FAIRFIELD, Conn.--(BUSINESS WIRE)--GE (NYSE: GE) today released the results of its second annual “Global Innovation Barometer” that confirm business executives’ belief in innovation as the main driver of prosperity, competitiveness and job creation, and also reveal how challenging and uncertain economic and political environments may hinder companies’ ability to deliver meaningful innovation.
The continued uncertainty of the global economy has had a marked impact on companies’ ability to innovate, with nine out of 10 executives reporting increased difficulty accessing external funding or a conservative shift in appetite for risk. Specifically, 88 percent of respondents saw increased challenges accessing venture capital, private investment and government funding, while 77 percent reported a reduction or reevaluation of the company’s willingness to take risks.
“This year’s study confirms a lot of what we’ve been seeing in the global marketplace, that the uncertainties inherent in today’s economic environment are challenging business’ ability to innovate,” said Beth Comstock, senior vice president and chief marketing officer of GE. “We see these results, in some ways, as a rallying cry for business leaders to understand where and how their innovation strategies are being challenged and to drive to new models. Innovation is a powerful lever to address the challenges of a growing world. It allows us to use resources more efficiently, produce more with less and deliver better technologies to help markets drive economic growth and better quality of life.”
GE expanded its global study this year by surveying nearly 3,000 senior business executives in 22 countries, all with direct involvement in their companies’ innovation strategy and decision making. The Barometer was commissioned by GE and conducted by independent research and consulting firm StrategyOne to identify drivers and deterrents of innovation, and to analyze perceptions around innovation opportunities and challenges.
Innovation and Growth Inextricably Linked
Executives surveyed indicate that innovation and competitiveness are more connected than ever before. By comparing survey results to external economic data, the report also indicates that countries where innovation policies are perceived as more competitive actually delivered more growth than those countries whose policy frameworks are perceived by executives as less competitive.
- 92 percent of executives said that innovation is the main ingredient for a more competitive national economy, and 86 percent agreed that innovation is the best way to create jobs in their country.
- Markets where business is most satisfied with the perceived political and social environment for innovation delivered higher GDP growth (5.19 percent average) than those markets where business feels anxious or threatened by policies (2.32 percent average).
- Executives in Israel, United Arab Emirates, Sweden and Singapore reported the highest levels of satisfaction with their country’s innovation environment, while Japan, Russia, Poland and France reported the lowest satisfaction levels.
- Interestingly, despite Japan’s negative view of its own country’s innovation policy environment, it was again ranked by global business leaders as the third most innovative in the world, right after the US and Germany, and ahead of China.
The survey showed that companies’ internal investments in innovation, from research and development budgets to the pursuit of new products or business models, are particularly at risk when the business community perceives a negative shift or deterioration of government policies that support innovation.
- 71 percent of executives that reported an unfavorable change in external policy or government budget priorities as a result of the global financial crisis also reported cuts in their own company’s R&D spending.
- Globally, business reported the least level of satisfaction (42 percent) with the efficiency and coordination of government support for innovation.
“Investing in innovation is a critical piece of global competitiveness and it comes in many forms – from traditional R&D to new products, markets and business models,” said Comstock. “Cutbacks today will have reverberations on economic and social progress for years to come, and may seriously hinder a company’s ability to compete. Governments and businesses both need to do their part to shore up the fragile innovation ecosystem.”
Companies Embrace New Approach to Innovation
The 2012 study validates the findings of the inaugural Barometer report – that companies are moving beyond the traditional, closed model of innovation and embracing a new paradigm, one that engenders collaboration between several partners, values the creative power of smaller organizations and individuals, and tailors solutions to meet local needs. Business leaders around the world agree that great innovations in the 21st century will be about shared value -- addressing both human needs and the bottom line -- versus delivering profit alone.
- More than ever, 88 percent of executives agreed that the way companies will innovate in the 21st century is totally different than ever before.
- 77 percent of executives acknowledged that individuals and small- to mid-sized enterprises have the ability to be as innovative as large companies.
- 73 percent agreed that innovation will be driven by people’s creativity over scientific research.
However, a disconnect surfaced between the importance of partnerships and the need to pursue them in the near term. A “partnership paradox” presented itself in which 86 percent of global executives believe that partnerships are an important component of the new model of innovation, but only 21 percent believe finding partners is an immediate priority to innovate more on a day-to-day basis.
No One-Size-Fits-All Approach
Above all, the Barometer clearly demonstrates that while innovation at the global level continues to move towards an open, more collaborative model, innovation at the local level presents a complex landscape of challenges and opportunities that cannot be addressed in broad strokes, but that must be understood and dealt with at the market level. Not only do the environments change dramatically from country to country, but so do the perceptions of where innovation can be most effective, and who is most likely to drive it.
“Creating conditions for meaningful innovation requires the right blend of internal and external factors that can readily be adapted to meet individual market and customer needs,” Comstock said. “Fortunately, this year’s study suggests that companies interested in competing are up for the challenge, ready to adopt and deploy a modern approach to innovation that will deliver both value and meaningful solutions.”
For more information on this study and a detailed report on results, visit: www.GE.com/innovationbarometer.
About the Barometer:
The research was commissioned by GE and conducted by StrategyOne between October 15, 2011, and November 15, 2011. Interviews with the 2,800 senior business executives were conducted by telephone across 22 countries. All respondents are directly involved in their company’s innovation processes and are VP and above with 30 percent of those surveyed at the C-suite level. The countries included in the research are Algeria, Australia, Brazil, Canada, China, France, Germany, India, Israel, Japan, Mexico, Poland, Russia, Kingdom of Saudi Arabia, South Africa, South Korea, Singapore, Sweden, Turkey, UAE, UK and USA.
About GE:
GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.
About StrategyOne:
Founded in 1999 StrategyOne is an independent research company with offices in New York, Washington, DC, Paris, Abu Dhabi, London, Chicago, Brussels, Atlanta, Dubai, Houston, Rochester, San Francisco, Seattle and Silicon Valley.
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