NURTURING EUROPE’SSPIRIT OF ENTERPRISE:HOW ENTREPRENEURIAL EXECUTIVESMOBILIZE ORGANIZATIONS TO INNOVATE

IN ASSOCIATION WITH:

TABLE OF CONTENTS

2

Key findings

3

Introduction

4

About the survey

5

The five personality types

7

Addressing social desirability bias

10

The emergence of innovation

11

Barriers to innovation

15

Supporting innovation

18

Conclusion

19© Copyright Forbes 2011

EXECUTIVE SUMMARY
Innovation is a prerequisite for corporate growth. This
study undertakes to analyze how best to nurture andencourage those who put forward innovations, andit provides research about the types of employees
valuable in conceptualizing and implementing ideas.
In negating stereotypes based on characteristics ofgroups of people predisposed to entrepreneurship,

this study further underscores the need for nurtureof existing resources through designated innovationbudgets. Due to the crucial roles played by financedepartments in fostering innovation, which was
revealed in the study, enhancing their entrepreneurial status would highly benefit corporations inmaintaining their competitive edge.

KEY FINDINGS•

Ideas are easier than execution. Not everyone is good at generating ideas, but nobody hinders the process. With regard
to execution, however, two personality types (Controllers and Movers & Shakers—see page 11) and one role (corporate
management) are obstacles to successful implementation of innovations.

•

Diversity helps. Personality traits that are valuable in the conception of ideas may be irrelevant, or even a hindrance, whenit comes to implementation. Innovation and enterprise therefore benefit strongly from a diverse workforce.

•

Small may be more beautiful. When it comes to innovation, bigger is not better. Organizations with 100 to 249
employees were best at generating innovative ideas. Those with revenues between $5 million and $100 million were best atexecuting them. Turning an idea into a product or process requires a certain level of scale and internal resources. But atsome point size begets bureaucracy, which can interfere with successful execution.

•

Resources matter. Innovation is not cheap, let alone free; and it is more often firms themselves, rather than externalfinance providers, that fail to allocate resources to it. If strategic plans do not allow for the resources to pursue serendipitous
innovation, then they can stifle it altogether.

•

Corporate management can be an innovation killer. Senior managers’ failure to buy into innovations was cited bysurvey participants as the biggest reason that innovations fail.

•Eyes on the big picture, line to the C-suite. The function most strongly connected with successful execution of
innovation is the corporate strategy unit (as distinct from “corporate management” more generally). Few parts of acompany have both the industry understanding and the bully pulpit available to corporate strategy.

•

Fear of death is a powerful incentive. The industry most likely to witness successful execution was media. More than most
sectors, the media industry has undergone a near-death experience—an “innovate or die” situation—over the past 15 years.

•

Ideas from those without influence can lead to innovation without results. R&D is the unit most capable ofgenerating new ideas. Yet it may lack the influence, and perhaps the ability, to implement them.

•

Although most differences among countries are modest, they do exist. Polish respondents were most likely to saythat they had championed an innovation. They were also more likely to say that they had succeeded in getting theinnovation implemented. UK, German and Swiss executives were least likely to say that they had proposed an innovation.

3

INTRODUCTION
The success of new ventures, both inside and outside existing organizations, requires individuals witha unique set of personality traits. Success occurs
in environments that recognize and support theirquest. In the right circumstances, they find theresources they need, and both employees and thesociety at large benefit from the innovations they
drive. In the wrong environment, enterprising executives may give up in frustration, hamstrung by lackof capital, intrusive regulations or simple organizational inertia.
Success depends on both nature and nurture: theindividuals on one hand and the environment andresources on the other. Some countries—like someindividuals and organizations—support enterprising
behavior better than others. “If you stick me downin the middle of Bangladesh or Peru,” said Warren
Buffett, “you’ll find out how much this talent produces in the wrong kind of soil.” This report explores
both the internal and the external: What are the personal qualities and enabling factors most likely tohelp Europe’s garden of innovation grow?

ENTERPRISE AND INNOVATION
In its older sense, the term enterprise denotes thereadiness to take on new projects and challenges,
especially daring and courageous ones. Johannes
Gutenberg, Eli Whitney and Tim Berners-Lee all
shared a spirit of enterprise that led to world-changing innovations. All were entrepreneurs: Throughpersonal enterprise they created something new,either on their own (Gutenberg), by harnessing thepower of a small group of partners (Whitney) or as
part of a larger organization (Berners-Lee).
The media tends to focus on individuals who, throughenterprise and vision, develop groundbreaking ideas
into giant companies. This narrative was popularized
by economist Joseph Schumpeter’s early writings,
4© Copyright Forbes 2011

where the entrepreneur is presented as the personification of innovation. The entrepreneur’s passage isa modern version of mythologist Joseph Campbell’s
hero’s journey—and the reason that bold iconoclasts
like Steven Jobs and Richard Branson became theheroes of the age.
But today’s business world is also populated by amore anonymous kind of entrepreneur. This is theinnovator who appears in Schumpeter’s later work:
One who, working within an existing organization,
conceives a new business idea and rallies the company to execute it. These entrepreneurs work inestablished companies everywhere. Their names
are seldom household words, but their accomplishments are just as heroic. They conceive ideas andthen mobilize bureaucracies, often plagued by politics and inertia, to create real products and services
and get them into the hands of consumers.
The stakes are high. In globally competitive markets,
creating economic value requires that companies—
large and small, new and established—continually
generate innovative ideas, quickly commercialize
them and tweak them as market conditions change.
This is the process that Schumpeter described in his
later work: constant innovation within companies
as they seek to solidify their competitive position.
Though Schumpeter described it as the bureaucratization of innovation, it must still be driven
by enterprising personalities. To the extent theenterprising spirit can be nourished within established companies, it will play a large role in keeping
Europe’s industries vibrant and the European region
prosperous.

THE ENTERPRISING PERSONALITY
The French economist Jean-Baptiste Say taught that
entrepreneurs mix capital and labor in new ways toboost productivity and earn high yields. The Austrianeconomists—Hayek, Schumpeter, von Mises—refined
the definition to introduce three qualities that we
associate with enterprising personalities today:• Enterprising spirit. Entrepreneurs are self-motivated individuals who—as Goethe said—“findhappiness in execution.” They thrive on risk anduncertainty, which contain the seeds of opportunity and the potential for profit.

• Problem-solver. These individuals focus on solving
problems by whatever means necessary, even if itleads to conflict with others. They disturb organizations and markets, but it is not disruption for
its own sake—it is to move the business incrementally forward.

• The center of networks. Turning an idea into an
innovation requires a rich social and businessnetwork, both inside and outside the company.
Enterprising personalities collect personalconnections and are often extroverts. The ideal
network combines people with different insights
and complementary skills. These connections canbe used to uncover opportunities, resolve issues
and get feedback.
Modern psychologists have elaborated on this definition
by testing entrepreneurs against five personality dimensions: conscientiousness, agreeableness, openness,

neuroticism and extroversion. Entrepreneurs differ
from typical personalities in the first four and possibly
the fifth. For instance, they exhibit higher-than-average conscientiousness, which could also be called drive,
motivation or self-discipline. It is the most consistentpredictor of job performance across all types of work.
It is also a key to the spirit of enterprise described in the
introduction. They also tend to score low on agreeableness—the trait that causes people to “go along to getalong” or avoid “rocking the boat.” They’re impatientwith process and committees. Consistent with the needto solve problems, they would rather move the businessforward than avoid conflict.
Finally, they are open to new experience and score
low on neuroticism. The need for the new is closely
tied to innovation, creativity, a thirst for adventure,and comfort with risk and uncertainty. At the sametime, the lack of neuroticism makes them self-confident, calm and even-tempered despite their need toovercome obstacles.
It is not clear that enterprising personalities are, on average, more extroverted than typical managers. But it
does make intuitive sense—not, perhaps, among engineers or more technically minded individuals, but clearlyfor sales-oriented promoters who succeed by convincing others of a vision that does not yet exist. Extroverted
individuals can create a network that shares a dream
and wants it to become reality.

About the survey
To gauge the level of enterprising traits among European executives, and the supporting institutions in European countries,
in the second quarter of 2011 Forbes Insights and Ipsos Observer conducted a survey of 1,245 business executives acrossEurope. Ninety-seven percent of the respondents came from six countries: Italy, the UK, France, Germany, Poland andSwitzerland. One-fifth was C-suite, 13% heads of business units, directors or VPs, and the rest managers and department
heads. They came from functions spanning the organization, with operations, sales, IT, finance and general management
represented most prominently. In terms of industry sector, about one-fifth came from manufacturing, followed by the public sector with 15%, then IT, retail and financial services.

5

DESIGN OF THE SURVEY
Forbes Insights and Ipsos Observer surveyed 1,245 European
executives in an attempt to answer two big questions. The
first pertains to individuals who work within organizations;the second, the people and institutions that they interact
with. The objective was to uncover insights that will help
enterprise and innovation flourish by improving the environment for enterprising executives throughout Europe.
The two questions are:

• Who are Europe’s innovators? There are two stages toinnovation: proposing an idea and getting it
accepted. If there are certain personality traits andbehaviors associated with conception or execution, it
should be possible to identify the innovators andpaint a picture. Are those with ideas also good at
execution? Are the innovators precocious twentysomethings or experienced executives with longresumes? Are the Poles really more entrepreneurial
than the French? It’s hard to support innovators
without first discovering who they are.

• How can the environment for innovation be improved?
Innovators face obstacles at every step. Some can beovercome with creativity, persuasion and drive.
Other obstacles may be more serious: an unsympathetic CFO, for instance, or the absence of risk
capital. Where these individuals thrive, they are
surrounded by organizations and people that
understand their needs (both financial and nonfinancial), have the resources to help them and are
comfortable with the risks.
To answer the first question, the survey focusedon self-perception and demographics. It identified

The survey followed up with questions about demographics—age, gender, country, seniority, function
and industry—and actual behavior within the respondents’ organizations. In particular, respondents wereasked whether they had proposed an innovation
within their companies over the previous 12 months,
what kind of innovation it was, their success in getting
the innovation implemented, and the reasons behindfailure when this occurred. Behind these queries was
an attempt to discover which respondents exhibited
enterprising traits rather than simply “talking the talk.”
Finally, the survey examined how friendly the local
environment was to entrepreneurs. It did this through18 statements (combinations of the three questions
and six types of organization below) about the organizations that surrounded the respondents. Were
they comfortable with risks? Did they understand theneeds of entrepreneurial businesses? Did they havethe resources that entrepreneurs need? The opinions
of executives on these subjects revealed the extent towhich they saw their milieu as dysfunctional or richwith possibility.

QUESTIONSORGANIZATIONS

To what extent are the following organizations comfortable with taking risks?

Government agencies specializing in business finance

To what extent do the following organizations understand the needs of entrepreneurs and entrepreneurial
businesses?

Banks

To what extent do the following organizations have theright resources to help businesses like mine?

6

entrepreneurs through 47 self-descriptive statements
about motivation, creativity, approaches to problem
solving, and attitudes toward risk and relationships.
These statements can be found in Appendix 1. Withineach category, respondents were asked to agree ordisagree with statements like “Uncertainty scares me”(a risk statement) or “I am comfortable around people
who are smarter than me” (a relationship statement).
The responses to these statements compose 47 personality dimensions. To the extent the responses
cluster into specific groups, they represent more orless enterprising personality types.

© Copyright Forbes 2011

Government agencies specializing in non-financial support

Venture capitalists and other equity investors
Our finance department
External accountants and auditors

FIVE PERSONALITY TYPES
When 1,245 executives each answer over 70 questions
about their attitudes, beliefs and demographics, theresulting data can be difficult to interpret. One way
to approach the task is to group the answers so that
respondents fall into clusters with similar characteristics. For instance, retail and consumer productcompanies use clustering techniques to group customers with similar buying habits, gender, age andincome level. They then tailor their marketing andproduct strategies to each group to boost sales andbrand loyalty.

respondents. They are most common in the UK, Italy
and Poland, although the differences among different countries tend to be small. They make up aquarter to a third of executives in mid-size companies (with 250 to 1,000 employees and $25 million to$1 billion in revenue). Surprisingly, a high proportionof Movers & Shakers exist in the risk function, as wellas (less surprisingly) in corporate strategy. Of theindustries surveyed, Movers & Shakers exist in thelargest numbers in private equity and media.
CONTROLLERS. These professionals are careful to talkThe executives who responded to the survey weregrouped into five clusters with different personalities, motivations and behaviors. Some are more
entrepreneurial, others more process-oriented.
The five personality types exist in every organization, and no one type is necessarily better than theothers. All bring different kinds of value to organizations. Leaders need followers. Doers need thinkers.
Visionaries may be poor at execution. Nevertheless,among innovative and entrepreneurial companies,
certain personality types are more prominent. The
five clusters extracted from the self-descriptive statements are as follows:
MOVERS & SHAKERS. These professionals have abias for action, strong leadership skills and a greatamount of personal drive. They are heavily motivatedby targets and rewards but also aspire to greatness, seeking to acquire influence over others andto create a legacy. Unfortunately, they tend towardarrogance and have little patience for teamwork.
Movers & Shakers make up about 22% of thethe talk; they like taking credit and try to manipulate others’ views in order to present themselves in afavorable light. In practice, however, they lack motivation and are intensely uncomfortable with risk andunstructured tasks, primarily because they wish tostay in control. Although they try to be seen as teamplayers, they are in fact insular. They do not makethe most of existing professional relationships, muchless seek out new ones.
Controllers are the smallest group overall, making up
about 15% of respondents. They are most common
in France, the UK and Switzerland, though again the
differences among countries are minor. They tend
to live in very big companies (over 1,000 employees) or very small ones (under ten employees). In
the big companies they are bureaucrats overseeing
processes; in the small ones, they are the center of“personality-driven” firms. Women are slightly more
likely to be Controllers than men (19% versus 13%).
Sales and marketing—functions where image andself-presentation are important—have the highest
7

proportion of Controllers at 20%. Finance is second at
16%. Controllers tend to be more common at lower levels of the corporate hierarchy: heads of business units,
department heads and managers.

not for the thrill but because they believe that all things
are possible. Perfectionists and workaholics, they takeintense pride in their achievements; they also enjoy having the status of an expert, and are keen to pass on theirexpertise.

STAR PUPILS. These are professionals who invest heavily

in their own personal development, acquiring mentors
with ease and making the most of other people’s expertise. Of the entire sample they are the likeliest to risethrough the hierarchies of organizations, even when
the dominant business culture is stacked against them.
Women who thrive in masculine environments often fall
into this category, and CEOs are significantly more likely
than other executives to match the Star Pupil profile.

Experimenters are the second-smallest category overall, with about 16% of the respondents. They exist in thelargest numbers in Poland and Germany (29%) and thesmallest in France (4%) and Switzerland (2%). They areleast common in the largest companies (over $1 billion)
and slightly more likely to be women than men (19%versus 15%). The highest numbers of experimenters arefound in the media sector (29%).

Star Pupils form the largest category at about 24% of
the respondents. Over half of the Swiss respondents
fall into this group, as well as 30% of the French and
Italians, as opposed to only 16% of British executives.
Otherwise, Star Pupils exist in similar numbers everywhere: large companies and small, finance and IT, men
and women. However, only 5% of CFOs, treasurers orcontrollers are Star Pupils. It is not clear why this mightbe, as the traits of Star Pupils would appear to be adaptive in any function, but one possible explanation arisingfrom the research literature would point to the lack of afull-fledged mentoring culture in these functions.1

HANGERS-ON. These executives believe in process. They
have strongly held views about how things ought to berun. Although they understand the need to take risks,
they are uncomfortable in unstructured environments.
Their obstinacy is rooted in habit and intellectual inflexibility, not the strength of convictions. They generally
lack motivation and, when asked how much they agree
or disagree with any given statement, are the most
likely to stick to the middle of the range. Some may be
unaware of how they come across: They are not eager toplease and unconcerned about others’ views.

EXPERIMENTERS. Fascinated by the possibilities the world

has to offer, these executives are notable for their persistence. Where there is a will, they believe, there is away. Therefore, they often find themselves taking risks,
1

Hangers-on form the second-largest category afterStar Pupils, representing about 23% of the total. They
are most common in France and the UK, where 27% of
respondents fall into this category, and least common
in Switzerland (17%). Men are slightly more likely than

ACCA (2009) The Coaching and Mentoring Revolution—Is it Working? (London: ACCA)
http://www2.accaglobal.com/documents/coachingandmentoring.pdf

8© Copyright Forbes 2011

women to fall into the Hangers-on category (25% versus19%). About one-third of IT executives are Hangers-on,
compared with only about 14% in operations and R&D.

co-founder of 7digital, a London-based venture capital–
funded digital content provider with revenues “in the
low eight figures”:

No group corresponds perfectly to the profile of the successful entrepreneur, although the Movers & Shakers
and Experimenters come close. Movers & Shakers andExperimenters expressed the strongest agreement of
the five categories with statements such as “I don’t let
failure hold me back,” “Past failures are not predictiveof future successes,” “When I’m part of a team, I liketo be the leader,” and “I would rather fail at my own
endeavor than succeed at someone else’s.” This is consistent with the tendency of enterprising individuals tohave a strong “locus of control.” According to Manfred
F. R. Kets de Vries, a Dutch economist, management professor and psychoanalyst, and the founder of INSEAD’s
Global Leadership Centre:“We saw the jigsaw pieces and how they
fit together towards a greater goal. But thegreater goal was not strictly defined. We had
an aspiration to build a digital media marketplace. And we knew that you needed content,
lots of suppliers and content offered different
ways. We started out thinking, here is a songand they need to own it. Then we saw that
there were all kinds of variations.”“Locus of control refers to how much control
you feel that you have in your life. Think of it asa spectrum. On one end is Superman: You cando anything. On the other is the idea of fate,that everything is predetermined, that you’rea victim of outside forces and can’t influence
anything. Entrepreneurs have a high locus ofcontrol. They are internally driven. They want
to be in control. They don’t like other people
telling them what to do.”Young and innovative firms generally need Movers &Shakers at the helm, promoting a vision that channels
the energies of Experimenters. It’s not a rigid blueprint; it is a direction that is modified as the company
grows and learns what works. Says Ben Drury, CEO andOnce organizations become more established, they tend
to cultivate Star Pupils in the hope that they will one day
become Movers & Shakers. However, this may not be
possible, since these personality traits are thought to be
fixed past a certain age.
Innovative firms generally try to avoid Controllers andHangers-On, although bureaucracies will inevitably breed
the latter among their ranks and may well find them necessary for their day-to-day operations. As firms shift fromhigh growth to a more mature stage, the need for strong
processes grows, and so does the need for individuals
who value control and process over risk-taking. But too
much bureaucracy is dangerous. Even large and maturecompanies are vulnerable to disruptive innovations.
Healthy organizations will always have a tension between
those more comfortable with risk and those averse to it.
(The graphs on page 10 are ranked by diminishing sharesof Controllers and Hangers-on, the least entrepreneurialgroups.)9

FIGURE 1: Personalities by Country
France19%

27%

United Kingdom

19%

27%

Italy

17%

17%

Poland

15%

17%

10%

20%

30% 4%

20%

15%

24%

Personality
Controllers

24%

Hangers-on

9%

Star Pupils

22%

Experimenters

19%

Movers & Shakers

12%
55% 2%

16%

29%

21%

19%

10%
0%

28%

22%

13%

Switzerland
Germany

15%

30%

29%

40%
50%
60%
70%
Percent in each personality cluster

80%

90%

100%

FIGURE 2: Personalities by Number of Employees
10 to 49

20%

22%

More than 10, 000

20%

21%

24%

15%

26%

Fewer than 1025%

100 to 249
50 to 997%

29%

1,000 to 9, 999

16%

19%

500 to 999
0%20%

Hangers-on

19%

Star Pupils

18%

25%

Experimenters

15%

24%

Movers & Shakers

22%

25%

17%

24%
19%
20%

25%
10%

16%

17%

19%

24%

9%

250 to 499 4%

Personality
Controllers

30%

16%

12%
15%

24%

26%

13%

19%

29%

33%

17%

40%
50%
60%
70%
Percent in each personality cluster

80%

90%

100%

FIGURE 3: Personalities by Annual Revenue
Less than $5m

21%

25%

20%

27%

11%

30%

Personality
Controllers

25%

22%

18%

22%

Hangers-on

29%

Star Pupils

25%

Experimenters

20%

More than $1bn

18%

$5m to $25m

12%$25m to $100m

11%

23%

22%

$100m to $1bn

11%

22%

21%

0%

10%

20%

30%

17%

16%

15%
20%

40%
50%
60%
70%
Percent in each personality cluster

80%

90%

100%

Movers & Shakers

FIGURE 4: Personalities by Title
CFO/Treasurer/Comptroller

38% 5%

9%

Head of Business Unit

19%

22%

Manager

17%

23%

Head of Department

17%

23%

Other C-Level

11%

CEO/President/Managing Director

10%

21%
17%

CIO/Technology Director
CMO/Head of Marketing

7%
0%

20%

19%

16%

19%

15%

17%

27%
30%

23%
14%

30%
28%

19%

17%

Hangers-on
Star Pupils
Experimenters
Movers & Shakers

48%

20%
30%

Personality
Controllers

37%

15%

15%

20%
10%

33%
19%

25%
15%

27%
22%

COO/Head of Operations

14%
19%

53%

40%
50%
60%
70%
Percent in each personality cluster

80%

90%

100%

FIGURE 5: Personalities by Gender
Male

13%

Female

25%
19%

0%

10%

20%

19%
30%

24%

15%

23%
40%
50%
60%
70%
Percent in each personality cluster

23%

19%
80%

20%
90%

100%

Personality
Controllers
Hangers-on
Star Pupils
Experimenters
Movers & Shakers

10© Copyright Forbes 2011

Addressing Social Desirability Bias
The 1,245 respondents to the survey represent a broad cross-section of personalities and business styles, from iconoclastic
innovators to process-driven bureaucrats. However, almost all believe that they are entrepreneurial, at least to some extent.
Entrepreneurship tends to be seen in a positive light, and entrepreneurs—from the brash Richard Branson to the frugal
Ingvar Kamprad—are seen as aspirational role models. When asked directly “Do you consider yourself entrepreneurial?”
the answer is usually “yes.”

FIGURE 6: Do You Consider Yourself “Entrepreneurial”?

FIGURE 7: Do You Consider Yourself “Innovative”?

45%

Yes
Sometimes

51%

Yes
43%

Sometimes

42%

No

9%

No

4%

Don’t Know

4%

Don’t Know

2%

0%

20%

40%

60%

0%

20%

40%

60%

The same is true when “innovative” is substituted for “entrepreneurial.” Innovation is good. Survey respondents generally rate themselves highly on traits viewed as good. Everyone is above average. The fact that close to 90% of the
respondents see themselves as entrepreneurial results from what social scientists call “social desirability bias”—the tendency to reply in a manner that will be viewed favorably.
Social desirability bias causes negative traits to be underreported and positive ones to be overreported. In fact, respondents who say they are entrepreneurs solely because it is viewed favorably are most likely not entrepreneurs, who generally
score low on agreeableness.2 Instead they are conformists: They tell people what they want to hear. They say they are
entrepreneurial and innovative, but they are less likely to champion innovations and see them through to implementation—actions that often require going against prevailing opinion.
The analysis addresses social desirability bias by
FIGURE 8: Percent of self described innovators who had not championed any
innovations in the past year

distinguishing between statements and behavior.

50%

innovations that they had championed within theirorganizations over the previous 12 months. We also

40%

40%

30%
20%

To isolate the social desirability bias in each indi20%

16%

asked about their levels of success in implementing
these innovations.

27%

Average = 21%

10%

We asked executives about the type and number ofvidual’s answers, our analysis sought out common

16%

factors that drove respondents to present themselvesin a positive light and also reduced their capacity for0%
Movers &Shakers

Star Pupils

Experimenters

Hangers-on

Controllers

innovation in practice. This bias factor was then used,along with the individual responses, in order to al-

locate respondents to the right clusters, helping us distinguish between those who talk the talk and those who walk the walk.
For example, about one in five of the respondents who claimed to be innovative had not personally championed an
innovative project in the past 12 months. Opportunities for innovation do not arise all the time. But the group our analysis
suggested has the greatest propensity for biased answers (the Controllers) included twice as many self-reported innovators
who were not in fact innovating as the total sample (Fig. 8).
2“The Big Five Personality Dimensions and Entrepreneurial Status: A Meta-Analytical Review,” Hao Zhao and Scott E. Seibert,
Journal of Applied Psychology, 2006, Vol. 91, No. 2, 259–271.
11

THE EMERGENCE OF INNOVATION
While almost 90% of the 1,245 respondents described
themselves as “entrepreneurial” and “innovative,”
about two-thirds had actually championed one ormore innovative ideas within their organizations overthe previous 12 months (Fig. 9). This is the first part ofevery innovative endeavor: coming up with the idea
and promoting it in the organization. The second partis to get it implemented. Creative people often succeed at the first part and fail at the second. The true
innovator succeeds at both.

FIGURE 9: Have You Championed an
Innovation in the Last 12 Months?

Yes, morethan once
35%

No
30%

FIGURE 10: Were You Successful?

Yes, once
36%

Consistent with other studies, Polish respondents
were most likely to say that they had championed an
innovation. 3 They were also more likely to say thatthey that had succeeded in getting the innovation
implemented—if not easily, then with difficulty, overcoming obstacles along the way. UK, German andSwiss executives were least likely to say that they had
proposed an innovation (Fig. 11).

No
17%

Yes, easily
23%

Yes, butwith difficulty61%

May not add up to 100%due to rounding.

FIGURE 11: Trying, Failing and Succeeding in Six Countries
Poland

18%

54%

Italy

16%

46%

France16%

44%Germany

19%

United Kingdom

12%

Switzerland

19%
0%

10%

20%

40%

13%

Success

22%

Succeeded fully

26%

Succeeded with difficulty

9%

39%

Failed

37%

11%

40%

Did not try

14%

38%

50%

The most frequently proposed innovations focused
directly on the two sides of productivity: efficiency inthe use of inputs (operational improvements leading
to greater efficiency) and efficiency in the combinationof inputs into outputs (product or service innovations
leading to higher revenue or more loyal customers).
In terms of who and what drives innovation—first
the idea, then the execution—the survey respondents
painted a complex and nuanced picture. To interpret

3

20%

33%
29%
30%

8%
15%

60%

70%

80%

90%

100%

the results, we used a set of binomial regressions inorder to capture contributions across a range of categories—personality, age, industry sector and soon—to championing new ideas (shown in green) and
executing them (shown in orange). The length of
the bar shows the size of the coefficient (the level ofimpact). A positive value denotes a positive impact,
and a negative one, a negative impact. The numbers next to each bar show the significance level ofeach coefficient. Only coefficients with at least a 90%

For instance, see “Studium przedsiêbiorczosci w Polsce w roku 2004,” Global Entrepreneurship Monitor, at http://www.gemconsortium.org/
download/1320291137483/GEM_Polska_2004.pdf.,which found that Poland outperformed most of Europe in terms of entrepreneurial activity.

12© Copyright Forbes 2011

FIGURE 12: Where Are New Ideas Championed and Executed? Where Are They Hindered?

Personality

Controllers

95.5%

Experimenters
Movers and shakers

99.5%
94.5%

100%

Star Pupils
Age (Years)
Employees

Age (capped at 65)
100-249

Revenue$5m to 25m

Role$25m to $100m
Corporate Management

99.6%
99.5%
94.1%
98.3%
99.7%
96.3%

Corporate Strategy

91.2%

Purchasing / Procurement

90.5%

R&D
Sector

99.5%

Consumer Products Mfg

94.6%

Media
Title

94.3%

CIO/Technology Director

98.8%

Other C-Level

96.5%
-1

Title

0

1

2

3

4

CoefficientChampioned
Executedsignificance level are shown. Each bar shows only the
impact of the corresponding variable—the influenceof other factors has been controlled for.4
The size and sign of the coefficients suggest that
there are many drivers of, and obstacles to, innovation
within companies. A few of the implications:generation are positive across the board. Not everyone
is good at coming up with improvements, but nobody
hinders the process. With regard to execution, however, two personality types (Controllers and Movers& Shakers) and one role (corporate management) areobstacles to successful implementation of innovations.

• Few are good at both facts and innovation. If it takes all• Ideas are easier than execution. The coefficients for idea

kinds to make a world, it also takes all kinds to both

4Note also that within each category, the factors influencing innovation were compared to a reference factor. For instance, four ofthe personality types (Movers & Shakers, Experimenters, Star Pupils and Controllers) were evaluated relative to a fifth: Hangers-on.
Therefore, the positive values for Experimenters, Movers & Shakers and Star Pupils suggest that executives with these personality traits
champion innovations more than Hangers-on; the negative values associated with Movers & Shakers and Controllers imply that these
personalities execute innovations more than Hangers-on. Each of the categories has a similar reference factor:• In the case of role (function) and industry sector, the reference is “other”—that is, employees who chose “other” as the answer
to these demographic questions.
• In the case of number of employees, the reference is very large firms (more than 10,000 employees).
• In the case of annual revenues, the reference is companies with more than $5 billion.

13

conceive and implement an innovation. No single personality, role, title, industry or size of company does
well in both roles. In general, those with ideas are notgood at execution and vice versa. Exceptions exist—
Steve Jobs comes to mind—but they are famous
because they are unusual.

• Success in one area may contain the seeds of failureorganizations that prioritize specific value-added functions and resources by elevating them to the C-suite.

• Fear of death is a powerful incentive. The industry most
likely to witness successful execution was media. Morethan most sectors, the media industry has undergone
a near-death experience—an “innovate or die” situation—over the past 15 years.

in another. The case of Movers & Shakers captures acontradiction that illustrates why no single personality type excels at both innovation and execution.
A bias for action, personal drive and aspirations togreatness ensure that Movers & Shakers, more thanany other personality type, constantly come up withnew operational and product improvements. At thesame time, the arrogance toward others and impatience with teamwork exhibited by Movers & Shakers
ensure that their ideas make little headway within theorganization.

• Small may be more beautiful. When it comes to innovation, bigger is not better. Organizations with 100
to 249 employees were best at generating innovativeideas. Those with revenues between $5 million and$100 million were best at executing them. Turning anidea into a product or process requires a certain levelof scale and internal resources. But at some point size
begets bureaucracy, which can interfere with successful execution.

• Eyes on the big picture, line to the C-suite. The function• Ideas from those without influence can lead to innovation without results. R&D is the unit most capable ofgenerating new ideas. Yet it may lack the influence,and perhaps the ability, to implement them. R&D leaders have advanced degrees, mastery of technical skills
and the ability to think about problems in disciplined
ways. Yet this same outlook may create problems incommunicating with business managers, who tend tohave a “get it done” mindset. New ideas come from
R&D; the implementation of new ideas does not, andperhaps it should not.

• Corporate management can be an innovation killer.
The regression results suggest that corporate management—generally understood to be the C-suiteand functional heads—hinders the execution of innovations. Indeed, senior managers’ failure to buy into
innovations was cited by survey participants as the biggest reason that innovations fail. It could be that theC-suite is too focused on the status quo, is juggling too
many balls to focus on a single improvement, or acts
as a necessary filter. (After all, not all innovations aregood ideas.) Regardless of the reason, the large negative coefficient suggests that senior management
hinders the execution of innovation. Although thecategory titled “Other C-suite” has a positive effecton innovation, it is unclear who these others are; asthey are outside the key C-suite positions of CEO, CFO,
COO and CIO, it is likely that they are more common in
14© Copyright Forbes 2011

most strongly connected with successful execution isthe corporate strategy unit (as distinct from “corporate management” more generally). The corporate
strategy group can take an idea and turn it into an
operational improvement, a new product line, aninnovative way of sharing risk or a new kind of marketing initiative. Corporate strategy has two big
advantages: first, an understanding of the dynamics
of the industry and the areas in which the company
can gain competitive advantage; and second, the earof the C-suite, business unit heads and key membersof middle management. None of these groups can
execute successfully on their own, but few parts of acompany have both the industry understanding andthe bully pulpit available to corporate strategy.

• Specialized units with narrow mandates may excel at
execution. It is instructive that among units within

the company, procurement wins second prize forthe best track record in executing innovations.
Procurement is a specialized unit with a technical purview, a narrow mandate and clearly definedgoals. It often has a degree of autonomy in terms ofexecuting innovations within its sphere of expertise.
E.F. Schumacher, the author of the 1960s bestseller
Small Is Beautiful, proposed the idea of “smallness
within bigness”—small organizations functioning
within larger ones. More than most units, procurement fits this model.

BARRIERS TO INNOVATION
are going to make a ton of mistakes,” said Facebook
founder Mark Zuckerberg in a recent interview withthe startup incubator Y Combinator. “The biggest
risk…is being too afraid of making mistakes, because
then you’ll be certain to fail.”5

Respondents were asked about barriers to innovationin two ways: in general and with respect to specificinitiatives they had championed. All but a handful of
respondents agreed that obstacles to innovation exist,
and there was widespread agreement about what thebiggest obstacles were.

The five personality types also agreed on the ranking
of most barriers to innovation. Experimenters gave
greater weight to government restrictions and a culture of risk aversion, while downplaying such limiting
factors as lack of opportunity or excessive competition. Hangers-on, meanwhile, had a tendency to takea Pollyanna-like attitude to obstacles: They downplayed barriers or even said that no barriers existed.

All five personality types said that lack of sufficient
capital was the single biggest barrier to innovation.
There is never enough capital to pursue all of the
new ideas that surface. Scarce capital requires making
choices. At the same time, the most innovative companies are those willing to take risks, to try a large
number of new things, many of which will fail. “YouFIGURE 13: What Are the Biggest Barriers to Innovation at Your Business?
Lack of financing

48%

Government rules and regulations

31%

Internal rules and policies

29%

Lack of vision25%

Lack of talent

25%

Corporate comfort with risk

17%

Not a stategic priority

14%

Too much competition

14%

Lack of metrics on innovation impact

8%

No opportunity for innovation in our sector

5%

Too little competition
No barriers to innovation

5%
4%
0%

10%

The two-thirds who had championed innovations werein a better position to evaluate barriers to innovation,
as they had faced obstacles and often overcome them(Fig. 9 on page 12). A fortunate one-quarter of thisgroup reported few problems in seeing their changes
adopted. A majority of 60% succeeded in pushing
their innovations through the organization, but faced
resistance and succeeded only with difficulty (Fig.
10 on page 12). This doesn’t mean that they are less
5

20%

30%

40%

50%

successful as innovators; in fact, the opposite may betrue. Obstacles are inevitable, and the ability to overcome them is a mark of success.
Among those who did not see their innovation succeed, the top obstacles had to do with resources andsenior management buy-in. The reasons also varied
according to the type of innovation being pursued(Fig. 14).

http://www.businessinsider.com/mark-zuckerberg-silicon-valley-is-too-focused-on-the-quick-score-2011-10, October 30, 201115

FIGURE 14: Why Wasn’t Your Innovation Implemented?
Couldn’t fund from existing budgets

25%

Senior management felt benefits wouldn’t be quick enough24%

Senior management felt project would be unprofitable

24%

Insufficient internal resources (staff, plant, expertise)22%

Too much risk

16%

Could not raise enough funds externally16%

Senior management unconvinced project fit strategy

15%

Other parts of business wouldn’t cooperate

13%Internal corporate policies

9%Unable to find right external partners

8%

Government regulations

6%
0%

Internal budgets were a particular problem for strategic(presumably large-scale) innovations as well as innovations proposed by cost centers like human resources.
Innovations requiring partnerships or joint ventures

5%

10%

15%

20%

25%

faced a high level of scrutiny from senior management.
Innovative financing arrangements failed when they
were not deemed sufficiently helpful to profitability.
New marketing ideas often tended to fail the risk test.

SUPPORTING INNOVATION
How can innovation best be supported? The survey presented executives with three agree-disagreestatements about whether different support agents
understood the needs of entrepreneurial firms,
whether they had the resources necessary to provide
substantial support, and finally, whether they werecomfortable with risk on the part of individuals andinstitutions whose support is needed for entrepreneurially minded innovators to succeed.
Unfortunately, the executives surveyed believethat only one of the external parties has all three.
Resources were not a problem: All except auditors
were seen to have resources and capabilities to help.
The issues were lack of understanding and unwillingness to take risks. Government agencies and external
accountants and auditors—unlike the banks, venture
capitalists and internal finance professionals—were
seen to lack understanding of the organization’s
needs. And the biggest problem was risk: None of theexternal parties except VCs were seen as comfortablewith risk—and four out of ten respondents disagreed
with the statement that venture capitalists are comfortable with risk.
Overall, in-house finance departments and venture
capitalists were the most highly valued sources of business support in every single country. They were seen
16

© Copyright Forbes 2011

to have an understanding of the needs of innovative
companies and the resources to help. Both are willing to take risks if they can be persuaded that thereis good chance of success (VCs more so than finance).
The UK was an exception in that banks were ranked
slightly higher than in-house finance departments.
In terms of resources, results vary substantially by country. Banks are viewed as among the best-resourcedorganizations to help entrepreneurial firms. “Core”
European countries such as France, Germany, Italyor, indeed, Switzerland tend to believe more in the
resources of in-house finance departments; in the UK
and Poland there is more faith in venture capitalists.
In France, executives are more likely than elsewhere
to believe that government understands business andthe entrepreneurial firm, which can be an advantage
when developing and implementing enterprise policy.
Meanwhile, in Poland, the perception is that publicbusiness support is very well resourced; yet figures on
expenditure alone do not justify this. In fact, in 2009,business support in Poland amounted to about 0.4%
of GDP (a relatively low figure), and most of it focused
exclusively on agriculture. The explanation probably lies with the level of expectations, as the Polishsample was more likely to think that most types of
support organizations were well-resourced.

FIGURE 15: In Every Country, Internal Finance Departments and External Investors Were Seen as the Most Competent Sources of Support

UK

VCs and other equity investors

5.3

Our finance unit

4.4

Banks

4.3

Government agencies for business finance

Poland4.0

Government agencies for non-financial support

3.9

External accounts and auditors

3.8

VCs and other equity investors

5.1

Our finance unit

4.8

Banks

4.6

Government agencies for business finance

4.3

Government agencies for non-financial support

4.3

External accounts and auditors
France

4.0

VCs and other equity investors

4.8

Our finance unit

4.8

Banks

Switzerland

4.3

Government agencies for business finance

4.4

Government agencies for non-financial support

4.3

External accounts and auditors

4.3

VCs and other equity investors

4.5

Our finance unit

4.9

Banks

4.0

Government agencies for business finance

3.5

Government agencies for non-financial support

3.4

External accounts and auditors
Italy

Germany

3.8

VCs and other equity investors

4.4

Our finance unit

4.5

Banks

4.0

Government agencies for business finance

4.1

Government agencies for non-financial support

4.0

External accounts and auditors

4.0

VCs and other equity investors

4.4

Our finance unit

4.8

Banks

4.0

Government agencies for business finance

3.8

Government agencies for non-financial support

3.8

External accounts and auditors

3.9
0Statement

1

2

3

4

5

Combined Rating

Understands company needs
Has right resources
Comfortable taking risks
17

FIGURE 16: France and Poland Give Relatively High Ratings to Government Agencies

Government agencies for business finance

Government agencies for non-financial support

France4.4

4.3

Poland

4.3

4.3

Italy

4.1

4.0

United Kingdom

4.0

3.9

Germany

3.8

Switzerland

3.8

3.5
0

1

2

3

Combined Rating

4

3.4
0

1

2

3

4

Combined Rating

Statement
Understands company needs
Has right resources
Comfortable taking risks
Even in these difficult times, the UK’s financial industry
is still seen as capable of taking on risk to an extent thatits peers on the Continent are not. This is rarely the perception on the ground, of course, nor is it always sharedby British policymakers. But in the context of international comparisons, this still appears to be the case,and these findings are consistent with those of a recent
Forbes Insights study,6 which found that small and midsize companies in the UK were more likely to get all of
the funding they needed from various sources than theirpeers elsewhere, although they were less likely to apply.
In Italy, business support institutions in general, andpublic organizations in particular, are seen as more comfortable with risk than their peers elsewhere in Europe.
While conclusions on the Swiss sample are tenuous dueto the small sample size, it is interesting to note the highlevel of trust in finance departments. The Swiss respondents in particular have a strong belief that financedepartments both understand the needs of the businessand have sufficient resources to help them.
Among the parties who organizations look to for support, the most problematic from the perspective ofentrepreneurs are government agencies and external
accountants and auditors. Relatively few respondents
believe that they understand the entrepreneurial firm,

and both are believed to spurn risk. Such perceptions
were, moreover, found to be significantly correlatedwith poorer innovation performance—though in fairness, encouraging auditors in particular to embrace risk
might not always be in the public interest. Bankers arethought to understand the organization’s needs, but
are seen as too risk-averse to be much help in funding
innovation.
A finding that deserves further examination is that
financial and non-financial support from government
agencies had widely divergent effects on innovative performance. As a rule, financial support was found to be
negatively associated with innovation, while non-financial support was positively associated with innovation.
Both appeared to influence the implementation, as
opposed to the championing, of innovations.
It is hard to know what to make of this finding. Moresophisticated (and thus more effective) business support systems may rely more on non-monetary support,
while direct grants and other financial interventions are
generally blunt instruments. It suggests that government support may be most effectively aimed at helping
businesses with existing innovative ideas; increasing an
economy’s overall innovative capacity in this way does
not appear to be a realistic proposition.

5“Small and Medium-Sized Enterprises: Rebuilding a Foundation for Post-Recovery Growth” Forbes Insights in association with
ACCA, CGA-Canada and CNDCEC, October 2010, http://www.acca.co.uk/pubs/general/activities/library/small_business/sb_pubs/
SMERebuildingAFoundation.pdf

18© Copyright Forbes 2011

CONCLUSION
In today’s flat world, where productivity and the ability to connect with the customer are so important increating value, a high rate of innovation is one of the
few ways to sustain competitive advantage. Support ofinnovation is crucial. It’s not about creating entrepreneurs—it’s about nurturing and encouraging those who
put forward innovations wherever they may be. This
support can come from within an organization, fromexternal advisers and from the government.

Size matters. There is an optimal size for innovative
firms because the pursuit of the new requires resources
and hands-on engagement with the business. Smallerfirms cannot always adequately support innovation;very large firms can stifle it with command-and-control bureaucracies. “Some people like to be segmented
in a bureaucracy,” says 7digital CEO and co-founder Ben
Drury. “I find a specialized role in a large organization
too constricting.”

Six lessons from the report:

Enterprises are in need of designated “innovation budgets.” Innovation is not cheap, let alone free; and it

Diversity helps. No one type of person corresponds tothe notion of the entrepreneur. Furthermore, personality traits that are valuable in the conception of ideas
may be irrelevant, or even a hindrance, when it comesto implementation. Innovation and enterprise therefore
benefit strongly from a diverse workforce.

is more often firms themselves, rather than externalfinance providers, that fail to allocate resources toit. Bottom-up approaches to innovation are rightly
hailed as more effective. But if strategic plans do notallow for the resources to pursue serendipitous innovation, then they can stifle it altogether. In difficult
economic times an even more likely scenario is one
with companies sitting on cash reserves that, withappropriate planning, could have been funding innovative work.

International comparisons are overrated. Comparisonsby peoples and countries are overridden by the importance of the effects of structure, resources andpersonality. Once the structural effects are taken into
account, country effects become negligible.

Finance can do more to help drive innovation - talentmanagement is one place to start. The finance depart-are most likely to manifest themselves where the benefits are easiest to document—in business functions witha concrete mandate or in the pursuit of input and output
efficiencies. Management’s metrics and controls may end
up dictating whether and how organizations innovate.

ment is highly regarded as a support mechanism forentrepreneurial firms throughout most major European
economies. Yet its inability to propel one particularly
entrepreneurial personality type (Star Pupils) to thehigher levels of finance presents a limitation, likely the
result of an underdeveloped coaching and mentoring
culture.

BRUCE ROGERS
CHIEF INSIGHTS OFFICER

BRENNA SNIDERMANSENIOR DIRECTORCHRISTIAAN RIZY
DIRECTORKASIA MORENO
EDITORIAL DIRECTOR

CLARA KNUTSONRESEARCH MANAGERDAN ARMSTRONGREPORT AUTHOR

Clarity and mandates channel the direction of innovation. Within organizations, innovation and enterprise19

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