Given the fast pace of our technology-driven economy, Innovation has become a tiresome buzzword. But in the reputation economy, Innovation is truly an integral part of what organizations need to succeed.
Ri’s extensive research on what shapes stakeholder sentiment has identified innovation as a key driver of corporate reputation, regardless of the industry in which an organization operates.
Innovation is among the seven business drivers of the RepTrak System, which delivers direct feedback on how innovative companies are perceived to be and how this shapes their emotional appeal among different audiences. The emotional connection between stakeholders and organizations is ultimately tied to support and business impact.
Innovation, as a reputation driver, captures a company’s performance across three attributes, defining companies that are:
- Generally the first to market new products and services
- Adapt quickly to change
In sum, the Innovation driver measures a company’s ability to embrace change and position themselves as forward-thinking.
How Innovation Impacts Your Reputation
Our 2019 Global Reputation study, which includes over 230,000 individual company ratings across 15 countries, concludes that Innovation accounts for 12.8% of corporate reputation among the informed general public. Across markets and industries, reputation - that emotional appeal that predicts stakeholder support - is in fact influenced by whether or not a company is viewed as being innovative.
2019 Global Reputation Drivers
Yet as shown in the wheel above, which illustrates the weight of each of the seven drivers of reputation, three other - , Products & Services, Governance and Citizenship - are significantly more important in driving reputation than Innovation on its own.
While Innovation impacts corporate reputation, these results highlight the importance of tying a company’s innovation strategy with other themes that matter more in the eyes of consumers. As trust for corporations has declined, Ri research has registered an increase in the relative importance of being a good corporate citizen and being open and transparent as reputation drivers. Thus, linking Innovation with corporate responsibility is one potential way to develop an innovation strategy.
The Most Innovative Companies and the Industries that struggle to keep up
The most highly-reputable companies around the world get credit for being innovative - 40% of the companies included in the Global 2019 Reputation Study obtain strong to excellent scores in this driver. However, two companies stand out for having achieved excellent Innovation scores in Ri’s Global study: Google and Amazon. Both of them tend to be top of mind when people think of companies that adapt to change and lead disruption within their industries.
On the other hand, Energy and Transport are the two industries with the lowest Innovation scores around the world. While Energy and Transport rely heavily on technology for their business operations, they are not seen as innovative in the eyes of consumers. Their low performance in this important dimension suggest that they have not properly responded to new stakeholder expectations.
What does an innovative strategy look like?
While a big part of being innovative includes being quick to to implement novelty in what and how you sell, innovation may be interpreted much more broadly. When it comes to proactive reputation management, finding new ways to give back to the community, reduce carbon footprint or enable best-in-class workplaces should also be considered as part of a company’s innovation strategy.
In a previous post about Innovation in the banking industry, we discussed the opportunity of showcasing comprehensive innovation solutions in an industry where innovation does not seem to matter. Today, innovation does not equate to developing a new app for your business, it means adapting to shifts in stakeholder expectations.
A good example of the above is illustrated by The Walt Disney Company, which landed among the 10 most Innovative companies globally in 2019. The Walt Disney Company demonstrates how an iconic brand expanded its business lines, adapted new technologies and found new ways to be a good corporate citizen. On one end, the informed general public has recognized their efforts to reinvent themselves and become an entertainment company in the age of streaming. This effort will culminate next month, with the release of Disney+.
On the other hand, The Walt Disney Company has found fresh ways to continue its legacy of a corporate giving. While its CSR program preserves a focus on hospitalized children, which was a cause close to its founder’s heart, they have developed new philanthropy efforts that tie to the needs of children in the 21st century and strengthened their commitment to the environment and to a responsible supply chain. These investments are captured in their strong 2019 Innovation scores, as well as their strong performance in Citizenship and Governance.
Overall, while Innovation has historically been tied to Products and Services, shifts in stakeholder expectations are pushing companies to take a step further and link their innovation strategy with what their brand stands for.
Learn more about our 2019 Bank RepTrak study.
Senior Research Manager