Insight into the innovation investment behaviour by large (>$100M) firms was recently revealed in a report by Accenture who surveyed 519 firms in US, UK, and France representing Banking, Capital, Retail, Electronics, High Tech, Health Providers, and Consumer Goods & Services. Data was provided comparing innovation performance in 2009 with data from 2012.
Important observations from 2012 were:
- Innovation as a Strategy – Fully 70% of the firms responded that innovation was one of their top 5 priorities with 18% being the top priority. 44% of manufacturers reported that innovation was extremely important to respond to “persistent change”. Only 34% firms believe they have a well defined innovation strategy in spite of 70% reporting that innovation was a top 5 priority.
- Innovation Investment Mix / Emphasis – 48% new product or service, 26% new process or business model (down from 30% in 2009), and 24% improvement or modification of an existing service (up from 17% in 2009) leading to the conclusion that large firms are taking a more cautious approach to innovation than 2009.
- Investment Levels – 51% firms responded that they increased funding devoted to new products and services with 74% of manufacturing firms increasing innovation investment levels.
- Innovation Performance – Only 18% believe their innovation investments are delivering competitive advantage. Only half of management from the large firms feel their innovation system is effective. Better performance was achieved by firms with formal innovation systems in place with 51% of such firms being first-to-market as opposed to only 17% with those with no such system.
- Innovation Shortfalls – 46% firms have become more risk adverse (shying away from breakthrough innovation and preferring incrementalism). Firms with formal innovation systems tend to pursue breakthrough innovations more than incrementalism and report 50% more likely to see innovation deliver competitive advantage.
- Challenges to Innovation – 30% firms noted predicting future trends as a challenge. 27% firms reported achieving cost containment as a challenge. 26% firms reported securing ongoing budget support as a challenge. 26% reported leveraging new technology as a challenge. 24% reported transforming new ideas into marketable products and services as a challenge.
Not reported though were growth performance over this period for firms with formal innovation systems to determine if such firms that have adopted innovation as a strategy are edging ahead of firms that have not. The data provide interesting benchmarks to compare with SMEs firm populations.