Companies are playing it safe when developing new products and services, research shows.
A new study by Accenture revealed that nearly half of executives feel their businesses have become more risk averse when considering new ideas. Instead of inventing new products and services, 64 percent of companies focus more on product-line extensions.
Even though more than 90 percent of the executives surveyed said that the long-term success of their organization's strategy depends on their ability to develop new ideas, the leaders reported a decline in the satisfaction with innovation performance over the past three years.
The research found that the number of executives who were likely to identify the introduction of a new product category as a primary innovation goal fell to just 27 percent this year, down from 42 percent in 2009. In addition, 33 percent of executives said their primary innovation goal was the expansion of the products that already supported their basic offerings.
Wouter Koetzier, managing director for innovation and product development at Accenture, said many companies take a low-risk approach to innovation because they lack a prudent, disciplined approach for innovation https://www.businessnewsdaily.com. This can jeopardize results, he said.
"It's a situation compounded for many by an inability to rapidly scale inventions," Koetzier said. "However, the research suggests that those companies that have a formal, end-to-end management system to nurture, scale and launch innovations tend to be more satisfied with their results as they achieve stronger outcomes."
The study shows that those companies that have institutionalized, formal innovation-management systems are almost twice as likely to say they were very satisfied with their initial idea-generation abilities. Additionally, businesses with a formal system in place are 75 percent more likely to define their innovation strategy as delivering a competitive advantage, twice as likely to introduce a new business process or model, and 35 percent more likely to say they are typically first to market with new products or services.
"The bottom line is that innovation can work better when a formal system exists to streamline processes, manage risks and mine the data needed to generate new products, services and business models to foster growth," said Adi Alon, a managing director in the Accenture Innovation and Product Development practice. "Approached correctly, innovation can be executed at scale, with speed and balance between renovation and game-changing initiatives, driving higher strategic and commercial value."
Accenture identified several key elements involved in creating a formal innovation system, including:
- End-to-end processes that contribute to speed and flexibility
- Unique, personalized customer experiences that can foster loyalty and enhance revenues
- The application of risk management to help drive innovation with analytics, processes and tools
- Integration of the customer voice through the use of big data and social media
The study was based surveys of 519 companies across more than 12 industry sectors in the United States, United Kingdom and France.