7 Ways Americans Trail in Corporate Innovation

America's leadership role in innovation is declining

By Angelo Morelli and Wouter Koetzier, Accenture, Accenture |  IT Management, CIO, innovation

Although an abundance of management thinking on innovation theory originates in America much of the practice and execution of innovation takes place outside this country. In America many mid-and senior-level American executives know innovation theory quite well. They have read the books, articles and attended conferences, but the gap between talk and action is wide. This turns out to be particularly true among corporate innovation leaders and chief innovation officers, many of whom have minimal authority, budgets or concrete plans of how to execute innovation.

In a new Accenture survey of communications industry executives in Europe and the United States, Americans trail Europeans in their willingness to use an open innovation business model, when measured on seven innovation categories. The categories and percentages where America lags Europe are:

  • working with more specialized developers (40 percent of Europeans surveyed do so versus only 18 percent of Americans surveyed);
  • collaborating with third-parties (28 percent of Europeans vs. 11 percent of Americans);
  • outsourcing innovation (28 percent of Europeans vs. 12 percent of Americans);
  • expanding the base of product innovation collaborators (32 percent of Europeans vs. 18 percent of Americans);
  • planning processes better (51 percent of Europeans vs. 39 percent of Americans);
  • simplifying products or services (33 percent of Europeans vs. 22 percent of Americans); and
  • hiring and training employees to bridge resource gaps (31 percent of Europeans vs. 22 percent of Americans).

These findings and conclusions are part of a large set of new Accenture research results about the status of corporate innovation around the world. Overall, Accenture's research revealed that innovation is a top priority for companies seeking to grow. But flaws in managing innovation are resulting in poor returns on innovation investments. Accenture believes these poor returns can be turned into profitable, sustainable growth by systematically managing innovation end-to-end, with the same rigor and discipline as other major business processes.

In the American versus European findings, Americans are far behind Europeans in working with more specialized developers and collaborating with third-parties. Open, collaborative innovation development models have become crucial to succeed in the global innovation race, according to Accenture's research. Companies that attempt to innovate on their own take bigger risks than those that collaborate openly and externally on innovation initiatives. Americans need to climb aboard the 'open model' bandwagon now before it is too late.

Americans must also deliver products to market faster. Accenture found that, on average, it takes Americans six months to launch products. Companies in France and Germany average less than three months. Similarly, Europeans enjoy greater success in new product development than Americans. Forty-seven percent of Europeans exceeded their product delivery target expectations, 15 percent more than Americans. And 21 percent of Europeans have planned more than 50 product or service launches this coming year, 14 percent more than Americans.

When executives were asked about what new services their companies were developing, Europeans outpaced Americans in eight of 11 categories. Those were:

  • messaging (44 percent of Europeans surveyed developed new messaging services vs. 39 percent of Americans surveyed);
  • search/navigation (40 percent Europeans vs. 30 percent Americans);
  • personal information management (45 percent Europeans vs. 22 percent Americans);
  • location-based services (34 percent Europeans vs. 31 percent Americans);
  • fixed mobile convergence (37 percent Europeans vs. 24 percent Americans);
  • social networking video streaming (27 percent Europeans vs. 23 percent Americans);
  • mobile advertising (20 percent Europeans vs. 18 percent Americans).

These services are at the heart of next-generation innovation in the communications arena. Americans should be concerned. The only three categories in which Americans led were voice services, content services, and user-generated content. Also, American firms' innovation projects do not tend to run over budget nearly as often as Europeans. Only 38 percent of Americans said they had gone over budget compared with 58 percent of Europeans.

So what does all this mean? For starters, Americans need to make improvements in managing corporate innovation programs and practices. One way of doing so is to manage innovation as rigorously as other business disciplines such as marketing, operations and strategy. Another way is to become much better at executing innovation rather than just reading and theorizing about it. And completing projects within allocated budgets should continue to be a high priority during these tough economic times.

Methodology

Accenture commissioned an online survey of 277 communications, media and high-tech executives in France, Germany, the U.K. and the U.S. to identify the challenges these industries face related to new product innovation. Nearly two-thirds of those who responded (63 percent) work in telecommunications, 26 percent work in the high-tech sector, and 11 percent work in the media industry. The online survey explored the correlation between companies that meet or exceed their new-product launch plans and those committed to open innovation. The findings are contained in a February 2009 report.

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