The Lux Innovation Survey 2026: Benchmarking Innovation in a Risky World

Arij van Berkel: Hello everyone. Good morning, good afternoon or good evening, depending on where you’ve been. Special kudos to those of you to whom good evening applies. We really appreciate you joining us in your evening time. Welcome to our webinar. We do an innovation survey every year. Last year we were talking about AI and we were talking about how you deal with risk management, for example. This year, we were getting throughout this year quite a lot of questions about benchmarking, about how you compare to others, and still a lot about risk and uncertainty. So our innovation survey this year is about benchmarking and about how to deal with a risky world. And we’ll get to the question whether it is indeed a risky world or whether there’s a level of predictability still there. So my name is Arij van Berkel. I’m the Chief Product Officer here at Lux, and I’m joined here by Anthony Schiavo, who’s our principal analyst, who’s been conducting this survey, designing it with our colleagues, launching it, and interpreting the results. And he will be taking us through those results today. Now, before we get started throughout the webinar, if you have any questions, you can type them in the Q&A box. For me, there’s a Q&A box on the right side of my screen. And time permitting, at the end of this webinar, we will try and get to as many questions as we can. Now, of course, it’s possible that you get a question after the webinar or that we don’t get to your questions. If you have any remaining questions, feel free to e-mail them to questions at luxresearchinc.com and we’ll respond to you over e-mail. If during the webinar you experience any difficulties, like a frozen screen or maybe your sound isn’t right, usually just refresh your browser window and things will settle and you will be back online. All right, now before we start the webinar, just for those of you who are maybe less familiar with Lux, we’re an independent research and advisory firm. We work with many of the world’s leading companies. And what we do is we identify emerging opportunities. We do that by evaluating technologies and supporting any of your high impact innovation decisions. We employ scientists, engineers and analysts together with industry experts to support your decisions in, for example, what projects you need to run, what partners you need to select, what strategy, innovation strategy would be most useful to your company. Talking of innovation strategy, without further ado, let me introduce Anthony. So Anthony, why don’t you take us through our innovation survey results of 2026?

Anthony Schiavo: Thank you, Arij, and thanks everyone for joining me today. Very excited to take you through the results. First, we’ll just introduce the survey, some of the themes, as well as some of the demographics who actually answered the survey. Then we’re going to talk about the two major sort of categories. How do you benchmark innovation? How do you measure the performance of innovation teams? And how do you manage risk? And then we’ll give a little bit of an outlook, how we can take some of the learnings from this survey and apply them to a future, which is not to give it away, but it’s looking increasingly risky. So last year’s survey, as I mentioned, we asked what survey respondents were really worried about. And they answered pretty overwhelmingly that uncertainty, risk, volatility were really some of the top concerns, the most common, even more so than something like rising costs, which has certainly been a real story and a real focus during the year. And I don’t think that this is really a surprise. We’ve been talking about risk a lot this year, and it almost feels like I don’t even have to explain it anymore, right? Whether it’s bottlenecks in some of these critical shipping lanes, whether it’s the Suez Canal as pictured here, or the Strait of Hormuz, those are creating more types of risk and volatility. Whether it’s rapidly shifting policy, whether it’s on you know, a federal level kind of whipsawing back and forth between administrations here in the US or even at a local level, right? People pushing back against data centers and that backlash, right? That sort of increasingly consumer-led grassroots concern about, you know, could be data centers, could be sustainable infrastructure, could be backlash against corporations who are maybe breaking some of those sustainability pledges. There’s all these potential risks that are now really intersecting with the innovation work that our clients are doing. And so we wanted to ask sort of a big question, which is, is innovation performance getting worse in this risky world? Are these risks impacting the day-to-day activities, the long-term activities of innovation teams? And if they are, and if innovation performance is getting worse or innovation is getting harder, How can we improve it? How can we adapt? And so there’s sort of two related parts to this. The first part is really about benchmarking, as Ari mentioned. How do innovation teams measure their own performance? We want to understand how, but we’ve also included some questions here on what the results are. Are innovation teams performing well? Which ones are performing well? And we’re going to get into that as the presentation goes on. And then we want to understand how innovation teams are responding to risk. What are the structures within their companies that are thinking about risk? How are those structures tied to innovation teams? And what are innovation teams really using risk for? What are the ways they’re thinking about risk? Where does it shape their innovation process? And then as I mentioned, we’ll give a little bit of an outlook. So to start talking about the survey itself, We surveyed around 160 mostly senior innovation professionals from a pretty wide range of industries. You can see here that just about half of our respondents have been in R&D or innovation for more than 15 years. So these are really individuals who are in the prime of their career. They’re in management roles, in some cases senior management roles. I’d say that the defining title in our model was a manager or a director, right? So R&D manager, director of open innovation, these are the types of titles that were most common. We had a number of individuals who were a little more junior, innovation leaders or R&D scientists, and we had a number of titles that were more senior, SVPs, department heads, even some C-level folks joining this survey. When we think about the organizations, this survey is anonymous, but we do have some clues, some contextual clues from both the titles that were reported to us and some of the other information we collect, as well as just a general understanding of our client network and our network of innovators that we work with. So we can tell that this is really drawing primarily from corporate innovators. I would say about 85 to 90% of respondents were from corporate innovators. We also know that there’s a pretty diverse set of industries. Certainly oil and gas, chemicals, heavy industrials are very well represented. Certainly some agri-food and more consumer-facing industries also had pretty strong representation. And then there’s a small subset of the individuals responding to this were from other types of innovation organizations. There was a handful of startup CEOs who responded. We had a handful of government researchers or government sort of lab and institute type individuals respond to this survey just based on our analysis of some of the titles and some of the questions that we received. We asked these groups, what type of innovation group do they fall into? Does their group have a particular archetype? This is a pretty interesting result. You see R&D is clearly the most dominant. About 35% of respondents put themselves in that category. And then we had open innovation, corporate venture capital, kind of a small amount, and then one or two incubator respondents. And then a good chunk, about 30%, a third really saying our team falls into sort of a multiple of these archetypes. We’re maybe having R&D and open innovation function or VC and open innovation function. So this is an interesting result, but when you compare this to the respondents, when we ask them to describe, what does your day-to-day work look like? How often do you require yourself or are you required to occupy yourself with the following activities? R&D management, IP management, innovation portfolio management, VC, M&A, strategy, specific to R&D or innovation, and then corporate strategy. What you can see is that there’s some areas that are more common than others. Innovation portfolio management, R&D management, and R&D innovation strategy really stood out. Reflecting the sort of seniority and the level of the people responding to the survey, a lot of strategy, as well as things like corporate strategy. And then M&A, pretty rare, although there is a good 20% of our respondents who are sometimes pulled into these. And then corporate VC, again, there’s a good chunk of our respondents who never do corporate VC. There’s a small number, about 10%, who are doing that. That’s clearly their full-time job. And then a lot of individuals who get pulled into it on a kind of an occasional basis. But when we compared the results of this question and we cross-tabbed them against the results of the previous question, what we found is that the defined archetype has no real impact on what they’re doing in their sort of day-to-day work. What I mean by that is if you’re in an R&D role or you self-identified as being part of an R&D group, you’re about as likely to say, I’m involved in innovation portfolio management or corporate strategy or even corporate VC as someone who’s self-defined as being in an open innovation role or a mixed role. So clearly we have these labels that we put on some of the groups within the innovation teams. But when we look at who is doing the work and what that work is, we can see that innovators are still doing kind of a lot of everything, right? Open innovation teams are doing a lot of R&D management and R&D strategy. Everyone is really contributing to corporate strategy. So these sort of labels or these structures in practice are really quite fuzzy. And I think that presents challenges as we get into some of the benchmarking that we’re going to see sort of crop up when it comes to how do we select KPIs, how do we measure our performance? So That’s who responded to the survey and a little bit about what they do. Let’s talk about how they think about benchmarking innovation and managing risk. So coming back to these two key issues, measuring their own performance, responding to risk, we’ll start with the benchmarking. And we asked a couple questions here on how these groups measure their success. We also asked how they rank themselves, how they see themselves relative to their peers. So We asked two sort of related questions. Does your innovation group have goals or target outcomes? If yes, what are those goals? And then is your group evaluated against those goals with clearly defined metrics? Essentially, do you have KPIs, key performance indicators? And again, if yes, what are those KPIs? And I’m lucky, happy to say that a lot of people did share their goals and their KPIs with us, so we actually have a pretty good sense of how innovation teams are measuring their performance. And then we asked, okay, have you achieved those goals, right? Sort of a self-assessment against your own targets. And then we asked, when you compare yourself to your industry peers, how do you rank your expenditure in terms of innovation, your effort in terms of innovation, and your performance? So we did kind of both a self-assessment against your own goals, as well as sort of a comparative assessment against what you perceive to be your peers. Starting with goals. Does your innovation group have clearly defined goals or outcomes? About 65% said yes. A relatively small fraction said no. And then, you know, about a third said, we’re still working on developing these goals. I’ll be frank, for the purposes of this analysis, we counted no and working on it. In one category? No. If you don’t have clearly defined goals, you don’t have them, even if you’re thinking hard about them, I’m sorry to say. This is, to me, a little bit surprising. Innovation is not really a new function, right? And here, we’re not asking about KPIs. We’re not asking about measuring innovation. We’re just asking about goals, right? And a third of teams still lack those very clearly defined goals or target outcomes. And it gets a little more sort of distinct when you see what those goals actually are. About half of the teams who said yes have a financial goal or a sort of a revenue goal. The most common is some kind of strategic goal, preparing for shifts in the market, expanding companies’ sort of operations into new markets or into new areas. Interestingly, risk mitigation is down here at around a 20% rate. And new sort of pure technology acquisition goals also in that kind of 20% rate. When we then asked, well, if you have these goals, is your group actually being evaluated against these goals with KPIs, clearly defined metrics. It’s even sort of more stark. Just about 45%, so less than half of innovation teams said, yes, we have KPIs. Again, about 15, maybe 20% said no, and maybe 35, 40% said we’re working on developing these metrics. So clearly you can see like, hey, less than half really have these KPIs. And then when we get down into what those KPIs are, we saw some interesting patterns. Now, one quick note here, you’re going to see a breakdown of respondents. If you do a little quick math, you’ll notice this adds up to more than 100%. That’s not a bug. A number of respondents have both financial and commercial as well as portfolio or stage gate technology delivery goals. So we counted those in both categories. We counted those both separately. So this does add up to more than 100%. But getting into the data, about 40% of respondents said they have some sort of financial and commercial outcome as a goal. Cost reduction and margin improvement were the most common, followed by revenue growth, top line growth. Then we had a kind of a three sort of related themes within what I would consider technology goals, right? We had milestones, stage gates, and delivery as a category. It’s about 30% of respondents, very clearly tied to a technology funnel stage gate process. Pilots, we’ve delivered a pilot, we’ve delivered technology. And then Sort of differently, we have the portfolio throughput and success rate. We put these in two categories because one is really measuring, okay, are you delivering pilots in a consistent way? How many pilots per year are you delivering? Whereas the other is looking at a ratio, right? A project count, a conversion or a success rate, a portfolio throughput from idea to commercialization. Targeting a lot of the same outcomes, right? But sort of two different ways of thinking about it. One way it’s like, let’s just sort of maximize the number. The other is let’s make sure that the ideas we’re putting in are really high quality. And then there is also a sort of a pure technology readiness, this last category of 11% that is really more about sort of direct technical outputs. Patents, IP submissions are sort of most common here. Some measurements of things like the technology readiness level. Related, of course, to the first two, you can’t, if you’re putting a pilot together, you’re sort of necessarily increasing the TRL, right? But different ways of measuring similar outcomes. And then last, there were KPIs reported on alignment to corporate strategy, business engagement and customer impact. These are, you know, more for customer facing roles or more for thinking about the innovation as a whole process, bringing that together and saying, okay, are we improving customer satisfaction ratings? Can we tie that to the innovation work that we’re doing? So when you look at this, right, now this is 40% of respondents who said yes to KPIs, right, in the case of financial and commercial outcomes. So that means we’re really looking at, when we consider the pool of innovative companies, about 20%, 18 to 20% have some kind of financial KPI, if we assume that this data is representative, I think it is. And about a third have at least one of these technical goals of milestones, portfolio, and technology readiness. So that’s a relatively low fraction, right, I think. Certainly one in five innovation teams having a financial KPI, to me, that really reflects that there’s a challenge, a real difficulty and a real, in a frank sense, a lack of maturity around measuring the financial performance of these innovation teams. But how are these teams performing, right? So the first way we ask this is how consistently has your group achieved its goals or metrics, right? This is not comparative. This is just within your own sort of team. About half achieve their goals somewhat consistently. 25%, they say every year in the past five years. Another third said some year in the past five years. So at least two years in the last five. Hopefully closer to three in the last five years. A relatively small fraction, about 15% total, said only one year or no years in the past five years. And then quite a large chunk said it’s not really clear, right? Which I think sort of, again, reinforces this point around the relative immaturity of the ability to measure the performance and the impact of these innovation teams. And this is not even necessarily a measure of impact. This is simply a measure of how you achieve those goals. It’s not even clear that you’re having a huge impact. Your goal might just be certain technology output metrics. And even in that case, it’s unclear to a range of different companies. When we look at effort and performance ranking, so how would you rank the innovation expenditure effort relative to peers, and how would you rank the performance of your innovation group relative to peers? We see a somewhat similar distribution, although it’s a little bit here more heavily tilted towards the top. You can see about 12 to maybe 13% said, oh, we’re in the top 10 in terms of effort, and about 15% said we’re in the top 10 in terms of impact. And then similar groupings, maybe 25% said, hey, we’re in the top 15%. And a solid 35% said, hey, we’re in the top 50% at least. So clearly this can’t match reality in the sense that you would expect that the performance of these groups would fall cleanly into these categories, right? The 25% would be in the bottom 25%. 25% would be in that sort of second bottom quadrant. But our survey respondents are not necessarily a perfectly representative sample of innovation overall, right? These are people who are more senior and these are people who are part of our Lux research network. Those are companies who, by definition, are putting more effort into innovation. They care about innovation, right? They have teams, they have structured goals, they have structured units related to innovation, right? So it is possible that this group is more heavily weighted towards the top of the performance spectrum. So in this context, I would really say that sort of self-assessment of goals, like, hey, how frequently are we achieving our goals, is really the most sort of impactful thing to think about performance. And so when we look at that and we look at, we cross-tab that or cross-reference that with, do you have KPIs? We can see a very clear pattern, which is that innovation teams with KPIs are much more likely to say that they are achieving their goals either every year or at least two years in the last five. Whereas innovation teams who don’t have goals or are still working on developing those goals, of course they’re much more likely to say it’s not clear if we’re achieving our goals, as you would expect. These teams with KPIs benefit a lot from a lot more certainty around their performance, I think, even if their performance isn’t necessarily better. And you can also see that even just within the distribution of the questions where you have some clarity or the answers where you have some clarity, you can see there’s a very different distribution. It’s a lot more likely that companies who don’t have these metrics are going to report that they have not achieved their goals or that they’ve only achieved their goal in the last one year out of the last five. So it’s a very clear result to me that innovation teams with KPIs perform better. And I think this is actually sort of a reinforcing thing, right? Teams with KPIs are probably better able to communicate their impact to the rest of the organization. They’re probably better able to achieve buy-in for their goals and thus they’re more likely to deliver on those efforts. We also looked at this, you see a similar result when you look at the sort of self-assessed performance ranking in terms of the quadrants. It tells a very similar story. So, and again, I trust this a little bit less, so I won’t spend too much time on it, but this answer also aligns. Okay, so innovation teams, we know how they’re measuring the results, right? About 20% of financial metrics, about 30% of some kind of technology related KPI. Those teams that have KPIs are much more confident in their performance at the very least, and are likely performing better than those of them. How are they responding to risk? So we ask a number of questions. The first four, three to four are really about the sort of the relationship between risk management within the business and the innovation team. Does your company perform risk assessments? Is the innovation team involved in that process? Are they actively creating these risk assessments? Does the team have access to those risk assessments? And then Does the team use those risk assessments in actually picking innovation activities? And we dig into that data a little bit more deeply. Then we had some more forward questions. What’s the biggest risk you see in your business today? And what’s the biggest risk you see in the business in the next three years? And then also, do you think the risk environment is getting better or worse? First, looking at some of the disconnects between innovators and corporate risk management. We see that just around 83% of respondents said our company is performing business risk assessments on a regular basis. That struck me as a little low, but then I also think this reflects some of the distribution. Not every respondent we have is from a major Fortune 500 company. I would imagine that for Fortune 500 companies only, this would be closer to 95, maybe even 100%. But some of the incubators and tech hubs who responded to this probably are not. So I think this is, I’d take this with a little bit of a grain of salt. But you can see there’s a very clear drop off when we ask, is your team involved in the creation of these risk assessments? Just about less than half said they are. But 63% say they have access to the results. That could be better. Clearly, there’s about a 20% gap of people whose companies are doing these risk assessments, but they’re not actually getting that access. But I think my hypothesis would have been that’s actually, that would have been a little lower in my hypothesis. So in some ways, this sort of outperformed my expectations. But it’s this last question. Does your innovation team use business risk assessments in picking innovation activities where we got the lowest response? Only about 40% do. And for those, when we asked them, well, how are you using them? We got a kind of wide range of answers, right? The most common was on an individual project basis, right? So whether you’re doing a stage gate, whether you’re doing a project level de-risking, you’re using a risk assessment to identify exposure to macroeconomic risk, exposure to technical risk, exposure to market risks, and ultimately de-risk these opportunities. That’s useful on an individual project basis. Of course, I think that you should be doing that in your innovation work. But then when we look at something like portfolio selection and resource allocation, only about 18% of respondents, again, who said they were using risk said, this is the way we use it. We’re using it to inform priorities. We’re using it to set our investment focus. We’re using it to allocate resources. So when we take those two numbers together, only about 7% of respondents to this survey, maybe 10% of large companies and most 15%, depending on what you think the demographics are, are actually using risk to determine the selection of technologies that they’re investing in. To me, this is a really clear and a pretty obvious gap, right? There are a lot of risks. These risks are known in a lot of companies. They are assessing them. Someone is thinking about them, but when it comes time to develop that portfolio of technologies, Not a lot of people are really taking these risks as a key input. At a similar rate, they’re using them for some other functions. Business alignments, saying, okay, these are the risks of business units facing. We’re going to try and align with that. That’s good. Looking at the individual target markets, taking data from those risk assessments and saying, hey, these innovations we’re developing, are the markets ready? What are the risks in those markets? And again, that’s useful. And then looking at the sort of the product adaptation, saying, hey, we have a particular coding or consumer product or whatever. Let’s identify risks within that and maybe some focus there. So if you imagine that all these are separate from each other, people are using risks in different ways. But we know that there’s a lot of overlap. We know that it’s not. 18% of people are doing this for portfolio selection and then a totally different 18% are doing this for business alignment. There’s really a small pool of people who are using these risks in these more strategic and forward-looking ways as opposed to just stage-gating with them. And so there is a real opportunity here to pump these numbers up, right? A lot more teams could be using risk to inform their technology portfolios. And this shows up in performance, right? The teams, again, who use these risk assessments in their self-assessed performance, they reported themselves to be a lot better, right? So looking at the results as a whole, I think we see a pretty clear pattern, right? When it comes to benchmarking innovation, there’s immaturity, right? A lot of teams don’t have KPIs, even fewer teams have really strong financial KPIs. When it comes to leveraging risk, and risk assessments and integrating that within innovation, there’s a lot of immaturity. A relatively small number are using these risk assessments to actually design an innovation portfolio that matches that risk profile. And this is a problem because overwhelmingly, the respondents said risk interferes with innovation. We asked, hey, does this interfere? Yes, significantly, 40%. And even slightly greater, another maybe 40%, 43% said, yes, moderately. And quite a minority said, no, the risk environment does not interfere with my innovation work. And when you look at the sentiment, it’s really negative. We asked how people expected the business risk environment to change over the next three years. And they said, it’s going to get worse. You know, 30% said it’s going to get significantly worse. 35% said it’s going to get moderately worse. And about 25% said it’s going to be about the same. Only a combined 7% of respondents thought that the risk environment was going to improve at all, you know, moderately or significantly over the next three years. So. Innovators clearly are not feeling positive about the risk environment that they’re operating in. It’s I think very safe to say. When we asked them what types of risks they were most worried about, a couple of interesting things emerged. China really leapt out and particularly this idea of increased competition, but also just higher competitive pressures in general, right? Commoditization, a lack of differentiation, even some uncertainty around demand all jumped out as these sort of market and competitive pressure risks. And people thought that they were bad today and getting worse in the future. Then geopolitical and macro sort of regulatory uncertainty also emerged as a big risk category. 23% said it’s bad today. A similar number, maybe slightly less, said it’s going to be bad in the next three years. And the third big category was technology disruption and pace. A lot of concerns about AI, whether it’s competitors using AI to accelerate their processes or an inability for my company or a difficulty for my company in adopting AI and our ability to accelerate our own innovation work. Those really rose to the top. And then there are a couple other risks. Interestingly, both internal execution strategy and funding resource and cost pressure were kind of viewed as near-term risks, but there’s a big drop-off if we think this is a risk in the next three years. The availability of funding and the ability to get this type of access to resources, it’s clearly viewed as a near-term pain point, but not as a structural problem. And then lastly, supply chain energy materials. This is interesting because it was the lowest risk that we saw in terms of the number of people who highlighted it, but it was growing right over the next three years. People are concerned that this risk is going to get worse, whether it’s energy prices, raw material availability, supply chains, transportation, and the general sort of macro interest in sustainable transportation. All of them sort of showed up as these types of risks. So what can you do about it? Well, I think there’s three big things I recommend. The first is I think there’s clearly a challenge with the structure of innovation teams, right? We know that teams with KPIs perform better. I think you need to organize teams into structures where they can have really specific KPIs. The fact that it seems like a lot of innovation teams are kind of doing a mishmash of everything, that really stood out to me. My colleague, the moderator, Dr. Ryan van Berkel, just recently did a webinar on innovation structure and resources. I encourage you to check that out. But a lot of the really good examples he shared there are from these very structured programs, things like Shell Game Changer, P&G Connect and Develop, where you’re doing open innovation in a very structured way. The people on the outside, the people you’re working with, have a very clear understanding of what you’re trying to achieve and the steps you’re going to take. And these types of very systematic innovation approaches and programs very naturally lend themselves to nice KPIs where you can really measure the impact. So if you can create those structures within your company, you’re going to have a better time finding the KPIs that really make sense, and then you’ll be able to communicate them better. The second thing is I think corporations really need to find ways to secure long-term financing. A lot of people are worried about China. This came up a lot. And the thing I’ll say about China, and there’s a lot to say, but one thing is that there is a very consistent funding framework and R&D framework and goal setting. From 2016, made in China 2025, through to now, there has been this very consistent set of priorities that have grown and evolved, but have had a lot of resources put behind them and have not suffered from big swings or big changes in direction. And I think, obviously the government is best positioned to do this type of thing. But by working together in consortia, whether it’s sort of a basic research level with something like the European Consortium of Innovative Universities, or even at a kind of industry level with consortia and goal setting, you see this a lot in the chips industry, they have very clear goal setting for their sort of performance targets going forward. These types of ways, especially when they’re coupled with funding, can help create the kind of consistent goals and ideally the consistent availability of resources that enables long-term innovation. Because companies are going to do less, they’re not going to have the same ability to rely on governments for that. So they’re going to need to find ways to replicate some of that with less government support. And lastly, I think it’s very important to really think about communicating the long-term value of innovation. It’s, again, this is a slide from my colleague, Dr. Van Berkel’s presentation we gave recently. Again, I encourage you to check that out. But he made the point there that, you know, you can think about innovation actions. It’s relatively near term now, maybe 2030 or 2035. The structure of your innovation portfolio is having an impact on the 2040, and then really long-term program level innovation goals, racing out to 2040, 2045, maybe even towards 2050. And there’s a lot of the focus of KPIs is really on actions, right? And that’s good. We need to understand how those different innovation actions reflect in sort of the value that’s being created for the company. But it’s also, I think, really worthwhile to think about portfolio and even program-level KPIs. And we really measure how our long-term innovation work is aligned with these strategic goals and the outcomes that we care about. So with that, I’ll leave you with three key takeaways. First, innovation teams are still really lacking some of the structural maturity found in other business functions, right? We don’t have very clearly defined roles, even when we’re in a particular structure. And I think this limits the ability of teams to have KPIs and communicate their performance. Second, innovation teams that do use KPIs and do use risk assessments perform better. So go and try and get those risk assessments. Go and try and develop those KPIs. I really urge you to be able to do this. And last, I think you really need to be proactive. In insulating your team from risk, right? We’ve touched on this. I did a whole presentation on risk earlier where this is really drawing from. But a lot of risks are knowable. A lot of risks are foreseeable. You need to build a kind of a buttress against these risks, right? And that means communicating your work well. That means having KPIs that prove your value. And that means getting involved with the risk assessments your companies are doing. So with that, I want to say thanks. And I see my colleague, Dr. Van Berkel, is on. And I’ll pass it over to you.

Arij van Berkel: Thanks, Anthony. Thanks for taking us through all of these results. And they’re really interesting and sometimes a little surprising. I’m just looking at our questions. And I’ll start with one that I think is interesting for everyone. So you showed that of our respondents, a large majority thinks the business environment is going to get worse in the coming three years.

Anthony Schiavo: Yeah.

Arij van Berkel: What do you think? How would you have answered and why?

Anthony Schiavo: That’s a great question. I do think it’s going to get worse, perhaps even significantly worse. I think there’s a couple things that drive that. One, I think that we are still, as much as we’re in maybe a clean tech winter, or whatever you want to call it, we’re very much in the middle of an energy transition. And we see that not just in the West or the sort of the global north, but in the global south as well. And as that transition is happening, it’s going to create weird systemic effects. This example I keep coming back to, but Pakistan invested a huge amount of solar, so it’s very bottom up. Transition led by small buyers. And that had the knock-on effect of really disrupting the profitability of their grid. So we’re really going to be in this era of bottom-up technology adoption. And that is going to, I think, create a lot of volatility in these sort of systems that is going to create risk. And then at the most macro level, I think we’re in this sort of transition. We’re in this sort of rejection of a lot of the macroeconomic, political, economic systems that have sort of defined our lives for the last 40 years, right? Whether it’s deglobalization or the breakdown of free trade or sort of even the sort of rejection of more democratic sort of forms of government, whatever you wanna call it, we’re clearly undergoing a big systems transition right now and that just means risk and volatility are gonna increase.

Arij van Berkel: Thanks. And I think that is entirely true. There’s many different transitions going on. I think we’ve had energy transition and material transition. I think we’re also now transitioning to a deglobalized world, perhaps. So there’s many transitions stacked on top of each other, which admittedly is getting a little hard to keep track of. There’s some people pointing out a couple of potential contradictions here. So you showed who took the survey and it looks like there’s a large majority of people that have in excess of 10 years experience, even 15 years experience. So we’re dealing with very seasoned innovation leaders. At the same time, those very seasoned innovation leaders don’t seem to have KPIs and don’t either seem to care or don’t seem to know what KPIs would work for them. So that’s maybe a contradiction. And then if you go to your risk management, you see that in the risks that they think are manageable in the sense that they think they will be less bothered by them three years from now than now, those tend to be internal risks. So the people we surveyed apparently have a long experience. They manage innovation kind of intuitively and they have a high confidence that they can manage things within their own organization. They’re a little scared of the outside world, but they know how to manage internally. Why would those guys make KPIs? Why would that even improve that they seem to have a very trusted position.

Anthony Schiavo: It’s a good question. And I think it’s interesting because KPIs, of course, do present a risk, right? In the sense that once you adopt a KPI, you need to fill it, right? You need to achieve it.

Arij van Berkel: It becomes very visible, yeah.

Anthony Schiavo: It becomes very visible, right? And if you fail to do so, you know, Roughly a third of our innovation teams are not achieving their goals in a consistent way. Maybe they don’t want KPIs. But I think that it is more likely that macro or really corporate factors have stymied the creation of this, right? And what I mean by that is my experience working with our clients is that restructurings, reorganizations, mergers, demergers, you name it, are all a constant feature of corporate life. And it’s no surprise to me that a lot of the companies that I see outperforming, I’m talking about Shell, right? It’s a company that’s had a very consistent innovation structure for the last 15 years, 20 years. So I think that a lot of these innovation teams they are doing things a bit more intuitively, they don’t necessarily have KPIs. I don’t think it’s because they’re sitting down and saying, I don’t want KPIs. I think it’s more, frankly, every two years, right? Someone is coming in and blowing up their org, blowing up their structure, goals are changing at a corporate level, and they kind of lack the stability to create those KPIs. So I think that teams need to be a little bit more proactive about pushing for those KPIs, about building them themselves, even though they’re scary, I get it. Because I think that unless you’re very actively trying to create that or you’re lucky enough to work at one of these more stable organizations, they’re not going to naturally sort of emerge into the work you’re doing.

Arij van Berkel: Yeah, thanks. I think we have time for one more brief question, perhaps. And this is more about team focus. So this is one of the things you mentioned very early on in our webinar today. People do identify as in a particular role, but then it turns out that their day-to-day job involves a mixture of all of those roles. Part of that may be explicable because people, if you’re managing an R&D department, you may be called upon to have an opinion about an open innovation project because you happen to be the subject matter expert or your department has subject matter experts that could be valuable there. So maybe part of that is inevitable. How do you know if your team is focused, so there’s this balance. That’s what we’re getting at, right, between being not siloed and interactive and being focused. How do you strike that balance? How do you know you’re doing okay?

Anthony Schiavo: Yeah, I mean, innovation, it’s very multidisciplinary, right? And that’s always sort of what makes it exciting and fun, why I like it, but of course it’s a challenge. I think that the biggest thing teams can do is give themselves more structure in their internal innovation processes. Ideally, you would like it so the R&D team, maybe ideally, I guess I should say, you’d like it so the R&D team is mostly doing R&D stuff, right? And then there are, if there’s an open innovation team, they have their own technical expertise. But I think if that’s not possible, then having very defined roles and very defined processes within that, one of the biggest complaints we hear from startups all the time about working with big corporations is that the big corporations themselves don’t know or can’t communicate or both who needs to make these innovation decisions, right? And so a startup, they talk to 10 people within the organization trying to get a POC or some sort of joint project going, 10 people all say yes, and they’re seemingly all very senior people. And then there’s like a secret 11th person who comes in and says no and scuttles six months of work. And it’s really painful, right? And that’s, I think, in part because a lot of companies, there’s a failure to really clearly understand what the process is. If we’re going to do a JD or we’re going to do a POC or whatever. Exactly what is the process? How is that decision going to get made? How long is it going to take us to make that decision? Who is going to make that decision? Who is going to have those inputs? A lot of companies just can’t clearly articulate that. And it disrupts their work with startups, and it disrupts their innovation activity overall, and it slows everything down. And so even if your team is going to be ending up like a lot of these teams doing something of everything because of where the technical expertise sits, that’s manageable, I think, or it’s a lot more manageable if you have a really clearly defined structured process. And I think it’s better to have a structured process that’s fast and works well, even if it means maybe there’s some opportunities you have to pass on because they don’t fit your process, right? There’s a huge gain to be made from answering these questions quickly and efficiently. I think that’s what companies can focus on.

Arij van Berkel: Working interactively, each contributing to each other’s function, that’s good culture. But good process means you have clear accountabilities and you know who’s responsible for what and where which decision gets taken. So separate between process and what people are doing every day, right? So the process of taking decisions, moving things forward.

Anthony Schiavo: Yeah.

Arij van Berkel: That’s clear guidance. Thanks, Anthony. And that concludes our webinar for today. So I’m sure there’s a few more questions and we’ll review them after the webinar. And if you have more questions, feel free to send them to [email protected]. The slide presentation and the recording from this webinar will be sent to all attendees through e-mail. That will still happen today. In addition, we’ll be publishing on our platform a report that contains a lot more details even about this survey. So if you have access to the platform, watch out for that. If you don’t have access to the platform, we may be persuaded to maybe send it to you again if you send an e-mail to questions at luxresearchinc.com. Also, after leaving this webinar, you’ll be prompted to complete a survey. That survey is really helpful. It’s about today’s webinar and presentation. And we really appreciate your feedback because that helps us inform and improve our future webinars. Finally, speaking of future webinars, take a moment and check out our future webinars on our website. And we’ll be looking forward to seeing you on one of those upcoming webinars. For today, thank you. Have a good rest of your day or a good night. Thank you, Anthony. And see you all in our next webinar.