Scaling innovations within large corporations is notoriously difficult, but whilst there is little real evidence that companies are getting better, that doesn’t seem to be dampening the enthusiasm of executives.
At least that’s the message from a recent Accenture report that reveals that a majority of executives expect business activities started now to be generating at least half of their company’s revenues in the next three years. What’s more, this is despite just 1/3 of executives saying that their companies had such a robust track record at the moment.
Scaling innovation
The report saw nearly 1,500 executives surveyed from 12 countries and 11 different industry sectors. Accenture regard the benchmark for innovation excellence as being a company for whom 75% of current revenue comes from business activities that begun in the last three years. When set against this standard however, just 6% of companies were sufficiently innovative.
The paper identifies three things that these companies tend to do that sets them apart from their peers:
- They have a strong core business – A strong core is often cited as a barrier to change as it creates such a strong legacy culture, but without it there is often insufficient investment capacity to change.
- They have a dedicated innovation function – There remains significant debate about whether you need an innovation department or whether it’s the responsibility of all, but some 76% of the ‘innovation masters’ in Accenture’s research had a dedicated function. This centralized facility supports the development of a wide network of partners to tap into for innovative projects.
- Strong synergies between the core and new businesses – This is arguably the key finding, as the relationship between the profit center of the business and the innovation center has often been the key challenge for successful innovation. The Accenture report finds that the best innovators are perhaps understandably masters at this.
“Leading companies rotate to new opportunities successfully not in spite of their legacy businesses, but because they strengthen them to release the resources needed to scale new business activities,” the authors say. “They have the courage to take bold steps – from strategic cost reduction, driving innovation into the core and divesting underperforming assets – to transform their core business to fuel new investments.”
The secret sauce or snake oil?
Suffice to say, this kind of survey is not all that new, and indeed neither are its findings. Similar work has been produced numerous times over the last few decades as organizations struggle with the innovator’s dilemma first identified by Clayton Christensen some 21 years ago. The Accenture survey admits itself, very few organizations have mastered this to date, but a whole bunch imagine they will in the future.
It’s a kind of blind optimism that you sense is common among executives who like to paint the past as the sins of their forbears, and the future as one that is inherently and inevitably different due to their unique capabilities.
There is undoubtedly an awful lot of investment in innovation, with nary an organization that doesn’t have some kind of incubator to partner with startups. Alas, a recent study of incubators and accelerators in Britain, Germany and the United States found that these environments were not motivating at all for startups, and almost did more harm than good for their growth prospects.
Not only do sponsors often regard the incubator as proof of their innovation prowess, but startups often regard acceptance into the incubator as job done. It’s a conflation of being busy as being productive when the two are certainly not the same thing.
So is the Accenture report revealing the secret sauce or a case of the Emperor’s New Clothes? I’m veering towards the latter, and even the language used (describing innovative organizations as ‘Rotation Masters’) seems a forced attempt to differentiate in a heavily crowded market. Do by all means check out the report and come to your own conclusions however.
