Innovation is a clear goal for most - strategies and approaches are still works in progress
Innovation is critical in an ever-changing business environment. Organisations that fail to prioritise innovation are more likely to fail – in fact, in a separate global survey of board members and C-suite executives, the rapid speed of disruptive innovation is ranked among the top risk issues for organisations over the next decade.
Even with long-term objectives in mind, innovation in the IT realm must also focus on specific near-term goals, such as improved efficiencies, cost savings, new business models and customer satisfaction. Otherwise, innovation initiatives are doomed to fail.
The good news is that a majority of organisations have clearly defined innovation goals. This is a strong indicator that IT executives, together with the board and C-suite, recognise the critical need for having an innovation plan and mindset – certainly on the IT side.
Strategy does not have to be the catalyst for innovation.
Does your company have clearly defined innovation goals?
As expected, the percentage of organisations with innovation goals varies by size. Nearly all (95%) large organisations (more than $10 billion in net revenue) have clearly defined goals, while just 50% of smaller organisations ($500 million to $999.99 million) currently have such goals.
Goals are only part of the innovation formula. To achieve near- and long-term success, there must be a strategy to achieve those goals. Here, on average and as expected, the numbers fall off a bit. Overall, 54% of organisations have a perceived clear innovation strategy and just over 40% are currently developing one. This is not surprising – innovation should be viewed as reimagining the business and creating potential new processes and opportunities until the focus shifts to drive business value. Strategy does not have to be the catalyst for innovation.
Which of the following best describes the status of your company’s technology innovation strategy?
The numbers vary by organisation size, with 76% of large companies having a clear innovation strategy, yet only 26% of smaller organisations having one.
The key takeaway: Organisations must differentiate between goals and strategy, and better define what those two categories mean to the business, since achieving goals (what you would like to achieve) is often confused with developing a strategy (how you will achieve it).
When it comes to the areas of innovation on which companies are focusing, efforts are geared more toward the optimisation of current systems, products and processes. However, a significant amount of their efforts are also dedicated to building resilience and generating growth in revenue and new markets.
CIOs, CTOs and IT leaders should collaborate with the board and their C-suite colleagues to define how and where innovation activities should be engaged as well as the desired goals, as part of the organisation’s broader business strategy.
Innovation breaks down to creating and reimagining products, services, solutions and operations. However, innovation without a defined strategy can be risky in any number of ways – for example, outcomes not achieved, budget overruns or lack of executive buy in. Although 79% of organisations have clear innovation goals and 54% have a clear innovation strategy, there is the possibility that most organisations only have notional objectives of what they want as opposed to a fully developed and actionable strategy.
Organisations must differentiate between goals and strategy, and better define what those two categories mean to the business.
What percentage of your company’s current innovation activity is focused on each of the following areas?
|Optimisation (of current systems, products, processes etc.)||Building Resilience (against disruption)||Growth (new markets, revenue, etc.)|
|21% - 30%||15%||30%||34%|
|31% - 40%||39%||32%||31%|
|41% - 50%||27%||8%||10%|
|51% - 60%||10%||1%||1%|
|61% - 70%||5%||0%||0%|
|71% - 80%||1%||0%||0%|
|81% - 90%||0%||0%||0%|
|91% - 100%||0%||0%||0%|
Research, exploration and testing are important parts of driving innovation. For many organisations, that translates to either creating a test environment (a lab) or putting together a group of experts (a think tank) to investigate innovation. Most large organisations (86%) are pursuing those options, while only one in five smaller organisations are doing so.
There are several factors that have an impact here, including budgets, staffing and the level of innovation required. That said, organisations should not innovate blindly. Instead, they should consider pilot projects, testing and applying the appropriate expertise (either from inside or outside the organisation). Organisations should also consider implementing new concepts and ideologies such as design thinking and agile or lean methodologies to accelerate the potential of innovation.
Does your company have a dedicated lab or think tank that focuses on innovation?
As important as innovation is, companies are still facing challenges moving ahead with these projects. The most significant of these challenges is regulatory and compliance requirements, by a notable margin. Security risks are among the top challenges as well.
Notable Observations – Industry and Region
- Overall, financial services organisations are more likely to have a dedicated lab or think tank that focuses on innovation.
- As expected, a strong majority of organisations in the technology and consumer packaged goods industries – 87% and 86%, respectively - have clearly defined innovation goals.
- Similarly, financial services (69%), consumer packaged goods (69%) and technology (60%) organisations are significantly more likely to have clear innovation strategies.
- Insurance (85%) and consumer packaged goods organisations (79%) lead the way in having a dedicated lab or think tank that focuses on innovation.
- 93% of manufacturing organisations have clearly defined innovation goals, while only 63% of organisations in the chemicals and materials industry have clearly defined their innovation goals.
- 81% of U.S.-based organisations have clearly defined innovation goals, compared with 79% of European-based organisations and 79% of Asia-Pacific organisations.
- When it comes to dedicated labs and think tanks, countries where organisations have a greater likelihood of having these include Japan (78%), China (62%), Germany (66%), United Arab Emirates (64%), and France (64%).
- Regionally, 54% of North American-based organisations have a clear innovation strategy, while 56% of European based nations say the same.