INNOVATION INDEX

Empowering Innovation

October 2015

Contents

Foreword

About

Summary

KeyStats

DriversofInnovation

InnovationCulture

InnovationConfidence

13

InnovationBehaviours

15

InnovationBarriers

18

Conclusion

20

FutureResearch

20

Footnotes

21

Appendix

22

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Foreword
I am delighted to have been involved in the development of this research report with Rare, which
we hope will be the first in a series of many that will help you understand the state of innovation in
UK industry.
This research report flags up a series of significant points that point to a future which can go one of
two ways. Youll note there are reasons to be cheerful and reasons to be fearful.
The reasons to be cheerful show the optimistic side of this research, that there are good innovative
ways of working in British organisations. These reflect the great practice of innovation in a number
of organisations and it is to these companies that we should look to for inspiration. They reflect a
desire on the part of UK employees and their managers to do things better and show that we do
understand the value of innovation within our organisations.
The reasons to be fearful summon a more sombre note and highlight that significant proportions
of our industry are lacking in innovation, either because of time and resource issues, or more
worryingly, because of attitudinal or cultural shortfalls in the organisations themselves.
This snapshot of business innovation in the UK can act as a warning from the future. We are at a
pivotal moment in economic and social development in the UK, akin the moment at the beginning
of the industrial Revolution. More than any other factor, Digital has the power to tremendously
alter the social and economic development of the United Kingdom. It is an issue of national strategic
importance. The consequences for British society of our inability to innovate in Digital at a company
level are of strategic importance. This pivotal moment and the decisions that firms make with
regard to innovation over the next few years will drastically affect our success as an industrial nation
on the world stage. In order to compete effectively within the knowledge economy, we will need to
innovate digitally.
Not doing so will lead to serious social and economic problems in the long-run for this country.
It doesnt matter how well you think youre doing now. Innovation is for the future. Innovate or
evaporate is the mantra, with Nothing quite recedes like success thrown in for good measure.

David Edmundson-Bird
Associate Director, Digital Innovation
Manchester Metropolitan University

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About

The Research
The Rare: Innovation Index is a research partnership between the Digital Innovation Centre at Manchester
Metropolitan University and Rare:.
The objective of the research is to understand current practices and the barriers to creating a culture of
innovation amongst UK businesses. The research has an interest in taking opinions from anyone working
full-time in the UK business sector, levels of seniority and geographical location - to get a rounded view of
life within an organisation.
The research was fielded by Rare: to the Peanut Labs research panel. During July, we surveyed 340 individuals
aged between 21-60, working full time across several business sectors, at varying levels of seniority.
A breakdown of the demographic data can be found in the appendix at the end of this report.

Rare:
Demystifying Modern Marketing with research, training and consultancy

Confidence = Context + Clarity

We help businesses understand their problems, and provide them with the context and clarity they need to
make decisions, with confidence.
We are a group of seasoned market researchers and strategists that help businesses make better decisions.
With client, agency and research experience, we have worked with 5 of the current top 10 global brands.
Visit www.rare.consulting to find out more about speaking opportunities, general queries and how to
benchmark your own business with the innovation index.

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Summary

The UK needs a confidence boost

With only one in five people working in the UK (22%) feeling highly confident in their organisations ability
to meet the current demands of innovation, the research indicates a low degree of confidence in innovation
within the the UK. Culture (33%), education (30%) and departmental silos (25%) are cited as being the
main barriers to innovation. At the same time, the majority of UK business (54%) do not currently conduct
consumer research, which has implications on businesses ability to meet the future demands of innovation:
38% of those surveyed have a low level of confidence in their businesss ability to meet the future demands
of innovation.

UK business needs to empower

These statistics certainly give us reason to sit up and take note. But it is not all gloomy weather. The findings
suggest that there is a great appetite for innovation, with 79% of those surveyed wanting to help their
organisations create a culture of innovation. Other research suggests that one of the biggest areas of focus
is empowering innovation. The Rare: Empowering Innovation study, (which takes the opinions of 107 people
aged 21-60, working full time in the UK across several business sectors and levels of seniority), indicates
that 70% of people working in the UK are not incentivised to innovate within their business.

Leaders need to take responsibility for creating culture

The data indicates that leaders within larger businesses value the contribution of innovation (71% of people
at large businesses agree that their business understands the value of innovation), and it is no surprise
that these businesses are likely to feel more confident about their ability to meet the future needs of
innovation, compared to smaller sized operations (large business 33%; small and micro businesses 19%).
Larger businesses have benefitted from reputation, which attracts the right leadership skills to drive the
right culture. There are techniques that smaller businesses can adopt to follow this blueprint, by way of
recruitment, incentives, personal development plans (PDPs) and collaboration.

In future, these barriers should be challenged directly. This report contains tips and practical advice from
business leaders who operate in organisations that have nurtured a culture of innovation.

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Key Stats

The research indicates that there are...

Reasons to be cheerful

Reasons to be fearful

There is desire...
79% of people employed in the UK want to help
their organisations create an innovation culture*

...but the suggestion of a gap

70% agree that their business could do more to
improve innovation**

Some businesses are driving change...

...while others are playing catchup
23% of people claim their organisations innovate to 28% claim their organisations innovate just to keep
serve future demands*
up with competitors*
Big business values innovation...
71% of people at large businesses agree that their
business understands the value of innovation*

...but there is a lot of following

46% of people working in the UK claim their
business follows the innovations of others*

Small business is willing to test ideas...

...but were not all willing to take risks
26% of people employed at small business claim to 42% of those in the UK agree that their business is
use rapid prototyping*
risk averse*
Strong focus on the customer...
...but less than half are actually listening
22% of people claim their organisation is extremely 46% of businesses research their customers, the
customer-centric*
majority dont listen to their customers through
customer research*
*N=343 Nat. Rep. sample, taken from Research Now/Peanut labs UK panel June/July 2015
**N= 107 sample from Survey Monkey panel July 2015

So how is your organisation doing?

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Drivers of Innovation
UK business needs to look forward and
focus on customer needs
Its ok to look over your shoulder,
just dont stand and stare.
Tom Paxton1
There is a healthy customer-centric approach to innovation in the UK. However,
more could be done to research and anticipate customer needs. Some businesses are
innovating with a myopic focus on competitors, rather than meeting the current or
future needs of their customers.
Source of Inspiration for Innovation: Category
(n=340)

Focusing on customers and

competitors
The data indicates that one in two
businesses (49%) innovate to meet the
needs of their current audience. This
represents a healthy focus on the end
customer, with nearly one in four (23%)
innovating to help serve new needs2.
Alarmingly, the results of the survey
reveal there is still a large focus on
the innovation of competitors by UK
businesses. Over one in four (28%) UK
businesses innovate just to keep up
with competitors, and are more likely to
refer to their own category (51% within
category; 45% outside of category) for
inspiration3.

Source of Inspiration for Innovation: Competitors

(n=340)

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Comparisons inside the category should

be for benchmarking and reference,
rather than inspiration and leadership.
This view is echoed by Chris Kreinczes
Creative Director at Springwise, Only
businesses think in categories. Customer
expectation is not set by your category,
it is set by their experience of customer
services. Chris continues, Businesses
need to take account of both direct and
indirect competition, and its impact on
market share. Just look at how Uber
has disrupted expectations in the ondemand transport sector. It is also set
to disrupt the food delivery, airline
and motor industries, who all need
to consider these evolving customer
expectations set by other categories.
Around half of those surveyed (46%)
claim that their company follows the
innovations of others, which could have
implications on the UKs ability to serve
the future needs of its customers in the
right way.
The research suggests that larger
organisations are more inclined to
be motivated by the needs of their
audience, with one in two (53%)
large organisations claiming that they
innovate to meet the current needs of
their audience, and around one in four
(23%) claiming that they innovate to
serve new customer needs.

Those US businesses that drive a

customer-centric agenda (identified
as leaders by the Forrester Customer
Experience Index) saw a 43% gain in

Only businesses think in

categories.Customerexpectation
isnotsetbyyourcategory,itisset
bytheirexperienceofcustomer
services.
ChrisKreinczes
CreativeDirector
Springwise
cumulative total return, compared to
those identified as laggards, who saw
a decrease in performance of 33%
between 2007-2012. With a delta
difference of 76%, a customer-centric
agenda is shown here to drive business
performance. As for the present study,
only a third (34%) communicate with
their key audiences, throughout the
business, through customer profiling
practices, which is consistent with
Forresters (2012) finding that only
30% of US businesses have voice-ofthe-customer programmes in place4.

There are important economic

implications of these findings, which
are consistent with wider literature.

RARE: TIPS
Remain focused on audience
Understandingyouraudiencehelpstomitigatetheriskofinvestingininnovations
thatdonotmeettheexpectationsofcurrentorfuturemarketneeds.
Be true to your brand
Createinnovationthatfitsyourbusiness,ratherthanyourcompetitors.
Be exploratory
Stay ahead of your competitors and look outside of your current category for
inspiration. Introduce a parallel strategy for innovation alongside business as
usual.
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