Welcoming The Innovation Revolution: Pressure Rises While Optimism Prevails
2016 GE Innovation Barometer reveals resilience amongst business leaders as they embrace digital transformation and big data
New York, NY, January 19, 2016 - GE (NYSE: GE) today unveiled the results of its 2016 Global Innovation Barometer, which explores how business leaders and members of the public perceive the barriers to and opportunities for innovation in a complex global environment.
Respondents are optimistic about the digital transformation of business and society, and 70 percent of executives feel curiosity and positive anticipation about entering the “Fourth Industrial Revolution.” Emerging markets, especially in Asia, feel especially empowered and are embracing disruptive innovation more than their peers in developed economies.
Business leaders and citizens alike agree that the most innovative companies are those who create entirely new markets or products, rather than improving or iterating on existing ones. But adapting to this reality is hard. Many fear being left behind as technology evolves faster than they can adapt, and most still favor an incremental approach to innovation that mitigates risk.
Beth Comstock, GE’s Vice Chair in charge of Business Innovations said, “This year’s Innovation Barometer highlights the enormous pressure put on businesses to disrupt themselves. But a belief in the transformative power of innovation persists, propelling them forward as they struggle and adapt to today’s increasingly competitive business environment.”
Globally, the U.S. remains ranked the number one innovation champion among business leaders, while Germany dropped from number two to number three. Japan is still among the top three countries considered to be a leading innovation champion, moving to the number two position. Informed citizens were consistent with executives in their perception, also citing the U.S. and Japan as number one and number two respectively, with China ranked third.
Welcoming the Revolution
Business leaders and citizens are optimistic about the potential of using data to connect and optimize industry (68 percent and 64 percent, respectively). Very few fear the impact that this digital transformation will have on employment (17 percent and 15 percent)--most anticipate a positive net impact (54 percent and 61 percent)-and they recognize that advanced manufacturing will radically transform the industrial sector for the better (86 percent and 90 percent).
This optimism is especially powerful in emerging markets, with Indonesia, Algeria, Nigeria and Turkey at the forefront. Business leaders from developed economies are feeling less optimistic and less empowered than their peers in developing economies.
Adopting New Models and Technologies
Executives are taking action on decisions that used to make them nervous, including increasing investments in new partnerships, data, and analytics to inform decision-making and remain competitive.
Collaboration has increased in most markets, and businesses across the globe are seeing results. Seventy-seven percent are seeing an increase in revenue and profit generated by collaborative activities in 2015 versus 64 percent in 2014. And 68 percent say their firm is open to sharing both the benefits and the risk-the revenue stream or losses-that could be generated through a collaborative initiative.
“Business leaders’ fear of becoming obsolete is forcing them to embrace the complexity and step outside their comfort zones,” Comstock said. “Increasingly, leaders are looking outside their walls to uncover sources of disruption and harness the power of data to help see around corners.”
Executives are also turning to the power of data and analytics to guide strategy and investment decisions. Seventy-three percent of companies have increased their ability to analyse large amounts of data in the last year, and 61 percent are using big data to inform decision-making (up from 53 percent in 2014).
Disruptive Innovation: The Solution and the Challenge
Being disruptive is the gold standard for both executives and citizens, but remains a challenging goal for businesses to implement.
There is general agreement (90 percent), among business executives and citizens alike, that the most innovative companies not only launch new products and services but also create a new market that didn't previously exist. Another 72 percent of business executives say that the “innovation hacking culture” that has emerged within start-ups provides a new model to challenge existing policies and ways of working.
Yet 81 percent of business executives still struggle to come up with radical and disruptive ideas, and only 24 percent feel their company is performing “really well” at quickly adapting to, and implementing, emerging technologies. They are feeling the pressure of “Digital Darwinism,” worrying that technology is moving faster than they can adapt.
Everybody’s Starting Up?
Although they recognize they need to disrupt to keep up, in practice, they still see this as a serious challenge. When it comes to their bottom line, most favor a safer incremental approach that mitigates risks.
Fifty-seven percent continue to favor lower-risk improvements to existing products and services rather than fully disrupting their offerings, and 67 percent play defense by protecting their core businesses as much as possible. But again, emerging markets are more fearless; risk appetite is seen as a challenge to innovation in a lot of the developed world, but countries like Indonesia, Nigeria, and China are least worried about it.
As they look forward, 81 percent of global business executives agree that the "start-up ethos” is a paradigm to follow. Business executives and the informed public are generally aligned on what it takes to foster reliable and radical innovation:
- A clear structure and process in place to manage innovation (49 percent)
- Encouraging and rewarding innovative people (45 percent)
- And creating a connected culture that facilitates idea sharing (45 percent)
Marco Annunziata, Chief Economist of GE added, “This year’s Global Innovation Barometer shows us that although businesses might struggle to adapt to an increasingly disruptive environment, they and the public realize that the new world will be one where humans and machines work side by side. Innovation will create new and better job opportunities, and digital technologies will make existing jobs better, more rewarding and productive. Education and training need to catch up fast, and companies need to consider new approaches to attract and retain the talent of the future.”
About the GE Global Innovation Barometer
Now in its fifth year, the research was commissioned by GE and conducted by Edelman Berland between October 13, 2015 and December 7, 2015. Interviews with the 2,748 senior business executives and the 1,346 informed publics were conducted by telephone or online across 23 countries. Seventy percent of the business executives surveyed are at the C-suite level. The countries included in the research are: Algeria, USA, Australia, China, Canada, South Africa, India, Poland, Sweden, Russia, Nigeria, Malaysia, Brazil, France, UAE, Mexico, Israel, Japan, South Korea, Indonesia, Germany, Turkey and Saudi Arabia.
GE (NYSE: GE) is the world’s Digital Industrial Company, transforming industry with software-defined machines and solutions that are connected, responsive and predictive. GE is organized around a global exchange of knowledge, the "GE Store," through which each business shares and accesses the same technology, markets, structure and intellect. Each invention further fuels innovation and application across our industrial sectors. With people, services, technology and scale, GE delivers better outcomes for customers by speaking the language of industry. www.ge.com
About Edelman Berland
Edelman Berland is a global, full-service market insights and analytics firm that provides corporate, non-profit and government clients with strategic intelligence to make their communications and engagements with stakeholders the smartest they can be. The firm specializes in measurement, tracking and analysis in reputation, branding and communications. Edelman Berland is part of Edelman, the world’s largest public relations company. Edelman Berland has more than 200 employees and 12 offices around the world. Edelman Berland: Intelligent Engagement.
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