• Finding #9: While nearly every company believes innovation
            is a key priority, only a handful of companies have
            anyone truly responsible for innovation outside
            the R&D or Engineering groups.

For an issue so important and top of mind, our team expected to find companies that had organized to achieve innovation. We were quite surprised to find the contrary. Most companies still consider innovation to be the perview of their R&D and Engineering Departments.

Beyond these two departments, management is responsible for making efficiency (e.g. cost cutting, right sizing, outsourcing, etc.) and effectiveness improvements (e.g. expand markets, improve sales, etc.); but not make innovation their priorty.

But, only in a small percentage of companies is anyone clearly responsible for innovation. In this handful of the best companies, we found either:

• A Chief Innovation Officer responsible for both technical and process innovation across the entire value chain, or
• Middle and Senior Executives were responsible for innovation as part of their job descriptions at every step in the value chain.

• Implications:
• Given Finding #1 -- Innovation is the most sustainable of all competitive advantages -- then innovation must be:
• Driven Down into the middle ranks of the organization, and
• Impacting every step in the corporation’s value chain
• Measured and Rewarded internally and externally (suppliers, outsourcers, alliances, etc.)
• The Value of Innovation is too great to let it be just a platitude; and it needs more than a vague strategy. To be successfully implemented it needs;
1. Policies
2. Principles
3. Programs
4. Processes
5. Practices
6. Tools
7. Metrics

1. Evidence:
• Our team examined a number of Outsourcing arrangements, primarily in IT. We expected to find there would be a focus on innovation in the Information Technology field, especially given the fact that this was a high technology industry, a critical element of a company’s life-blood, and billions of dollars were spent annually.
• In case after case, the platitudes of innovation were all voiced. But it was difficult to find a single policy, program, practice, or process where the parent company and its IT outsourcer had a conjoined effort to innovate together. One deal had a 1400 page contract, but not a single word about innovation. All the emphasis was on lowering costs, but nothing about win-win innovation that would improve the performance of both companies.