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For CEOs The Innovation Clock Is Ticking

For CEOs The Innovation Clock Is Ticking

Lack of time, strategy and formal process for implementing innovation worries many CEOs


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Though CEOs in KPMG’s 2016 U.S. CEO Study view innovation as a strategic priority, only 25 percent say innovation is embedded into everything they do.


Furthermore, 36 percent say their organization’s approach to innovation is either ad hoc, reactive, or occurs on a siloed basis. On a positive note, 80 percent of the CEOs expressed confidence in their management team’s ability to drive innovation, yet the vast majority (85%) indicated that they need more time to strategize about how to foster innovation and proactively address disruptive challenges.


To learn more about what CEOs are saying about innovation and to read the full 2016 KPMG CEO Study, visit


“Nearly all CEOs see emerging opportunities over the next five years that are detectable now, through signals like changing demographics, technology innovation and start-up activity,” said Mike Nolan, vice chair, Innovation & Enterprise Solutions, KPMG. “However, it’s the forward- thinking CEOs that take a broad view of the areas where disruption is taking place, assess how these elements impact their business and operating models, and begin to reshape their company into an organization that turns disruption into innovation.”


Innovation is key to increased growth
The outlook for growth remains a top concern in the C-Suite, with 51 percent of CEOs expecting their top-line growth over the next three years to be 5 percent or less. Nolan believes that a stronger focus on innovation can increase both growth and shareholder confidence.


“Five percent or less growth estimates don’t excite shareholders,” said Nolan. “To move the needle, successful CEOs are working hard to drive the right mix of investments in new products and services, alliances, and acquisitions to open up new channels and attract new customers.”


Nearly three-quarters of CEOs believe their organizations are capable or highly capable of making the right investments and obtaining the right resources to drive innovation initiatives.


“This is where CEOs have to examine their strategy and determine whether they have the necessary data, talent, resources, and business models to put them on the right path to remain relevant and competitive,” said John Farrell, national managing partner, Innovation & Enterprise Solutions, KPMG. “It is also essential that CEOs develop a formalized approach to innovation that defines strategic objectives, generates buy-in from leadership, and fosters a culture that encourages and rewards innovation throughout the organization.”


Employees are innovation evangelists
Building the right culture is crucial to innovation, and most CEOs believe they have the right teams in place, with 80 percent stating that management’s innovation acumen was capable to highly capable, and a similar number indicating they have the skills and resources needed to address their innovation imperative. Sixty-eight percent of CEOs also indicated strong capabilities in creating a “safe to fail” environment.


“There is a tremendous alignment between the priorities of CEOs and the employees that advance the business objectives,” said Nolan. “CEOs also strongly believe that the chance to innovate and work in an entrepreneurial or collaborative environment is a key factor in attracting top talent.”

About the study

The third annual KPMG CEO Study analyzes the views of 400 U.S. CEOs from organizations with at least $500 million in revenue. The survey canvasses opinion on a wide range of issues affecting the business landscape, including topics such as U.S. economic conditions, technological disruption, innovation, regulation, and cyber security.


KPMG LLP, the audit, tax and advisory firm (, is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 174,000 professionals, including more than 9,000 partners, in 155 countries.


Derek Brown

© 2020 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.KPMG International Cooperative (“KPMG International”) is a Swiss entity.

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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