Widespread commitment to innovation throughout the electronics and high-tech industry is not reaping commensurate rewards, according to a recent survey we conducted. The good news is innovation can be more effective when companies have a formal system to encourage it.
Our report, “Why ‘Low Risk’ Innovation Is Costly,” studied 519 companies across 12 industries including 68 companies from the electronics and high-tech industry. We found:
- Only 13 percent of executives within the electronics and high-tech industry believe their respective companies’ innovation initiatives deliver a competitive advantage
- Nearly two-thirds (63 percent) of all respondents indicated opportunities to exploit under¬developed areas and markets often die
- Most respondents (60 percent) said their organizations tend to pursue product line extensions rather than develop completely new products and services
- Fifty-nine percent noted their organizations have become more risk averse regarding new ideas
- Only 34 percent said they were very satisfied with their initial idea generation, and only 30 percent said they were very satisfied with their company’s conversion of ideas into market-ready products, services or business models
- Nevertheless, 80 percent of respondents indicated they rank innovation among the top 5 strategic priorities of their corporations.
Respondents said two dominant obstacles inhibit them from driving higher returns from innovation. Their conservative approach focuses on individual line extension rather than developing a broader portfolio that also includes big, bold ideas. Second, many companies lack systematic, enterprise-wide processes capable of ommercializing inventions.
Respondents were asked about five different areas in which they might increase investments in innovation—cloud, mobility, big data analytics, scientific applications and social media. Electronics and high-tech executives ranked first among all industries in two categories--cloud (74 percent) and scientific applications (43 percent).
These same respondents also showed deep commitments to innovative initiatives versus the other industries. Nearly three-fourths (72 percent) have a formal system in place to achieve innovation, placing the sector second among all surveyed industries. Virtually the same percentage (71 percent) reported employment of a chief innovation executive or another officer designated to oversee innovation—the second highest among all industries.
A formal innovation system can streamline processes, manage risks and mine the data needed to generate new products, services and business models to foster growth. Accenture has identified five key elements for creating such a system. They include unique customer experiences that can foster loyalty and integration of the customer voice through the use of big data and social media.Wouter Koetzier (email@example.com) and Adi Alon (firstname.lastname@example.org) are managing directors in the Innovation and Product Development group at Accenture.