Companies are making blind bets on innovation with billions of dollars potentially on the line, according to a survey of over 1200 global executives and business leaders. The PwC Innovation Benchmark examines how top companies are meeting innovation challenges.
Most companies struggle to align their business and innovation strategies, leaving many companies flying blind as they place bets on innovation. A finding that is especially important as the report also found that strategy, not size of investment, is the greatest determining factor in the success of an innovation initiative.
The aim of the study was to understand how these business leaders view innovation and what they are doing to better reap its rewards. Innovation was looked at across a complex set of challenges, including innovation strategy, operating models, culture, metrics, and more in a bid to understand how companies are seeking to create business value and financial returns on their efforts.
The survey findings show that companies are struggling with clearly aligning their innovation efforts with their business strategy.
Tielman Botha, Digital Lead for PwC South Africa, says: “Innovation is a major part of the competitive equation for 21st century business. The capacity to create value through the development of new customer experiences, products, services, technologies, processes and business and delivery models is one of the keys to profitability, growth and survival.
“In an era of digital business and rapid technology change, virtually no company can ignore the imperative to innovate. Failure to do so is an invitation to lose business.
“This report identifies the pain points for executives across all industries to help find solutions to drive innovation that will align with business strategy and result in bottom-line success.”
The report also explores the different approaches to ideation and innovation models deemed most successful. Overall, companies are becoming more inclusive and are adopting innovation models that bring more voices to the table, including employees across all levels and departments. Not only does this foster fresh thinking, it also establishes a more innovative culture. Furthermore, companies are looking to customers as partners as they look to create the next big breakthrough innovation.
Among these findings, PwC’s Innovation Benchmark also found that:
- Leaders show low confidence in their company’s processes: Just over one-quarter of respondents believe they lead their competitors in innovation.
- Companies are embracing open innovation models: The most innovative companies today are promoting innovation both inside and outside their organisations by breaking down traditional barriers to bring in a much wider ecosystem for ideas, insights, talent and technology. Sixty-one percent of respondents say their company deploys an open innovation model, followed by design thinking (59%) and co-creating with customers, partners and suppliers (55%), all well ahead of traditional R&D (34%). More-inclusive operating models, such as open innovation, design thinking and co-creation with partners, customers, and suppliers are now all embraced ahead of traditional R&D, and by a wide margin – almost twice as many companies favour these models.
- The innovation X factor? Humans: Big data can tell you that customers behave a certain way, but it takes a human to explain why they behave that way. As a result, most companies surveyed (60%) consider internal employees their most important partner for innovation. It is important to realise that employees are not merely workers with a defined set of job or managerial skills. Even if they do not sit on a company’s core innovation team, employees can be valuable contributors to innovation efforts early in the process.
- Designing the next innovation breakthrough: Technology companies set the pace in developing breakthrough innovations with 58% of respondents reporting their companies focus mainly on breakthrough innovation.
- Tech innovation or leader? Increasingly, companies are looking to technology to help create markets for novel products and services that do not yet exist and to meet needs that customers don’t yet know they have. “With technology being key to innovation in general, it is no surprise that technology companies lead the way in breakthrough innovation, with nearly two-thirds of them making this the focus of most or all of their innovation efforts. They are followed by companies in the pharmaceutical and life science, health services, communication, and automotive industries – almost half of innovating businesses in those sectors focus mostly on breakthrough innovation,” Botha adds.
Notes to editors:
- To explore the full survey findings, please visit: www.pwc.com/innovation-benchmark.
- Methodology: PwC’s Innovation Benchmark is a global study run by PwC and PwC’s strategy consulting business, Strategy&. Primary data collection occurred online and by interview between 12 September 2016 and 27 January 2017. The results and insights in this report are based on responses from 1200+CXOs, VPs and directors from 44 countries and all major sectors. Participants are clients of PwC, or were identified by third parties. This report is based on the strategy module of PwC’s Innovation Benchmark, which also has operational modules for innovation financials, corporate venture capital, incubation, open innovation, product lifecycle management, research and development (R&D), and R&D tax.