Return on investment in innovations drops by 27% in five years
Accenture proffers ways to unlock value chain
Return on Investments (RoI) on innovation spend is on a steep fall, as research has shown a 27 per cent decline in the last five years.
According to Accenture’s research, almost one-third (29 per cent) of those surveyed expect to increase their investments in innovation by more than 50 per cent over the next five years.
Accenture, a professional services firm, noted that more than half (57 per cent) of businesses making significant investments in innovation have under-performed against industry peers when it comes to growth or market value.
Managing Director, Financial Services at Accenture, Toluleke Adenmosun, noted that the fact that return on investment overall is dropping is a worrisome trend. “Businesses are spending more than ever, but their inability to see proper returns is shocking.
“One of the reasons for this could be that many organisations still see innovation as a peripheral activity separate to the core business; an ‘ad-hoc creative process’ rather than a set of practices that will fundamentally change their way of doing business. It’s like going jogging once a month and then expecting to be able to run a marathon.
“Over the last five years, roughly $3.2 trillion was spent on innovation worldwide. Yet, the study shows it is not how much you spend that matters, it is how you spend it. The companies bucking the trend and seeing the biggest returns are investing in bold, watershed moves rather than incremental shifts.”
“The companies reaping the biggest rewards show a ‘go big or go home’ mentality by investing in truly disruptive innovation projects,” added Toluleke “They don’t just tinker around the edges.”
Toluleke also argued that some companies just chase the latest tech trends without thinking about how to connect what they’re spending to the biggest problems or opportunities in their business.
The research also revealed that there are seven key characteristics that are adopted by companies deliberately driving innovation.
According to Accenture, high-growth companies apply innovation practices to change their ways of doing businesses more fundamentally, so that they can become among others, hyper relevant; network powered; technology propelled; talent rich; data driven; inclusive and asset smart.
Accenture further explained that in network powered environment, harnessing the power of a carefully managed ecosystem of partners would bring the best innovation to customers.
Accenture noted that generating, sharing and deploying data to deliver new product and service innovation safely and securely is the hallmark of any data driven initiative.
To the professional firm, adopting intelligent asset and operations management to run businesses as efficiently as possible, and to free up the capacity for other innovative efforts would make assets smart.