Execs see innovation as the way forward in uncertain times: GE study

General Electric (GE) recently unveiled the results of its third annual "Global Innovation Barometer", which found that while business executives continue to value innovation as a strategic priority, one in three report concerns over their ability to maintain a competitive edge in a faster paced, more globalised and resource-constrained environment.

This emerging "innovation vertigo" - an uneasiness with the changing dynamics of today's business landscape and uncertainty over the best path forward - is challenging leaders to think differently about how they will achieve growth. Many executives, however, seem to be embracing this complexity by exploring new and sometimes unexpected opportunities to innovate.

"Innovators must be resilient or risk being left behind," said Beth Comstock, senior vice president and chief marketing officer of GE.

"Change has become constant and we see leaders responding by betting big on more unconventional approaches to innovation to unlock growth. At GE, we are exploring different markets, partnership structures and business models - all in the pursuit of uncovering new ways to better serve our customers and meet the world's biggest challenges head on," he added.

The Barometer was commissioned by GE and conducted by independent research and consulting firm StrategyOne to explore how business leaders around the world view drivers and barriers to innovation and how those perceptions influence strategy. GE expanded the study this year by surveying more than 3,000 senior business executives in 25 countries, all with direct involvement in their companies' innovation strategy and decision making.

Protectionism risk

Many executives appear torn about how to best respond to the changing business environment. In an effort to mitigate this perceived risk to their business and local economies, many are responding by adopting protectionist tendencies; 71 per cent of executives reported that their government should prioritise promotion of domestic innovation rather than imported, while 71 per cent also reported that their governments should actually open markets further and promote imported innovation and investment. Paradoxically, there was a 53 per cent overlap between these two opposing views.

"Since the global financial crisis, we have worried that economic volatility will weaken the consensus behind free and open international trade. Today's report suggests that even among business leaders the siren song of protectionism may at times be difficult to resist," said Karan Bhatia, vice president and senior counsel for global government affairs and policy for GE.

While incremental and product innovation have historically been the main drivers of growth for companies, business model innovation is gaining momentum as a route to success. Innovating a new model may offer businesses a less risky and resource-intense path to better understand and reach customers over traditional methods such as new product development.

Some 52 per cent believed that development of new business models will contribute the most to their company's performance going forward, representing a six-point increase when compared to how it has traditionally contributed to their innovation portfolio.

While executives report contraction in private investment globally, Germany, and UK have seen growth. Collaboration as a competitive advantage between businesses is emerging as a means to surpass competitors and generate revenue, particularly in emerging markets. Yet despite global acknowledgement of the power of partnerships, lack of effective IP protection, trust and talent poaching pose barriers to action.

Global business leaders are concerned by the policy environments affecting innovation, and are calling on policymakers to create more stable, supportive policy frameworks to help enable better innovation in markets and across borders.

Executives perceive safeguarding business interests - talent, knowledge, IP - and removing policy barriers - bureaucracy, over-regulation - as key to allowing innovation to flourish.

Business' perceptions of their respective country's policy environments have grown more negative in the majority of countries surveyed, particularly in Sweden, Israel, Turkey, Saudi Arabia and Canada. India, however, shows dramatic improvement (nine points).

When asked about the main priorities their governments should focus on to support innovation, education (50 per cent), fighting bureaucracy (48 per cent) and protecting trade secrets (41 per cent) were identified as the most pressing - in particular by Mexico and Brazil.

Talent has been consistently identified as a critical concern for innovation leaders across the globe, as the creativity and technical prowess of the workforce is seen as key to unlocking innovation potential. Concerns around workforce preparedness (i.e., education) and access to talent (i.e., cross-border mobility, retention, poaching) abound as companies are seeking to match the right job with the right people and line up the right skill sets to meet tomorrow's economic needs today.

Better alignment of the education system with business needs is a top priority for businesses, with 81 per cent identifying it as among their top four concerns. However, South Korea was a noticeable exception, with only 47 per cent ranking this as a top business priority.

Some 55 per cent of respondents - a six-point drop from the previous year - indicated that universities and schools provide a strong education model for tomorrow's innovative leaders.

Some 41 per cent believe restrictions on access to foreign talent are increasing, having a negative impact on business' ability to innovate.

The research was commissioned by GE and conducted by StrategyOne between October 22, 2012 and December 5, 2012. Interviews with the 3,100 senior business executives were conducted by telephone across 25 countries.

The countries included in the study are: Australia, Brazil, Canada, China, Germany, India, Ireland, Israel, Japan, Malaysia, Mexico, Netherlands, Nigeria, Poland, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sweden, Turkey, United Arab Emirates, the UK, the US and Vietnam.