February 6, 2019
According to a new report from Accenture, the majority of businesses don’t see a return on their technology investments and just 14 percent of businesses manage to realise the full potential of their tech investments. Roughly $3.2 trillion was spent on new technology in the last five years. Businesses that were most successful with their investments were the ones investing in bold moves, rather than incremental shifts.
According to the study, based on data from Bloomberg, more than half (57 percent) of businesses making significant investments in innovation have underperformed against industry peers when it comes to growth or market value.
At the same time, almost one-third (29 percent) of those Accenture surveyed expect to increase their investments in innovation by more than 50 percent over the next five years.
The characteristics of innovators
The report identifies seven key characteristics exhibited by the companies making the most of their innovation spend:
- Hyper Relevant – sense and address the changing needs of customers
- Network Powered – harness the power of their partners
- Talent Rich – create flexible, augmented and adaptive workforces
- Data Driven – generate, share and apply data to deliver new innovations
- Technology Propelled – master leading-edge tech
- Inclusive – incorporate broader range of stakeholders
- Asset Smart – adopt an intelligent asset and operations management plan
“The fact that return on investment overall is dropping is a worrying trend. Business are spending more than ever, but their inability to see proper returns is shocking,” said Arabel Bailey, MD for UK&I at Accenture. “One of the reasons for this could be that many organisations still see innovation as a peripheral activity separate to the core business; an “ad-hoc creative process” rather than a set of practices that will fundamentally change their way of doing business. It’s like going jogging once a month and then expecting to be able to run a marathon.
“Over the last five years, roughly £2.5tn was spent on innovation worldwide. Yet, the study suggests it is not how much you spend that matters, it is how you spend it. The companies bucking the trend and seeing the biggest returns are investing in bold, watershed moves rather than incremental shifts.”
“The companies reaping the biggest rewards show a “go big or go home” mentality by investing in truly disruptive innovation projects,” added Bailey. “They don’t just tinker around the edges.”