Most U.S. firms fall short in innovation

Mar 23, 2016, 3:21 PM EDT
(Source: Dan Mason/flickr)
(Source: Dan Mason/flickr)

A report released by consulting firm Accenture on Monday found that U.S. firms across 12 industries are struggling with innovation, and things appear to be getting worse. The 2015 survey of executives and managers within 500 U.S. companies found that 60% said their firms do not learn from past mistakes, compared to 36% who admitted to this in Accenture’s previous survey in 2012. Likewise, the number of respondents who indicated their firm often misses opportunities to exploit underdeveloped areas or markets increased from 53% to 72%. And the percentage of those who believe their firm is risk averse rose from 46% to 67%.

The findings are not all disheartening, however. On the surface, many firms are taking the right steps. 74% of the firms surveyed have established formal innovation processes, up 12% from 2012. (For example, 63% percent now appoint “chief innovation officers.”) And the firms do well at integrating small-scale innovation into their operations. 90% reported that they apply emerging technologies to improve products and services, and 86% apply capabilities such as analytics to optimize their product portfolios. (Last year’s Blouin Creative Leadership Summit – BCLS – highlighted this and more in its New Adaptations for Business Leaders panel.)

The firms are also increasingly talking a big game about disruptive innovation. For instance, 84% said they believe innovation is key for their long-term success compared with 67% in 2012. 84% are looking for the “next silver bullet,” meaning something to transform the market rather than the latest version of an existing product. Creating new products is a priority for almost 47% of respondents, up from 27% at the last survey.

But then the firms tend to hit “the innovation wall” – a lack of execution capabilities.  82% conceded they do not distinguish their innovation approaches between incremental and large-scale transformational change. And given that 72% of respondents indicated their firms tend to pursue product line extensions rather than develop totally new products or services, it’s no surprise that “big” innovation ideas often go nowhere because they lack an organizational “home” within the company.

There are ways to improve, however. “True innovation requires aggressive changes in technologies, operating models and talent,” said Adi Alon, managing director of Accenture Strategy. The consultancy recommends three transformational changes. Firms should build a two-engine approach, with one focused on continually making existing products better, and the other on game-changing innovation. They should also view innovation through new lenses, not exclusively through the old playbook. And firms would be able to tap new ideas, models, and customers by breaking down traditional barriers with cross-industry collaboration. These themes are right in line with what was discussed in the BCLS panel Business Strategies for the Next Decade.

An essential step, and perhaps most challenging of all, is a cultural one within a firm – accepting inevitable failures in the innovation process, and not punishing or stifling those who came up with the ideas. Therefore there should be wiggle room in budgets and timing, and expectations should not be unreasonably high.