Report shows businesses still struggle with innovation

New global study shows leading businesses are continuing to find innovation a challenge, viewing the traditional R&D model as broken

Research and development teams at large, traditional corporations are ill-equipped to rise to the challenge of digital Darwinism, a global report claims.

The report, The Innovation Game: Why and How Businesses are Investing in Innovation Centres, by Altimeter Group and Capgemini Consulting, uncovered a shifting approach to digital innovation as companies try to overcome the challenge. It found businesses are increasingly looking to launch physical ‘innovation centres’ or 'innovation labs' in major global technology hubs such as Silicon Valley to leverage an ecosystem of startups, venture capitalists, accelerators, vendors, and academic institutions.

Researching the innovation centre efforts of the largest 200 companies globally across five sectors - automotive, financial services, consumer products & retail, manufacturing and telecoms - Altimeter and Capgemini Consulting found 38 per cent have set up innovation centres in a global tech hub. The report also noted that innovation centres help to accelerate the generation and implementation of new ideas, attract talent, drive employee engagement, and establish partnerships with startups.

However, too many organisations are using these centres in isolation and not bringing the innovative thinking necessary to digital transformation into internal teams.

“Many organisations are solving the issue of embracing innovation by partnering with or acquiring technology startups, but too often this is a sole focus,” global head of research at Capgemini Consulting, Jerome Buvat, said.

“A more equal balance between external and internal thinking is required. Innovation centres are proving an effective means to cultivate the agile startup mentality needed to remain at the forefront of the market, but it is clear that establishing an effective centre has many challenges.”

The most popular areas of research for innovation centres remain well-established technologies such as mobility (63 per cent) and big data/analytics (51 per cent). Less mature technologies, including 3D printing (5 per cent), virtual reality (13 per cent) and robotics (13 per cent), are currently lower down on the priority list.

Penetration varied significantly between sectors, with manufacturing a clear leader at 58 per cent. But despite facing increasing pressures from digital disruptions, the report found the financial services sector only lagged at 28 per cent.

According to principal analyst at Altimeter Group, Brian Solis, for the world’s largest organisations, innovation has never been more important – or more difficult.

“We find ourselves in a world where disruption is imminent and can come from anywhere and these digital-savvy competitors are threatening the very fabric of many established industries,” he said. “Without constant innovation, once dominant players are finding their tried and trusted paths to innovation are now dead ends. It’s time to innovate or die.”

Despite innovation centres receiving substantial investments from many global organisations, with some seeing significant benefits, establishing a successful centre is still proving a challenge. In fact, the report suggested 80-90 per cent of these centres ultimately fail.

In order to successfully deploy an innovation centre, the report stressed their purpose must be clearly defined and well aligned to the business’ needs.

The report recommended:

  • Businesses deploy an innovation centre bearing in mind a strong governance model, with senior leadership support, to implement innovations across the enterprise;
  • Have an optimal focus that is neither too futuristic, nor too close to current business operations;
  • Closely involve business units to avoid isolation;
  • Create a truly cross-functional team that thrives in both structured and unstructured environments;
  • Operate with a degree of budgetary freedom, but know when to abandon projects; and
  • Work with a diverse group of partners in the innovation ecosystem, but use sound judgment when selecting them.

One successful innovation centre is BMW’s “Future Lab” in Mountain View, set up with the aim of developing cutting-edge digital products and services. Its flagship product, BMW ConnectedDrive, provides a suite of infotainment features such as MP3 connectivity and weather information. One of the latest projects, currently in progress, is to develop virtual reality goggles that will help drivers park in tricky spots by enabling them to ‘see through’ the car.

Medical technology company, Medtronic, recently opened its centre for business model innovation in Singapore. This new centre has the mandate to design, test and scale new business models for developing Asian markets.

The report also cited the integration of Walmart Labs within the larger Walmart global ecommerce unit, as a good example of how an innovation centre can be used to run a company’s global websites and enable ecommerce innovations to be seamlessly plugged into its online sites. According to the report, the team at the Walmart Labs helped develop Walmart’s internal search engine in just nine months, driving a 20 per cent increase in online sales conversions.

“The advent of thriving technology hubs, and the appetite of new digital entrants to relentlessly disrupt and innovate, has created an innovation ecosystem that traditional organisations can tap into,” Capgemini Consulting’s global chief digital officer, Fernando Alvarez, said. “By combining the culture and approach of innovation centres with the budget fire power and access to customers that they enjoy, traditional organisations have an excellent opportunity to innovate and re-energise their capabilities.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO Australia conversation on LinkedIn: CMO Australia, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+: google.com/+CmoAu

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Latest Videos

Conversations over a cuppa with CMO: ABC's Leisa Bacon

In this episode of Conversations over a Cuppa with CMO, ABC's director of audiences, Leisa Bacon, shares how she's navigated the COVID-19 crisis, the milestones and adaptability it's ushered in, and what sustained lessons there are for marketers as we start to recover.

More Videos

Hi everyone! Hope you are doing well. I just came across your website and I have to say that your work is really appreciative. Your conte...

Rochie Grey

Will 3D printing be good for retail?

Read more

Zero proof spiritsUsa since 2011 www.arkaybeverages.com🤪🤟

Sylvie

How this alcohol-free spirits brand rode the health and wellness wave

Read more

okay this a good newsmaybe i gonna try it

kenzopoker1

CMO's top 8 martech stories for the week - 9 July 2020

Read more

Very insightful. Executive leaders can let middle managers decide on the best course of action for the business and once these plans are ...

Abi TCA

CMOs: Let middle managers lead radical innovation

Read more

One failing brand tying up with another failing brand!

Realist

Binge and The Iconic launch Inactivewear clothing line

Read more

Blog Posts

MYOD Dataset: Building a DAM

In my first article in this MYOD [Make Your Organisation Data-Driven] series, I articulated a one-line approach to successfully injecting data into your organisation’s DNA: Using a Dataset -> Skillset -> Mindset framework. This will take your people and processes on a journey to data actualisation.

Kshira Saagar

Group director of data science, Global Fashion Group

Business quiet? Now is the time to review your owned assets

For businesses and advertiser categories currently experiencing a slowdown in consumer activity, now is the optimal time to get started on projects that have been of high importance, but low urgency.

Olia Krivtchoun

CX discipline leader, Spark Foundry

Bottoms up: Lockdown lessons for an inverted marketing world

The effects of the coronavirus slammed the brakes on retail sales in pubs, clubs and restaurants. Fever-Tree’s Australia GM Andy Gaunt explains what they have learnt from some tricky months of trading

Andy Gaunt

General manager, Fever-Tree Australia and New Zealand

Sign in