Companies don’t learn from past mistakes, miss market opportunities and are risk averse
NEW YORK: March 21, 2016 – U.S. companies are struggling with various innovation pursuits – continuing a problem they have been grappling with for the past three years, a new Accenture (NYSE: ACN) survey finds.
The survey of executives and managers within 500 U.S. companies reveals that six in 10 (60 percent) said their companies do not learn from past mistakes. This is nearly double the 36 percent who admitted to this three years ago when Accenture last conducted a similar survey.
Nearly three-fourths (72 percent) indicate their firm’s often miss opportunities to exploit underdeveloped areas or markets versus 53 percent three years ago. And more than two-thirds (67 percent) believe their companies are risk averse, a large increase from 46 percent revealed in the previous survey.
The survey also shows that 82 percent admit they do not distinguish their innovation approaches between incremental versus large-scale transformational change – meaning they use a single “one-size-fits-all” approach to achieve different goals. Most respondents said they have “big” innovation ideas but are missing an organizational “home” with the company. So their ideas often go nowhere.
“A significant gap exists between what U.S. companies want to achieve in the innovation arena versus what they are able to do,” said Adi Alon, managing director, Accenture Strategy. “They want to innovate yet they need to take different and bolder actions to achieve transformational, major revenue-generating innovation. True innovation requires aggressive changes in technologies, operating models and talent.”
The survey polled executives and managers involved with innovation in 12 industries such as communications, electronics and high-tech, consumer products, and retail. Accenture’s analysis of these results, summarized in a new report titled "2015 Accenture U.S. Innovation Survey: Clear Vision, Cloudy Execution," concludes that these companies hold on to outdated products too long thereby increasing expenses and making them less competitive.
More bullish on disruptive innovation
Despite their companies’ innovation shortcomings, respondents are more bullish on disruptive innovation than they were three years ago. For instance, 84 percent said they believe innovation is key for their long-term success compared with 67 percent three years ago. The same percentage of respondents – 84 percent – said they are looking for the “next silver bullet,” meaning a market-defining innovation rather than incremental iterations of the same products. Creating new products is a priority for almost half (47 percent) of respondents, an increase of 20 percentage points from three years ago.
Transformational changes needed
Accenture identifies three transformative changes that companies can undertake to ignite innovation:
- Build a two-engine approach. Companies need to develop agile innovation operating models that enable them to test new ideas quickly and absorb new capabilities and talent from other industries. Engine One sharply focuses on making existing products and capabilities continually better. Engine Two efforts are disruptive and potentially game-changing. When executed correctly, these innovations deliver a step-change improvement in organizational performance and competitive advantage.
- View innovation through new “lenses.” Despite their best intentions to drive big changes, many companies continue to evaluate and pursue opportunities using the ideas, processes and business models they have relied on for years. In an age where non-traditional entrants are increasingly capturing market share and customers are demanding new products, services, conveniences and forms of engagement, a company’s reliance on its old playbook will prevent it from achieving competitive advantage.
- Break down industry barriers. Disruptions in everything from the flow of raw materials to the demands of “always on” consumers require a new model based on collaboration. Emerging technologies are making it possible for companies to unlock new sources of innovation through alliances across multiple business sectors. Cross-industry innovation models lead to competitive differentiation and new sources of growth, revenue and customer loyalty.
This survey polled 500 professionals with innovation responsibilities at U.S. companies with revenues greater than $500 million about their attitudes, expectations and implementation related to innovation. Twelve industries were represented: banking and capital markets; biotechnology; chemicals and natural resources; communications; consumer goods and services; electronics, high tech and medical products; energy; healthcare providers; insurance; retail; travel and transportation services; and utilities. For this survey, innovation was defined as “a market-differentiating change that generates a sustainable competitive advantage in a product, service or business model and that leads to measurable value creation for an organization.”
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 373,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
+ 1 973 590 9920
North of Nine