A new survey has found that companies are finding it extremely difficult to produce disruptive products, services and business models. Instead they are following a potentially perilous strategy of low-risk innovation.
An Accenture survey (Why “Low Risk” Innovation is Costly) of more than 500 executives from large US, UK, and French organizations revealed that instead of offering big, bold ideas, companies are relying on modest line extensions.
Other key findings are:
70% ranked innovation as among their top five priorities
93% believe that the long-term success of their company depends on the ability to innovate
Fewer than 18% of respondents believe their own innovation strategies are delivering competitive advantages
Only 26% of respondents are seeking to disrupt existent markets with innovation
Only 34% of respondents believe their company has a well-defined innovations strategy
A Cautious Approach
Caution is understandable in a fiercely competitive market where novelty is a premium and can be satisfied in part by line extensions and minor modifications. Big ideas often involve costly R&D investment and success rates are low. But is the cost-effective development of bold innovations possible?
The Accenture report suggests a number of possible solutions. They include:
Leveraging the power of Big Data and social media, incorporating the customer into development processes
Running innovation as an end-to-end value chain emphasizing speed and flexibility (lateness to market was identified as one of the principle reasons for innovation failure)
Applying risk management practices specifically tailored to innovation to identify future opportunities and to properly evaluate your innovation portfolio.