Customer Is King – Enterprises Intensify Innovation Efforts
In the view of German managers, the success of industrial enterprises depends decisively on their innovative capability. On a scale of 1 to 10, managers rate its influence at an average of 8.7 points. Acting on this awareness, many enterprises implemented more actions designed to promote innovation in 2014 than in the previous year. This is a key finding of the 2015 Industry Innovation Index, a cross-sector study commissioned by the specialty chemicals company ALTANA for the second year in a row, for which the market research firm Forsa-Institut surveyed 250 top decision makers and 250 entry-level employees in German industrial companies.
Of 11 actions that are known to be important for promoting innovation, the focus on customer needs was the one most often implemented in the surveyed industrial enterprises. A total of 55 percent of the companies systematically analyze the needs of their target group before developing new products. That is 9 percentage points more than in the previous year's survey at the end of 2013.
The proportion of managers with a great willingness to invest in research and development also increased by eight points, to 30 percent. Accordingly, almost one third of the companies have budgeted more resources for innovation projects in 2015. The third most frequently implemented measure to promote innovation is an employee suggestion system. Every third company uses such a system extensively.
94 percent of the industrial enterprises reward employees who initiate an innovation. However, the focus here is on financial rewards (78 percent). In seven out of 10 companies, top management also thanks the innovator personally, and the innovation is publicized internally.
"Appreciating success cannot be overestimated. It is and remains the key motivator for future innovations," declares Dr. Matthias L. Wolfgruber, CEO of ALTANA. "Financial factors alone, such as a big R&D budget or an attractive compensation system, aren't enough to sustain long-term innovation."
Innovation Potential Still Not Fully Utilized
The stepped-up expenditure of German industrial enterprises is not yet producing an increase in innovative capability in German industry. The Industry Innovation Index in this study was calculated as 139.5 points, compared to 142 last year. Generally, an index value of over 100 points is an indicator for a high level of innovative capability.
"An enterprise culture can't be turned around in just a year, and such a change doesn't lead directly to new products either," notes Dr. Georg F. L. Wießmeier, ALTANA's Chief Technology Officer. "Many important parameter adjustments for innovation initially have an internal effect before manifesting outwardly. The study shows clearly that these adjustment mechanisms can be used more effectively." For example, only one in ten industrial enterprises offers sufficient scope for innovation and unlimited acceptance for unconventional thinking and action. The study also found that only one in ten companies systematically utilizes external knowledge.
Background to the Industry Innovation Index study
At the end of 2014, market research institute Forsa was commissioned by the ALTANA Group to conduct 500 telephone interviews with representatives from industrial companies with over 250 employees. A total of 250 members of management boards, managing directors and division heads were interviewed. At the same time, Forsa polled 250 entry-level employees at industrial companies aged between 18 and 35, with work experience of between two and five years.