Global firms innovate better

14 June 2012

NEW YORK: Brand owners with offices in multiple regions have stronger innovation records than firms operating in a single region, McKinsey research has suggested.

A new global report from the consultancy, based on a survey of almost 4,700 business executives at high-performing companies, suggested there was an "innovation advantage" in having "people on the ground" around the world, with employees in different regions sharing best practices.

The poll showed that 71% of managers at companies who operated in multiple regions agreed their employer had a good record in innovative product development, compared to 67% of those from companies who operated in a single region.

"Companies of all kinds can do a lot to improve innovation," the report added. "Global companies may benefit from the finding that having people on the ground seems to be associated with improving companies' ability to meet customer needs."

Multi-region firms also beat out their rivals in terms of the company offering global and regional leadership (66% versus 64%) and a good risk management infrastructure (65% versus 61%), according to the survey.

But McKinsey also showed that single-region companies outperformed international firms on other metrics. For example, 57% of executives at single-region companies said they were offered a "compelling" work experience, compared to 46% of their multi-national equivalents.

Workers at single-region companies were also more likely to agree their employer had an "inclusive" innovation strategy, at 55% against 50% for multinationals.

When asked what their employer can do to improve their operations, 28% of respondents from all kinds of firms cited more effective sharing of innovation across business units and regions.

This was the third most commonly-cited area for improvement on the survey, behind developing proficient multi-regional leaders (35%) and optimising networks within the business to maximise sharing of expertise (30%).

Just 1% of respondents said there was no improvement needed.

Data sourced from McKinsey; additional content by Warc staff