WALTHAM, Mass.--(BUSINESS WIRE)--Despite the recession, global corporations are actively pursuing innovation strategies as a means of driving growth, even though their top executives voice serious concern about successful execution, according to Caught in the Crossfire, PRTM’s 2009 global executive survey on trends in managing innovation. PRTM, a worldwide management consulting firm, conducted the survey with 65 senior executives across diverse industries worldwide. The survey revealed that executives are placing new emphasis on business model innovation—transitioning from a focus on product and technology innovation to funding new business model development.

While all executives mentioned growth as the reason to innovate, they are split on how they approach innovation. Approximately half the executives are already focusing on growth and have developed an innovation strategy to support this objective. The other half is pursuing a more conservative business approach, one supported by a hybrid innovation strategy that splits efforts between maintenance and opportunistic growth. However, 30 percent of all respondents voiced concern about whether the innovation strategy is right for the company’s business goals, citing complexity in determining where to invest modestly, and when to focus more heavily on breakthrough innovations to fuel higher growth.

Execution of Innovation Strategy Is Number One Concern

More than 60 percent of respondents said creating an operational model that links to the innovation strategy—and that drives disciplined implementation—is a major concern. Heightened pressure from global financial markets and competitors is creating fear among executives that innovation execution may fall short, resulting in disappointing financial performance when their innovations reach commercialization. Executives are not convinced they have the right combination of strategy, operational model and execution to deliver profitable growth. Most companies are making changes to their operational models to support changes in their strategies and growth goals.

“The bottom line is that some executives are feeling bullish on innovation strategies for growth but bearish on their ability to execute,” said Robert Shelton, director and leader of the Global Innovation practice at PRTM. He continued, “Others worry about their strategies. But all executives are working to ensure the linkage between strategy and execution. ”

Executives Focus on Five Areas of Business Model Innovation

All respondents cited a renewed emphasis on business model innovation to complement technology product innovation, with a focus on five prominent areas:

• Product/Services Bundling: About one quarter of companies are developing bundled products and services to provide solutions services and create stronger customer loyalty, lifting revenues and margins—both strong tools for growth.
• B2B Focus: Twenty-five percent of companies are developing B2B offerings—e.g., back-office services—to improve their customers’ business performance. According to PRTM, these innovations often improve customers’ return on assets—squeezing more out of what they already have.
• New Customer Needs: A quarter of companies are investing in anticipation of entirely new customer needs. This can be risky, yet also provide rapid growth via entirely new products and services, according to PRTM.
• Expanding Boundaries: Fourteen percent are significantly expanding the boundaries of their offerings by moving into adjacent areas—an uncertain approach, but one that will likely grow as companies learn to manage new business models.
• Changing Scale: Slightly more than 10 percent are significantly changing the scale of their traditional offerings. PRTM estimates this will be one of the biggest areas of business model innovation within five years, given its global reach and growth potential.

“The approach to innovation among global corporations is changing dramatically, in light of the economy and the relentless pressure to demonstrate growth,” said Shelton, the co-author of Making Innovation Work and a noted authority on innovation. He continued, “Executives are increasingly embracing the idea that they need an innovation strategy, yet there is also a growing recognition of the challenges of making the strategy work.”

About PRTM

Since 1976, PRTM has created a competitive advantage for its clients by changing the way companies operate. PRTM’s management consultants work with senior executives to develop and implement innovative operational strategies that deliver breakthrough results. The firm is a leader in operational strategy, supply chain, product development, and customer value management. PRTM has 19 offices worldwide and serves major industry and global public sectors.