Keep this in mind while you read the headline that has emerged from the Boston Consulting Group report on innovation: there is strengthening correlation between executives frustrated with the return on innovation spending and businesses cutting back on innovation investment.
Fewer than half of the 3,000 managers surveyed are satisfied with the financial return on their investment in innovation. And these figures have been declining steadily - 52% of executives were satisfied in 2006, 46% were satisfied in 2007, and 43% are satisfied in 2008.
The number of managers who say that their business plans to spend more on innovation in the coming year has also fallen - from 72% in 2006 to 67% in 2007 and 63% in 2008.
This is of great concern. But a big clue as to what is driving this can be found in the results of the survey's question about how companies measure innovation success. Just 43% of businesses surveyed track innovation as vigorously as they track other core business operations, and a mere 35% are happy with their innovation metrics. This might be why: the most popular metrics are customer satisfaction, the percentage of sales from new products, and overall revenue growth. These are all important measures of a company's management execution, but they hardly measure innovation success accurately. Innovation metrics must be both specific and incremental.
Here is another interesting finding - the challenges that executives say get in the way of successful innovation strategies are directly within their control: lengthy development times, a risk-averse corporate culture, difficulty selecting the right ideas to commercialise, silos hindering internal co-operation. BCG adds that year after year, respondents have consistently identified the same obstacles to innovation return.
An inescapable conclusion is that having identified exactly what ails them, managers and leadership teams are unable or unwilling to fix the root causes. If that is the case, scaling back all efforts to innovate make sense.
Wait - does it make sense? Wouldn't giving up on innovation, foresight, strategic thinking be a crippling decision? Isn't innovation one of the few consistent sources of long-term competitive advantage?
In a tough economic environment, surely now is not the time to scale back on innovation. Surely now, more than ever, businesses that are wavering need to redouble their efforts and fix the root causes that are holding them back.
What do you think? How important is the ability to successfully innovate? And how are you finding the process?
Source: Kristen Le Mesurier - http://blogs.theage.com.au/business/executivestyle/innovator/archives/2008/11/are_businesses.html
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