Wall Street Analysts Need to Ask Corporate Leaders Different, Tougher Questions About Their Innovation Efforts, According to Innovation Experts From The Boston Consulting Group

Authors of Just-Released Book Exploring Why Innovation Disappoints Even The

Savviest Leaders Available to Discuss What Analysts and Investors Fail to

Ask CEOs About Innovation and Organic Growth - and Why Many of the Usual

Questions Are Useless

This Season's Earnings Calls are the Right Time to Start Pressing CEOs with

New Questions About Their Innovation Efforts, According to James P. Andrew

and Harold L. Sirkin, Co-Authors of Payback: Reaping the Rewards of


Jan 24, 2007, 00:00 ET from The Boston Consulting Group

    BOSTON, Jan. 24 /PRNewswire/ -- Wall Street analysts and investors
 should use the current earnings season to start asking CEOs and other
 leaders better, tougher questions about their innovation efforts and
 approaches to organic growth, according to James P. Andrew and Harold L.
 Sirkin, Boston Consulting Group (BCG) senior vice presidents and co-authors
 of the just-released Payback: Reaping the Rewards of Innovation (Harvard
 Business School Press, January 2007), which explores why innovation is top
 priority at virtually all companies, and is also a source of mounting
     Mr. Andrew and Mr. Sirkin also believe that analysts and the investment
 community often ask corporate leaders the wrong questions about their
 innovation efforts -- and fail to ask questions that could provide insight
 into why half of all leaders are disappointed by the returns on their
 innovation investments. Asking the right questions could prompt new
 thinking that leads to solutions and better innovation success, according
 to the authors.
     Mr. Andrew and Mr. Sirkin are available to discuss which frequently
 asked questions are useless -- and point out the right questions that don't
 get asked enough. (To arrange a conversation, contact Alexandra Corriveau
 at Sommerfield Communications, Inc. at 212-255-8386 or
     Following are some of their views on questions that are wrong, and ones
 that are right:
     Wrong: Not the Right Questions for Analysts to ask Companies About
 their Innovation and Organic Growth Efforts -- if they Want a Clearer View
 of Innovation Effectiveness at Companies they Watch
     -- Why aren't you spending more on R&D? (Innovation spending increases
        each year, but frustration with the returns on the spending is a
        constant, according to BCG research among more than 1,000 decision
        makers.  The real question should involve not how much they're
        spending, but what they're getting for it.)
     -- How good are you at moving your innovation efforts through your
        pipeline? (Many companies would benefit from focusing on fewer -- but
        better and more profitable -- ideas in their innovation portfolios.)
     -- Why did you kill that project we've been hearing so much about? (Most
        companies should be killing more, not fewer, projects.  A better
        question might be: Why didn't you kill it sooner? What would it have
        taken to be able to do so?).
     -- How do you maintain a steady flow of "big ideas? ("Idea worship" often
        derails and dilutes companies' focus on getting payback from
        innovation.  Most companies have plenty of ideas; the issue is whether
        they're being turned into profitable growth avenues.)
     -- Why is Company X more innovative than you are? (While it is always good
        to keep pressure on a company, the question doesn't get to the
        all-important issue of whether innovation efforts are leading to
        profit, and getting there within a timeframe that makes the profit
        real.  Also, innovation rarely occurs on a regularly scheduled and
        consistent basis).
     Right: The Right Innovation Questions for Analysts to ask Leaders --
 but not the Questions they Usually Ask
     -- Who wakes up every morning and worries whether your company is being
        innovative enough, and empowered with the tools, funding and people to
        take steps to make innovation really happen?  (In many cases,
        innovation is "homeless" within companies; people don't treat it as a
        discrete business function that needs rigorous management and metrics.)
     -- How good are you at killing innovation efforts before they've sucked
        money and resources? How many did you kill last quarter? (At any given
        company, up to a third of the initiatives in the innovation portfolio
        are "walking dead" -- and thus an insidious drain. Companies need to
        get better at killing these off, quickly.)
     -- Who at your company is the innovation venture capitalist -- the one who
        is willing to take risks backing ideas that might, but might not, "make
        it"? (At many companies, senior executives bemoan the lack of "big,
        risky" ideas. They want to have more opportunities to take big swings,
        but too often good ideas are buried deep in the organization, and don't
        come up for light because employees don't know whom to go to for ideas
        that won't help this quarter's earnings.)
     -- How, specifically, is your company aligned around innovation -- i.e.,
        how are you organized, from the standpoint of compensation, hiring,
        promotion, etc., to literally profit from new knowledge and ideas?
        (Often, companies that claim to be focused on innovation aren't really
        organized and aligned to make money from those efforts.  These
        companies may be aligned around other goals that may not complement
     -- What new innovation partners have you recently developed relationships
        with, and what benefit are they going to bring you? What have you had
        to change to make this work?  (Companies need to actively reach outside
        their own boundaries to harness the talents, spending and results of
        other organizations.  But most companies don't do this enough, nor have
        they made the necessary changes in their company to be able to
        effectively bring outside ideas in and not have them rejected because
        they were "not invented here.")
     -- Do you have a tried-and-true innovation business model? (If the answer
        is yes, watch out.  Companies tend to default to the business model
        they feel most comfortable with -- rather than selecting one of the
        three innovation business models based on an assessment of variables,
        such as cost and the need to get to market quickly.)
     -- How much time do you personally spend on innovation?  How much time in
        your regular operating reviews is spent discussing innovation,
        specifically? (One of the things that distinguishes the most innovative
        companies from the rest is the direct and substantial involvement of
        the very top of the organization in the business of innovation.)
     -- Where does innovation rank on your agenda of top strategic priorities?
        If it is important, how are you demonstrating to your employees that
        you personally really think it is important?  How do you know they
        believe you?
     Payback: Reaping the Rewards of Innovation (Harvard Business School
 Press, January 2007) is based on The Boston Consulting Group's
 innovation-focused work and research involving thousands of innovation
 decision makers and corporate leaders. It analyzes the innovation problem
 and uses scores of detailed examples to show that companies can get beyond
 "innovation intoxication" to gain a clearer picture from which to make
 smart decisions and align key players.
     About the Authors
     James P. Andrew is a Senior Vice President and Director of The Boston
 Consulting Group, and heads the firm's global innovation practice. He has
 been with BCG for 20 years, in both the US and Asia. Mr. Andrew leads BCG's
 annual global Senior Executive Survey on Innovation (conducted with
 BusinessWeek), and works with leading companies around the world and across
 industries on their innovation strategies and related organizational
 issues. He regularly counsels senior executives on innovation culture,
 performance, and leadership.
     Harold L. Sirkin is a Senior Vice President and Director of The Boston
 Consulting Group, and leads the firm's global Operations Practice. He has
 been with BCG for 25 years. Under his leadership, the firm has emerged as
 the foremost driver of client results in two areas critical to profitable
 growth-innovation and globalization. Mr. Sirkin previously led BCG's
 E-commerce and IT practices. He regularly counsels senior executives on
 innovation, globalization, operational capabilities, change management and
     About the Boston Consulting Group
     Since its founding in 1963, The Boston Consulting Group has focused on
 helping clients achieve competitive advantage. Our firm believes that best
 practices or benchmarks are rarely enough to create lasting value and that
 positive change requires new insight into economics and markets and the
 organizational capabilities to chart and deliver on winning strategies. We
 consider every assignment to be a unique set of opportunities and
 constraints for which no standard solution will be adequate. BCG has 61
 offices in 36 countries and serves companies in all industries and markets.
 For further information, please visit our Web site at http://www.bcg.com .
     To receive a copy of Payback and supporting materials, or to schedule a
 conversation with one of the authors, please contact Alexandra Corriveau at
 Sommerfield Communications, Inc. (212) 255-8386 or

SOURCE The Boston Consulting Group