%

1%

5%

Appropriate governance

34% 31%

0%

2%

2%

31%

4%

1%

1%

Supportive legal framework/contractuals

15% 27% 31%

13% 1%

13%

Special purpose vehicles/JVs

10% 27% 27%

12% 7%

17%

If you look at history,

innovation doesnt come
just from giving people
incentives; it comes from
creating environments where
their ideas can connect.
Steven Johnson8

20

40

60

80

100

Know the ingredients for successa proactive innovation agenda

The list of enablers is long, but not exhaustiveit only outlines the sort of ingredients that
successful innovation is based on.
Identifying the specific drivers required, for any given organization or program, is much
more complexas reflected by the varied emphasis placed on different enablers by survey
respondents. This is to be expected given the wide variety of organizations, innovation goals,
and strategies in play. Innovation is not one thing, and equally when mixing the ingredients of
innovation, we should not follow one single recipe.
But the commonalities are also compelling. Our survey found that of the 20 shortlisted factors,
18 were scored as important or very important by a majority of respondents. The precise blend
varies, but very often the same sort of factors need to be in place, such as an environment that
creates good ideas, clear commercial incentives, effective governance, strong sponsorship,
process expertise, and robust implementation.
While this in a way looks like a daunting list, we flipped this around as a positive conclusion.
Innovation doesnt just happen; it flows from a proactive agendaa series of steps, decisions,
and investments that build up the particular capabilities to make innovation take flight, often
over a period of learning, testing, and development.
In other words, put in place the right steps, and you can expect innovation to flourish.
Learn which function leads on innovation
Innovation is an intrinsically collaborative activity; and one of the success factors identified is
close cooperation between the different parts of an organization. However, it also seems that
innovation has a different salience for different parts of the organization.
We asked our sample to what degree different functions drive innovation. The responses
showed a striking range, from leaders such as customer engagement, R&D, sales and
marketing, operations, and IT, to laggards such as finance, procurement, HR, and payroll. This
bears out the strong focus in much of the emerging technology at present around multichannel engagement, sales and operations (think customer data mining or the consumerization
of IT). But it also raises the questionare the core back-office processes of finance, HR, and
procurement doing enough to innovate?

Kevin Kelly and Steven Johnson on Where Ideas

Come From, Wired magazine, 09/27/10

8

16

Business white paper | The innovation agenda

Figure 15. Parts of an organization that drive innovation

5
4
3
2

Range of driving innovation

from major role (5)
to no role (1)

1
n/a /dont know

Customer engagement
R&D

17% 34% 18%

6%

4%

21%

32% 18% 7%

2%

10%

31%

Sales and marketing

14% 30% 23%

8%

5%

20%

Operations/client services

16% 25% 25%

5%

5%

24%

IT

24% 18% 25%

10% 6%

17%

Corporate center

18% 19% 14%

15% 6%

28%

4%

5%

35%

Production
Analytics/information management
Finance

26% 18%

12%

10% 17% 23%

10% 10%

30%

8%

15% 19%

26%

17% 15%

Procurement/supply chain

6%

15% 26%

8%

18%

27%

HR and payroll

5%

10% 14%

18% 23%

30%

20

40

60

80

100

Hear the many voicesone idea

In these pages, weve aimed to explore the new frontiers in innovation and address four big
innovation questions:
What is innovation?
Does innovation matter?
What tools and technologies are driving innovation?
What factors enable achieving innovation?
We concluded that the answer requires a pluralist perspectivethere is no single way. Theres
a wide range of definitions, motivations, and success factors. Anything else represents a
simplification that materially limits what innovation is or can be for organizations.
And yet despite this complexity, innovation, now more than ever, still has great value as a
concept for business, citizens, and governments. Amid the kaleidoscope of ideas, there are
patterns, hot technologies, frequent pitfalls, and well-trodden paths that can be followed
or adaptedfor success. It has meaning for the smallest to largest organizations, and for
corporations and the public sector. Above all, innovation remains a powerful force that
resonates, inspires, and motivates.
Continue the conversation
This paper is part of an ongoing program of research and discussion into innovation in business.
For more information, follow the Twitter conversation at #InnovationAgenda
Download our new diagnostic, the Innovation Heat Map, see Figure 16.
Develop your own Innovation Heat Map
Does your organization run a plethora of innovation projects? Can it be difficult to see how it all
joins up? HP and Aecus developed a diagnostic tool to help organizations like yours take stock
of the innovation activities you are pursuing, and to identify potentially untapped innovation
angles available to you.
Simply plot your initiatives on the grid by asking the following questions:
SourceHow will the innovation be delivered? (Y axis)
ImpactWhat level of impact is being targeted? (X axis)
DriversWhat technologies and practices will be used? (point color)
17

Business white paper | The innovation agenda

Figure 16. Innovation Heat Map example

HP/Aecus Innovation Heat Map
What is the total set of innovation
possibilities facing my organization?
Where do our innovation initiatives focus?
What are the untapped areas?

Initiative A

Open/ecosystem
(more collaborative)

Source?
How is the
innovation
delivered?

Tools, techniques, technologies?

Project Y
Partnering

Euro digital project

Initiative B

Product Z

ERP Transform

Platform X

Internal/closed
(more core)

Team/process

Business

Industry

Analytics

Mobile

Applications

Multi-channel

Business model

Security

Cloud/SaaS

Social Media

Commercial

Other

Society

Impact? (Scale)
What level does innovation impact?

This will produce a Heat Map similar to Figure 16, showing where your innovation activities are
focused and the core tools, techniques, and technologies you are relying on. This may reflect
deliberate decisions; but, it may also illustrate potential innovation opportunities that can be
tapped into.
To download an electronic template of this Heat Map, please go to hp.com/services/bps/
innovation-agenda.

About HP
When HP talks about innovation, our conversation starts with you. Its not about what HP has
done or developed. Its about what our innovations can do for youyour ability to win in the
marketplace; improve service to your customers, constituents and colleagues; and thrive
in the shift to a New Style of IT. In other words, not just technology. And not innovation for
innovations sake. But rather, innovative ways technology can be delivered and consumed to
help you reach your goals and stay a step ahead in this new, business-led, flexible, collaborative
IT environment.
For more information on HP innovations, please visit the HP Enterprise ForwardInnovation
Series or join the HP Enterprise Forward LinkedIn Discussion Group and get engaged with some
of technologys brightest minds. For more thought leadership, visit the HP Enterprise Services
blog: hp.com/go/esblog, the Business Process Services blog: hp.com/services/bps-blog and
follow the HP Fellows on The Next Big Thing: hp.com/go/tnbt.

About Aecus
Aecus was HPs research partner for this survey and paper. Formerly known as Alsbridge plc,
Aecus is an award-winning independent consultingfirm that helps clients get great results from
outsourcing, offshoring, and shared services. This includes working with clients to get the most
from their sourcing using innovative new tools such as analytics, robotics, and new commercial
structures. For more information, contact paul.morrison@aecus.com (@MorrisonPaul1) and
follow the discussion at #aecusinnovation.

Sign up for updates

hp.com/go/getupdated

Share with colleagues

Rate this document

Copyright 2015 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only
warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein
should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.
4AA5-7346ENW, April 2015, Rev. 1