CEB Research & Development Leadership Council

From Inventors to Innovators

Unlocking the Innovation Potential of Your R&D Workforce

se As

Plan

ss
R&D TALENT

Develop

CEB Research & Development Leadership Council

R&D leaders need to identify ve specic markers in their workforce, use that knowledge to guide talent deployment and design optimal project teams, and build a leadership environment that nurtures innovation.

EXecUtiVe SUMMarY
Corporate R&D organizations have a wealth of inventorsstaff with technical expertise and a passion for technology who deliver value to the technology organization. But R&D executives want more innovatorsstaff who can identify unarticulated customer problems, create novel solutions, then create the momentum required to commercialize them. What makes innovators different from inventors? How rare are they? Are there ways to spot someone with high innovation potential without having to wait 10 years to observe his or her track record? What are the most promising ways to nurture innovation potential? CEB conducted a research study to tackle these questions. The research drew on extensive interviews with R&D executives and individual level assessments of over 1,900 R&D staff at 42 major companies. The top ndings include the following:

This research draws on: Interviews with Senior R&D Leaders Surveys of R&D Managers at Major Companies Assessments of R&D Staff Worldwide

80

700

1,900

Companies with high innovation-potential R&D workforces have new product sales performance that is 75% better than other companies, on average$1.4 billion in additional sales each year for a $10 billion company. Five specic behavioral markers are highly predictive of innovation potential, more predictive than technical competencies. Most companies R&D performance management systems overfocus on project management rather than the competencies that have the largest impact on innovation potential. Since its rare to nd people who excel at all ve markers, R&D organizations should form heterogeneous teams based on the ve markers. R&D staffs innovation potential improves with the leadership effectiveness of their managers, but few R&D managers excel at managing innovators. Many unwittingly diminish innovation.

As a result, R&D leaders need to identify the ve innovation markers in the workforce, use that knowledge to guide talent deployment and design optimal project teams, and build a leadership environment that nurtures innovation. This paper discusses the research ndings and some strategies leading companies are taking to improve innovation in their R&D workforces.

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Contents
Introduction 1 What R&D Executives Want in Their Workforce A Scientic Approach to Innovation Potential The Five Markers of Innovation Potential Top Six Research Findings
Finding 1: Two Behavioral Markers Matter a Lot Finding 2: The Five Behavioral Markers Are Strong Predictors of Innovation Potential Finding 3: We Dont Reward the Behaviors That Matter Most Finding 4: Staff with Multiple Markers Have Higher Innovation Potential but Are Rarer Finding 5: Behaviorally Diverse Teams Make Individuals More Innovative Finding 6: Quality of Leadership Inuences Innovation Potential

1 2 3 3
3

4 5

6 6 7

From Inventors to Innovators: R&D Talent Strategies in Action

Imperative 1: Identify the Five Innovation Markers in Your R&D Workforce 8 Hillshire Brands Co. Identies Good Ideas and Idea Champions Imperative 2: Use the Five Innovation Markers to Design Optimal Teams Unity Industrial Co., Ltd., Makes Behavioral Diversity Work Imperative 3. Build a Leadership Environment That Nurtures Innovators Colgate-Palmolive Helps its Leaders Better Manage Innovators 8 9 9 9 9

How CEB Can Help Action Steps for R&D Executives About CEB

10 10 11

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Introduction
Identifying innovators is more of a judgment call through our periodic interactions with managers and staff.
VP Product Development Consumer Products Company

Corporate R&D organizations have a wealth of inventorsstaff with technical expertise and a passion for technology who deliver value to the technology organization. But R&D executives want more innovatorsstaff who can identify unarticulated customer problems, create novel solutions, then create the momentum required to commercialize them. What makes innovators different from inventors? How rare are they? Are there ways to spot someone with high innovation potential without having to wait 10 years to observe his or her track record? What are the most promising ways to nurture innovation potential? CEB conducted a research study to tackle these questions. The research drew on extensive interviews with R&D executives, and individual level assessments of over 1,900 R&D staff at 42 major companies.

Only an established track record of delivering innovation would allow us to identify innovators.
SVP R&D High-Technology Company

What R&D Executives Want in Their Workforce

Interviews with R&D executives conrmed that they want a workforce with more innovators, who can to deliver more value to the enterprise. They have a wealth of inventorsstaff with technical expertise and a passion for technology, who deliver value to the technology organization. But they want more innovatorsstaff who can identify pressing, unarticulated customer problems and create novel solutions that will resonate internally and in the market. Current State
Too many inventors generating value for the technology organization Focusing on solving complex technical problems Striving to develop solutions that are technologically complex and difficult to imitate Depending on others to sell their solutions

Ideal State
More innovators generating value for the enterprise and its customers Dening and redening the right problem before solving it Developing solutions that are easy for customers to use or adopt and easy for stakeholders to articulate

Creating stakeholder momentum to commercialize ideas

92% of R&D organizations we

However, there is little clarity about what specic attributes are most important for innovation potential. Is it adaptability, business acumen, collaboration, or creativity? Is it problem solving, technical expertise, strategic thinking, or intellectual curiosity? Ask 10 experts and youll get 10 different answers. Review the current literature on innovation, and youll get several answers but little consensus. Although the R&D group is highly technical and scientic, understanding what attributes drive innovation has been more art than science. In fact, 92% of R&D organizations we surveyed do not use behavioral competency models to systematically assess innovation potential in their workforces.

surveyed do not use behavioral competency models to systematically assess innovation potential in their workforces.

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A Scientic Approach to Innovation Potential

The innovation potential of R&D staff can be measured by assessing their contribution to identifying big unarticulated customer problems, developing differentiated solutions, and generating internal momentum for ideas.

CEB wanted to put a scientic approach and quantitative analysis to these pressing questions: Could R&D organizations be more systematic in identifying the attributes of innovation potential and, armed with that information, what could they do to develop greater innovation in the workforce? The rst step on this journey was to dene innovative employee. In collaboration with our member executives, we developed an index of Innovation Potential, a score calculated based on managers assessment of an individuals abilities to:
Identify Customer Problems Develop Novel Solutions Identify customer problems that, if solved, could generate high-impact ideas and big offerings for the company. Develop novel solutions that are easy for customers to use, create competitive advantage, have sufficient business value to command a price premium, and can actually be implemented even if they produce big increases in customer demand. Create internal momentum for ideas, both in generating internal support, commitment, and enthusiasm to move ideas forward and in developing solutions that stakeholders can readily communicate to secure commitment.

Create Internal Momentum

The innovation potential of R&D staff can be measured by assessing contributions to the team in all three areas: identifying problems, developing solutions, and selling the ideas internally. The next step was to use this Index of Innovation Potential framework to identify the specic attributes and behaviors that support these capabilitiesand the answers werent necessarily the obvious. CEB surveyed 700 R&D leaders from more than 42 corporations worldwide. In a staged process, CEB:
Gathered Managers Assessments of Their Staff Identied the Competencies Most Critical to Innovation Determined Ways to Foster Those Competencies The R&D managers provided assessments of more than 1,900 staff members core innovation activities from different R&D levels and sub-functions. Working with the managers assessments, CEB researchers used the evidence-based CEB/SHL Universal Competency Framework to identify behaviors most likely to inuence innovation. Knowing which competencies mattered most led to identication of best practices to spot and nurture innovators, creating an environment where innovation can thrive.

$10B company where the average

R&D professional has high innovation potential can deliver

$1.4B extra in new product sales

relative to peer companies of similar size.

Efforts to foster innovation pay off. Companies where R&D staff has higher innovation potential deliver signicantly better new product performance (measured by vitality) relative to companies with lower innovation potential staff. Vitality is dened as the percentage of current year global sales attributable to new products and services launched in the previous three years. For example, a $10 billion company where the average R&D professional has high innovation potential delivers $1.4 billion extra in new product sales relative to peer companies of similar size.

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The Five Markers of Innovation Potential

CEB researchers identied natural competency groupings based on their statistical relationships with one another, found common themes shared by competencies in each factor, and then used multivariate regression to examine the impact of each factor on outcome variables that indicate innovation potential. When we tested for the prevalence of 48 behavioral competencies from the Universal Competency Framework and their statistical connection to innovation potential, we found ve specic innovation potential markers:

70% of R&D staffs innovation

potential can be explained by the ve markers.

Results Seekers achieve personal and project goals. They are prepared to put in the extra effort and hours to achieve an objective. They see things through to completion and monitor progress against deadlines and milestones. Customer Empathizers seek opportunities to get customer input and feedback. They champion the customer perspective in developing ideas and solutions, thoroughly research customer needs and expectations, and relate customer needs to relevant technologies. Idea Integrators identify common themes over multiple issues. They are good at pinpointing key information from masses of data, understanding how one issue may be a part of a larger system, sorting information into patterns and relationships, and exploring and drawing on ideas from a wide range of disciplines and elds. Inuencers listen, consult, and communicate proactively with others. They build strong relationships and handle objections convincingly. They are good at adapting their communication style to the context and audience and explaining complex ideas to a non-technical audience. Risk Takers decide on a denite course of action and prefer to take calculated risks rather than miss opportunities. They initiate action without referring to others. They are willing to stake their personal reputations on ideas and projects they believe in. Risk takers are good at identifying opportunities and threats from market information and competitors.

Note that individuals can have strengths in none, one, or more of these ve markers. Each of the ve markers individually has a signicant impact on the innovation potential of R&D staff. Collectively, the ve markers explain over 70% of R&D staffs innovation potential.

Top Six Research Findings

There are ve observable markers that predict R&D staffs innovation potential. Customer Empathizer and Idea Integrator competencies most strongly drive R&D staffs innovation potential.

Finding 1: Two Behavioral Markers Matter a Lot

Based on a maximum impact analysis, two markers can most strongly drive innovation potential: Customer Empathizer (understanding customer needs) and Idea Integrator (synthesizing insight from disparate sources).

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All Five Behavioral Markers Inuence InnovationTwo of Them Greatly

40%

Five Markers of Innovation

26%
20%

24% 14% 10%

9%

0% Customer Empathizer

Idea Integrator

Risk Taker

Results Seeker

Inuencer

(20%)
Understanding unarticulated customer needs and synthesizing insight from disparate data and multiple disciplines most strongly drives innovation. n = 1,337.

Finding 2: The Five Behavioral Markers Are Strong Predictors of Innovation Potential

76% of staff who excelled at any of

the ve behavioral markers showed high innovation potential.

R&D organizations prize technical expertise, but that expertise does not necessarily lead to innovation. The study showed that staff who excel at technical competenciesthose who averaged a six or higher on a seven-point scale on technical competencies such as prototype development and validationhad only a 5050 chance of having high innovation potential overall. In contrast, 76% of staff who excelled at any of the ve behavioral markers showed high innovation potential. If you want to nd talent with the best innovation potential, assess behavioral competence rather than focusing too narrowly on technical expertise.

The ve behavioral markers of innovation potentialResults Seeker, Customer Empathizer, Idea Integrator, Inuencer and Risk Takeryield much better insight into an employees innovation potential than technical or functional expertise.

The Five Behavioral Markers Are More Predictive of Innovation Potential than Technical Competencies
80%

76% 51%

40%

0%

Staff Who Excel at Any of the Five Behavioral Markersa n = 286.

Staff Who Excel at Technical Competenciesb n = 473.

Behavioral competence is dened as a score of 5.5 or higher out of 7 on the behavioral markers Inuencer, Risk Taker, Customer Empathizer, Idea Integrator, and Results Seeker. One on a 1 to 7 scale, where 7 represents extremely effective and 1 represents extremely ineffective, technical expertise represents those who averaged 6 or higher in competencies such as concept generation and development, product and prototype development, and validation.

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Finding 3: We Dont Reward the Behaviors That Matter Most

Although customer-focused and idea integration behaviors drive innovation potential signicantly more than others, we tend to reward results-seekers when assessing performance.

When we looked at the relative importance of the ve behavioral markers on an employees performance score, we found a disturbing disconnect that hampers innovation. In the chart below, the blue bars represent the impact of each behavioral competency on innovation potential, while the orange bars represent the impact of that competency on the employees actual overall performance score. The discrepancy is clear, companies overfocus on project management and outcomes rather than on other attributes that are far more important to innovation. Although rewarding positive results is important, employees need to also be recognized and rewarded for innovation behaviors if innovation is a goal for the business. Many organizations unwittingly have disincentives in place to squelch the very competencies that would improve innovation.

Most Companies Focus Too Heavily on Outcomes Rather Than the Behavioral Markers of Innovation Potential
Maximum Impact on Innovation Potential Maximum Impact on Employee Performance Scorea

50%

41%

25%

26%

24% 14% 15% 10% 0% 9%

7%
0% Customer Empathizer

11%

Idea Integrator

Risk Takerb

Results Seeker

Inuencer

Although customer-focused and idea integrator behaviors drive innovation potential signicantly more than others...
n = 1,337.
a

...we tend to reward results-seekers when assessing performance.

Employee performance scores represent manager assessment of their direct reports performance (in the most recent review) on a 1 to 7 scale where 1 = far below expectations, 4 = meets expectations, 7 = far above expectations. Value not shown due to statistical insignicance at 95% condence level.

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Finding 4: Staff with Multiple Markers Have Higher Innovation Potential but Are Rarer
of R&D staff in the survey sample did not excel on any of the ve markers.

61%

The more innovation-related competencies an employee displays, the greater the chance that he or she will have high innovation potential. So it was surprising to nd that 61% of R&D staff in the survey sample did not excel (score a six or seven on a seven-point scale) on any of the ve important markers, as assessed by their managers.

Focus on developing (or nding) the ve behavioral markers in R&D staff to increase innovation potential. Companies should likely focus on developing markers in the majority of staff who currently excel at none, especially for the markers where the team is collectively weak.

Prevalence of Innovation Markers and the Associated Likelihood of High Innovation Potential
Percentage of Staff Likelihood of Having High Innovation Potential

100%

96% 83% 68%

61%

55% 33%

50%

9%
0%
Staff Who Excel at Zero of the Five Innovation Markers

12%

8%
Staff Who Excel at Two of the Five Innovation Markers

7%
Staff Who Excel at Three of the Five Innovation Markers

5%
Staff Who Excel at Four of the Five Innovation Markers

7%
Staff Who Excel at All Five Innovation Markers

Staff Who Excel at One of the Five Innovation Markers

n= 1,932.

Finding 5: Behaviorally Diverse Teams Make Individuals More Innovative

An individuals innovation potential is higher when working in a behaviorally diverse team.

Team diversity denitely inuences an individuals innovation potential. For purposes of this study, we dened homogeneous teams as those that excel at three or fewer of the ve markers of innovation, and heterogeneous teams as those that excel at four or more. We found that individuals are, on average, more innovative on teams that are behaviorally diverse. So heterogeneity in team structure is a good idea, but our research found R&D teams are just as likely to be homogeneous as heterogeneous.

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Employees Have Higher Innovation Potential on Heterogeneous Teams

6.00

= 17% 4.71

5.53

3.00

0.00 Behaviorally Homogenous Teams

n = 626.

Behaviorally Heterogeneous Teams

n = 598.

Finding 6: Quality of Leadership Inuences Innovation Potential

The innovation potential of R&D staff improves with the leadership competencies of their managers, such as the abilities to provide a strategic view, cope with disappointments, inspire staff to innovate, and maintain a long-term focus. However, few R&D leaders excel at managing innovators, which diminishes staffs innovation potential. In fact, 77% of CTOs told us their R&D managers are not very effective at these leadership competencies.

Few R&D Leaders Excel at Managing Innovators, Which Diminishes Innovation Potential
6.0

5.1

= 34% 3.8

3.0

0.0 High Manager Effectiveness at Key Leadership Competencies

n = 52.

Medium or Low Manager Effectiveness at Key Leadership Competencies

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From Inventors to Innovators: R&D Talent Strategies in Action

To unlock the innovation potential of the R&D workforce, R&D leaders need to:

Identify the ve innovation markers in the workforce. Use their knowledge of the ve innovation markers to deploy talent and design optimal teams. Build a leadership environment that nurtures innovators.

Imperative 1: Identify the Five Innovation Markers in Your R&D Workforce

Employees fear that failure in bold, innovative projects will be seen as incompetence and affect their careers. That concern is mitigated or eliminated by having executives demonstrate how their own personal failures actually advanced their careers.

Hillshire Brands Co., Identies Good Ideas and Idea Champions

Hillshire Brands Co.a leading supplier of meat products under such iconic brands as Jimmy Dean, Ball Park and Hillshire Farmwanted to establish an open forum for idea generation. In monthly workshops, R&D employees can exchange bold ideas and get feedback. Executives can also observe the innovation potential of the broader R&D workforce and identify latent innovators who might normally go undetected. Hillshires approach includes three primary components:
Open Forum for Innovation Monthly SNOW days (sharing new opportunities to win) provide an informal way to share and learn new opportunities or ways to deliver results. R&D staff perceive the forum as a risk-free environment to network with peers as well as senior executives. Executives share stories of their failures and how their careers were propelled by what they learned from those failures. This candid sharing helps employees realize that failure is an integral part of success, and learning from failures is a necessary step to leadership. Hillshire hosts informal reviews where R&D executives offer depersonalized, constructive feedback to innovators to encourage staff to continually generate and rene ideas.

Executive Failure Discussions

Depersonalized Executive Feedback

Since the inception of this approach, Hillshire staff have been more willing to innovate. Top management has identied more staff with innovation potential as a result of these workshops and seen a signicant increase in the number of quality innovation ideas being reviewed each year. We didnt build this process to identify innovators, said an R&D executive, but we found that it provided a really good snapshot of the organizations innovation potential.

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Imperative 2: Use the Five Innovation Markers to Design Optimal Teams

Unity Industrial Co., Ltd., Makes Behavioral Diversity Work
An individuals innovation potential is higher when working in teams that are behaviorally diverse. However, individuals with different behavioral competencies may often be at odds with each other during the lifecycle of an innovation project. For example, a Results Seekers desire to demonstrate a quick win may be fundamentally at odds with an Idea Integrators desire to broaden the scope of an idea and spend more time rening it at the front end. An international manufacturing company, pseudonymed here as Unity Industrial Co., Ltd., tackles this issue by using team-based guidelines and metrics to ensure that team members arent working in conicting ways:

Uniform team behavior scores create collective accountability for team behaviors by assigning a common team behavior score to all project team members and integrating it with performance evaluations as a key component of business objectives. Team behavior guidelines provide a roadmap for how to operate in a diverse team environment, which reduces friction and encourages greater collaboration.

This approach has built appreciation for behavioral diversity among R&D staff. By participating in a live idea-to-concept cycle with a behaviorally diverse team, employees gain an appreciation of the importance of different competencies for team success. Holding team members collectively accountable for good team behavior ensures overall collaboration and synergy.

Imperative 3: Build a Leadership Environment That Nurtures Innovators

Colgate-Palmolive Helps Its Leaders Better Manage Innovators
How do you make sure your middle managers arent inadvertently stiing innovators? Under pressure to deliver outcomes, R&D managers often struggle to inspire staff to innovate. Only a minority of R&D managers are open to new approaches, dealing with early failures, and providing a strategic view, according to their direct managers. At the consumer products giant Colgate-Palmolive, executives take direct ownership of the responsibility to transform R&D managers into innovation leaders. Executives deliberately expose mangers to innovation-oriented situations and projects that require them to demonstrate leadership, and ensure that managers do not act in ways that hinder innovation behaviors. This initiative has three primary components:

Leadership champion pairs: Two leadership champions are identied and paired with each manager to drive strategic thinking and leadership competencies. Critical learning experiences: A series of action-learning project opportunities takes managers out of their comfort zones and requires them to appreciate and foster behaviors critical to innovation. Peer coaching lab: Middle managers get together to focus on short-term results with a long-term strategic view, detail challenges they observe, and collectively brainstorm solutions to challenges related to championing innovation. The platform for peer coaching helps managers crystallize their own learning from innovation projects to prepare them for coaching their direct reports.

Leadership-led manager development has signicantly improved middle managers engagement in innovation, which in turn has enabled staff to pursue more innovation ideas.

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How CEB Can Help

We support the worlds leading organizations by providing end-to-end solutions to plan for, assess, and develop R&D staff to meet critical talent objectives.

A e ss ss

R&D TALENT

CEB Research & Development Leadership Council: Membership provides you with access to decision-support tools, advisory services, and networking opportunities to inform organizational changes and talent strategies. We help more than 200 corporate R&D teams adopt best practices in hiring, development, performance management, and succession management. CEB R&D Talent Assessment: Identify the prevalence of the ve markers of innovation potential, identify your high-potential employees, and engage your staff. CEBs talent assessment service scientically measures each staff members individual capabilities and helps your managers develop better coaching techniques. CEB R&D Leadership Academy: This classroom development program is designed to build broader business engagement and inuencing skills required of R&D staff today, including how to drive cross-functional collaboration to meet business and innovation goals.

Plan

Develop

End-to-end R&D talent solutions. Learn more at rd-talent.com.

Action Steps for R&D Executives

Assess staff for the ve behavioral markers that have the greatest inuence on innovation, and use that knowledge to guide talent deployment decisions and form heterogeneous project teams that spawn greater innovation.

The research points to ve key action steps for any R&D organization that wants to raise the level of innovation: 1. Assess staff for the ve behavioral markers that most inuence innovation: Results Seeker, Customer Empathizer, Idea Integrator, Inuencer, and Risk-Taker behaviors. 2. Use your knowledge of these innovation markers when making talent deployment decisions to ensure that high innovation potential staff are optimally deployed. 3. Create behaviorally diverse project teams while managing the friction that can naturally result from this heterogeneity. 4. Orient performance incentives toward the behavioral markers that matter the most, rather than focusing too narrowly on outcomes. 5. Build managerial support for a climate of innovation. Create opportunities for managers to have greater insight on the behavioral competencies of R&D staff, self-discover and neutralize their behaviors that inhibit innovation, and learn how to more effectively nurture innovation behaviors. The full research report, From Inventors to Innovators: Unlocking the Innovation Potential of Your R&D Workforce, provides additional details on the research methodology and ndings, key imperatives for R&D executives, ways to empower your R&D teams for innovation, insight into additional approaches of leading companies, and more. For more in-depth, interactive exploration of the subject, visit rd-talent.com.

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About CEB
CEB, the leading member-based advisory company, equips more than 10,000 organizations around the globe with insights, tools and actionable solutions to transform enterprise performance. By combining advanced research and analytics with best practices from member companies, CEB helps leaders realize outsized returns by more effectively managing talent, information, customers and risk. Member companies include approximately 85% of the Fortune 500, half the Dow Jones Asian Titans, and nearly 85% of the FTSE 100. For more information: +1-866-913-8102 RD.Support @executiveboard.com www.cebglobal.com Through this network, more than 300,000 business professionals have access to more than 300,000 corporate best practices, 1,500 benchmarking data sets, and 11,500 analytical tools to drive faster, more effective decision making across all major disciplines and areas of business. This white paper presents summary ndings from a 2013 CEB research study on how companies can unlock the innovation potential of their R&D workforce; the research drew partly on assessments of more than 1,900 R&D staff at 42 companies.

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