ie. White Paper Rise of the Chief Innovation Officer An Executive Whose Time has Come Contents

Executive Summary | 1

Introduction | 2

What Is The Role Of A Chief Innovation Officer? | 3

Why Are Companies Now Appointing Chief Innovation Officers | 4

Which Companies And Industries Are Using Chief Innovation Officers? | 7

Difficulties With The Spread Of The Chief Innovation Officer Role | 8

Key Takeaways | 10 The Rise of the Chief Innovation Officer

Executive Summary

Innovation is a legitimate and vital business by the Chief Innovation Officer, who identifies process that is essential for companies areas where change is necessary. looking to evolve at a pace that elevates them above the competition. The Chief Innovation Officer has to be multi- skilled and comfortable in a number of Due to the complexity of innovation, there has situations and understand that innovation is to be the infrastructure and business direction essential to solving organizational problems. in place to ensure that innovation can prosper smoothly. This infrastructure is put in place

In this whitepaper we will discuss:

• If the Chief Innovation Officer is an important catalyst to ensure that innovation can come from anywhere in the organization, not just the top of the hierarchy. What delivery methods could be considered as an alternative to the current outreach. • Whether a creative environment is a pre-requisite for innovation and the necessity of valuing innovation as an effective way of reforming the organization. • The evolving definition of the Chief Innovation Officer. We will also evaluate the key roles of the Chief Innovation Officer and how they impact organizational processes on a daily basis. • How the Chief Innovation Officer is now a necessity and what competitive advantages they bring to the organization.

Through the examination of the points above, this research will look at the role of the Chief Innovation Officer and how it is changing approaches to innovation and the wider implications this has to companies.

1 The Rise of the Chief Innovation Officer

Introduction

‘Innovation is now seen as a vital cog in the ways that companies grow, with many claiming that it is the single most important way for companies to expand today’

Chief Innovation Officers (CINOs) are now found in companies all over the world, bringing new ideas and creating new cultures. The role is not formally established across industries, meaning that the specific tasks of any CINO can vary considerably from company to company.

The role has a wide remit and can include anything from improving communication channels to promoting entrepreneurism at all levels. Due to the lack of a formal and defined set of roles and responsibilities for CINOs, other processes are often included in the role, such as marketing, IT or sales. Much of this is dependent on the career history of the individual.

Innovation is now seen as a vital cog in the ways that companies grow, with many claiming that it is the single most important way for companies to expand today. 3 It is for this reason that the creation of a formal position focused around innovation has become a priority for business leaders.

This whitepaper aims to discuss the rise of the role in the boardroom, as well as investigate factors that are currently slowing the pace of hires for this position. We will look at which companies are utilizing the position the most and why the role is increasing in popularity.

2 The Rise of the Chief Innovation Officer

What is the Role of a Chief Innovation Officer?

The role of Chief Innovation Officer is relatively new and due to this, many are establishing An important role for the Chief what duties the position should include. The Innovation Officer is also to make sure role generally sits within the C-Suite, often that the ideas that come through the reporting to the (CEO) company are not purely to create and (CMO). This allows a new process but that they have the CINO to have a holistic approach across commercial value. 4 the organization, creating processes and best practices throughout almost every department This is a vital aspect of the role and one of the and division. founding pillars of why this is now a position often required in companies - as ideas are The duties of a CINO are non-formalized brought forward the evaluation process needs across companies due to many who hold the to be both thorough and fast, meaning that an position being the first to do so. This situation established role needs to be created in order means that many CINOs will be establishing to take full advantage of potential innovations. the duties as they go and adopting new responsibilities as situations occur throughout their tenure. Some CINOs see the role as taking another 5 to 10 years to either formalize across industries or develop into something different. 1

The role normally constitutes the creation of processes which allow new ideas and innovations within the company to be quickly reviewed and either implemented or rejected. The purpose of this is to allow companies to incubate new practices or products to gain market prominence or maintain performance. Often an idea needs to be implemented quickly in order to have maximum impact and one of the CINO’s key roles is making this process as fast as possible.

Innovations and changes can often represent risk, especially with disruptive technologies or practices that change the core functions of a company. A primary role for CINOs is minimizing the risks involved with innovating or making the transitions between old and new processes as smooth as possible, allowing for transfer with minimum disruption to the functions of the company.

3 The Rise of the Chief Innovation Officer

Why Are Companies Now Appointing CINOs

‘If innovators didn’t establish new ideas and game changing technologies, there would never have been any successful companies or technological advances’

The importance of innovation has always been obvious: if innovators didn’t establish new ideas and game changing technologies, there would never have been any successful companies or technological advances. However, it is only within the past few years that we have seen the formalized role of CINO, or similar, become moew prevalent in companies. Indeed 70% of executives have now listed innovation within their top five priorities and 18% as their most important. 4

There are several reasons for this:

Allows For Real Game of their primary role) produced both Gmail Changing and AdSense, two of the company’s most profitable divisions.3 Due to the unpredictability of worldwide economies and the huge costs that mistakes CINOs allow for this process of can have, there is a real need to support formalization to occur smoothly game changing ideas. A recent Accenture and have the expertise to create report found that companies have become avenues in which innovations can be more conservative with innovations, making communicated and implemented. incremental changes that may extend a line or make small changes to an existing product.4 The gains from these kind of innovations are Quick Evaluation often negligible and do not typically break new ground, meaning that progress and One of the major business developments advancements are slower, resulting in smaller of the past decade has been an increase overall business results. in the speed of change. With the rise of global connectivity, the pace that companies A formalized system of innovation is needed need to implement changes has increased to allow for pipelines to be created where real exponentially. This speed, combined with the ideation can be supported both professionally necessity to produce business results from and financially.4 A prime example of this is new ideas, has meant that established roles Google, where this process of innovation (at to both evaluate and implement new ideas one point their employees could take 20% of have become vital. all working time to work on projects outside

4 The Rise of the Chief Innovation Officer

This responsibility falls on the CINO and ideas. However, only 20% believed that their represents a key element in the overall company delivers.3 Bridging this gap through business impact of new innovations. The the hiring of a CINO means that employees success of a new idea or product often feel more empowered and supported in their comes down to timing and whether it can new entrepreneurial endeavors within the be implemented before a competitor. Due company. to this, many companies have found that without proper evaluation, new ideas can have The failure to effectively support these negative effects on the company. entrepreneurial activities can see companies losing some of their most promising A CINO sits in a position employees. The survey found that that allows them to quickly 93% of those who had started evaluate new ideas and their own company had pursued make decisions about an entrepreneurial idea at their whether to support previous company. 57% of these them. had found their previous company had not been very supportive or not Previously this kind of at all supportive and 30% had started work would fall to a their own company to have the freedom to senior executive who had pursue their ideas without having to focus on additional responsibilities, other subjects. 3 meaning that, if speed was required, the evaluation process If a CINO can foster a culture where these would not be as thorough. If it needed to be projects can be undertaken within a company, extensively evaluated, it would take longer. there would be an increased chance of keeping their most passionate and forward thinking employees. Promote Group Thinking and Employee Support Increase Inclusivity

The Accenture survey indicated that 60% 53% believe that their company did not of respondents believed that the best support ideas from all levels of the workforce,3 ideas come from a collaborative effort, 3 which implies that restricts its meaning that creating environments in which innovations to business decision makers employees can work together is an important alone. This exclusivity of sources limits the process. Fostering these environments potential new ideas that could come from requires an innovation strategy with linear outside of the existing decision makers, communication channels, which is a key role meaning that new innovations could easily be for any CINO. missed. With one of the key responsibilities of a Chief Innovation Officer being the creation Having somebody with the ability to bring of effective communication pathways and people together means that companies can confidence in employees to put forward new benefit from the improvement of ideas and ideas 1, this would allow those groups outside the increased profitability that this brings. The of the normal decision makers to have a importance of this goes beyond increased genuine contribution to new innovations. profitability and moves into employee retention, as 49% of people asked believed that managerial support is very important for the generation of new entrepreneurial

5 The Rise of the Chief Innovation Officer

Reward Effort

Although the ultimate goal of innovation is to bring business success and increase profits, the reality is that many ideas will fail before one becomes a success. Therefore, it is important to have a process in place to reward initiative and the process of attempting something new.

A CINO can create a reward system, meaning that employees will have more confidence to ‘It is important to have a come forward with potential ideas. process in place to reward initiative and the process of 77% said that new ideas are only rewarded attempting something new.’ after they have been implemented and proven to work, while 27% also said they had avoided pursuing an idea due to a fear of a negative impact. 3 Having a formal system in which employees come forward with all ideas may mean dealing with unachievable or unrealistic propositions from many, but will mean good ideas will not be missed.

6 The Rise of the Chief Innovation Officer

Which Companies and Industries are using CINOs?

As the formal role of CINO is relatively new, it evaluating ‘innovation activities’, with 87% is interesting to observe who has been the of respondents now claiming that this is the biggest adopters of the role and who have case. This is up from 64% of respondents been utilizing the position for strategic benefits. saying the same thing in 2009. 4

Traditionally the retail and high-tech The position is now most prevalent in utility communities have seen a high level of companies (73%), electronics & high-tech investment in innovation as this is one of the (71%) and manufacturing (70%). 4 These keys to dominance in their markets. This has results are relatively unsurprising regarding meant that the process of new initiatives, electronics & high tech and manufacturing designs and processes have become because of the inherent nature of product ingrained within their culture. This is why they development and the necessity of innovation have consistently been in the top bracket in order to improve sales, but that utility for spend on product development and companies have the highest percentage is innovation. 4 interesting.

However, the use of Chief Innovation Officers is now focused on fostering the processes and platforms that allow for innovation to spread throughout a company. Traditional companies who have not had this focus on innovation and new products are therefore looking at these roles in a way that they previously had not.

Accenture Survey 2012 This is perhaps a sign that CINOs are seen as a necessity when CINOS employed Increase in CINOS per industry implementing new ideas within older since 2009 and more traditional industries. 60% 73% Utility Companies Utility companies have increasingly seen the 71% Electronics & High-Tech need for new innovations with pressures on Of Respondents 70% Manufacturing resources and in several cases the ability to Employ A CINO or similar position distribute to a growing population.

The Accenture survey found that 60% of What is clear is that the spread of the role respondents now employed a Chief Innovation throughout several industries is likely to Officer (or similar position) but there were continue for the next few years. This kind industries which had a higher uptake than of growth has seen the importance of the others4. The survey, which was conducted position recognized across almost all sectors, in 2012, found that there was an increase despite the lack of formal duties across of 6% in the uptake of Chief Innovation companies and industries. Officers since the previous survey in 2009. 4 Equally, there has been a significant rise in the number of companies who were actively

7 The Rise of the Chief Innovation Officer

Difficulties In The Spread Of The CINO Role

The role of the Chief Innovation Officer, despite rising in popularity, does have some difficulties in rolling out to some businesses. When companies appoint a CINO for the first time there can be several hurdles to get over before the full benefits can be realized.

No Previous Experience Misunderstanding Of Role

Due to the role being new in scope, both in As previously mentioned, the role of the the company and in the corporate world in CINO is unformulated in its specific roles and general, many who adopt it will not responsibilities. This can lead to confusion have held a similar position in any when implementing new ideas and initiatives, other company previously, as it will be unclear to both the CINO and meaning that the reality of the other executives exactly what remit performing certain duties can the CINO has. With the unpredictability often be underestimated. 1 of the role and the pace of change within the company, it can often It also means that it takes lead to a situation where certain time to acclimatize to responsibilities will be given back to the role before any major their original owners and others will changes can be made, be added to the CINO’s remit. which can cause tensions when certain expectations Especially in companies where aren’t met in the anticipated the roles and responsibilities time frame. of senior executives have been set and adhered to for a long time, this may cause Board Room Roles major disruption and a certain degree of animosity towards The CINO role often includes the new CINO. responsibilities that others within the executive team would have adopted as part of their position and this can cause tensions when Establishing Systems the CINO takes these on. With a new position that requires a holistic view over the company, A key role held by newly appointed CINOs it will require not only working alongside is the establishment of new systems and those in the C-Suite but also maneuvering practices within a company, including new responsibilities to the CINO without treading ways of performing certain tasks, new on the existing executives’ toes. communication pipelines and ways in which employees work. 1 The implementation of This can cause tension within these systems can often disrupt the ways company , hindering or that people operate, causing tensions and slowing down the work of the CINO in difficulties in the adoption of these new their primary role. processes.

8 The Rise of the Chief Innovation Officer

These challenges often mean that successes to be one of the most important aspects from new systems are not as instantaneous as to concentrate on. Examples of where many would like. companies have tried to change a culture and system too quickly and without patience It takes time for employees who have are numerous. The CINO and other senior become accustomed to existing members of the company need to be patient systems to become proficient with new and responsive in order to create the kind of processes, and as such, their output culture where innovation and entrepreneurial will often drop before it improves. ideas can prosper.

Changing Company Culture

Arguably, the CINO’s most important role is the changing of company culture. This task is done mainly through the use of new systems and pipelines, but also requires patience and communication to make sure that it is implemented as smoothly as possible.

With the level of understanding required from employees at all levels of the company, approachability and problem solving is going

9 The Rise of the Chief Innovation Officer

Key Takeaways

The Chief Innovation Officer role is undoubtedly increasing in popularity and scope, with more industries and individual companies now making the most of the new role and the potential it has.

The work being done by Chief Innovation Officers may not be identical at each company, with roles being relatively fluid but holistic on an individual basis. This means that the skill set for CINOs is not universal, but can incorporate many facets depending on industry or even individual companies.

As we have looked through some of the elements that the increasing popularity of the role incorporates, in addition to the challenges that it faces, there are three key takeaways to reflect the current climate in which CINOs operate:

The Importance of Innovation Has Fuelled Its Popularity

Innovation has become a key driver to company success in the past few years. Companies like Google and Apple have made billions of dollars from diversifying their products or coming up with new ones from the entrepreneurial drive of their employees. With surveys pointing to the importance that employees believe innovation to have on a company’s fortunes, it is little surprise that companies employ CINOs.

If a role that was so vital were left as an extra task in an existing role, then companies would be putting their future success at risk. This is a key reason for the popularity of CINOs increasing in boardrooms across the globe.

The Lack of a Formalized Role

As the role is in its infancy, it is important to note that the roles and responsibilities of individuals differ vastly from company to company. This lack of a formalized process could create problems in the future, not only in individuals moving between companies as a CINO but also for companies looking for a new CINO.

If moving company, the roles may differ considerably given the lack of universally recognized responsibilities across companies. This means that expectations and reality need to be balanced from both sides, perhaps meaning a longer adjustment period.

Only if and when the role becomes more formalized in roles and responsibilities across multiple companies will this stop being an issue and will allow for those working within this new role to be able to fully develop and bring experiences from multiple sources.

10 The Rise of the Chief Innovation Officer

Minimizing Risk And Establishing Communication Channels

Despite the role not having a fully formed set of formalized roles and responsibilities, one of the key elements of the role is the minimizing of risk and improvement of communication channels throughout the organization. Businesses have recognized that innovation does not always create success and in many instances could be an overly disruptive and ultimately fruitless endeavor.

A widely accepted role of CINOs is the minimizing of this risk through knowledge and experience backed assessment of new ideas. Alongside this is the support to those who want to come up with the new ideas, creating an environment in which new ideas and products can be supported rather than feared.

Despite the relatively short time that the CINO role has been around compared to other board level positions, it is becoming increasingly important for innovative companies. Despite the lack universal roles across companies and industries, it should not detract from the impact that this position can have at a company and it is only a matter of time before they are mentioned in the same breath as Chief Operating Officers, Chief Financial Officers and Chief Executive Officers.

11 The Rise of the Chief Innovation Officer

References

1. Interview with Johnny Ryan, CINO at The Irish Times http://hbr.org/2007/10/the-chief-strategy-officer/ar/1, 2007Gartner. 2. Incubators, Accelerators, Venturing, and More, How Leading Companies Search for Their Next Big Thing, Boston Consulting Group 3. Corporate Innovation Is Within Reach: Nurturing and Enabling an Entrepreneurial Culture, Accenture 4. Why “Low Risk” Innovation Is Costly, Overcoming the Perils of Renovation and Invention, Accenture

Acknowledgements

The authors would like to thank all the members of the LinkedIn group - Big Data / Analytics / Strategy / FP&A / S&OP / Strategic Planning / Business Analytics / Innovation The Rise of the Chief Innovation Officer

Authors

George Hill

Managing Editor of , a magazine dedicated to the spread of new ideas and technologies within strategy and innovation. He has been writing and researching around the subject for the past 4 years as well as collaborating with and interviewing some of the major players within the space.

Simon Barton

Simon is an Editor at Chief Strategy Officer and has been writing about the subject for almost a year. He has had the pleasure of speaking with some of the field’s major players, learning from their insights in the process.

Featured Contributors

The authors would like to thank all the members of the LinkedIn group - Big Data / Analytics / Strategy / FP&A / S&OP / Strategic Planning / Business Analytics / Innovation for the continuing sources of new information and discussions around data. The Rise of the Chief Innovation Officer

Contacts

George Hill Michaela Jeffery-Morrison Managing Editor & Online Director Innovation Divisional Head

+1 (415) 992 7586 +1 (415) 692 5477 [email protected] [email protected]

Deanna Notice Hannah Sturgess VP, Marketing Director, Demand Generation Partnerships

+1 (415) 992 5561 +1 (415) 992 7502 [email protected] [email protected] The Rise of the Chief Innovation Officer

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