Innovation Isn't Working At 4 Out Of 5 Companies

Turns out that business innovation is hard. And it's hard even if you have a chief innovation officer, a platform for crowdsourcing ideas or other formal means to turn the crank.

Just 18% of execs in a new Accenture study of 519 U.S., U.K. and French companies said they're getting a competitive advantage from their innovation strategies.

Now, that number should be fairly low -- if three-fourths said they get a competitive advantage, I'd say a lot of people had fooled themselves. Who would be left to have an advantage over?

But 18% is a surprisingly low percentage given how much effort companies are putting into innovation programs, said Adi Alon, managing director in Accenture's innovation and product development consulting practice and an author of the study. A full 70% of survey respondents consider innovation at least among the top five strategic priorities at their companies, and two-thirds said they're extremely or very dependent on innovation for long-term success. Half of companies have increased spending to drive innovation, and a mere 10% have cut it.

[ For more thoughts on how to drive innovation, see 5 Contrarian Tips On Innovation. ]

Alon thinks the questions left plenty of wiggle room for execs to give their innovation programs the benefit of the doubt. "We didn't frame it as 'everlasting' competitive advantage," Alon said. Another metric in the study shows that for every one of 15 different innovation areas, execs were less likely than they were three years ago to rate them "very satisfied."

"Commercialization and launch" and "consistent innovation performance" fared particularly badly. Companies do rate their innovation results higher on most fronts if they have some formal program for it. But still, only 21% of those with formal innovation programs say their companies' innovation delivers a competitive advantage (14% of those without a program say it does).

Alon blames two big factors:

First, companies are too risk-averse. They're still timid from the recession and fail to take a portfolio approach. If they thought in terms of a portfolio, they would be more likely to take a few big, risky bets along with smaller, safer ones.

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Second, companies aren't learning enough from the digital economy -- meaning they're not analyzing enough data from social network communications or their own systems. Get that right, Alon said, and execs will have the confidence (or ammo) to overcome the risk-averse piece. (Accenture's report has tips for building an innovation program, like crafting it for speed and agility.)

To Alon's factors, I'd add one more: not understanding your company and its unique innovation metabolism.

How much risk and change can it digest, where will the organization reject new ideas like a virus, and who do you work with and around in order to make progress? My recent column suggesting 5 contrarian innovation tips showed CIOs tweaking conventional approaches to fit the realities of their companies' cultures.

Innovation programs are awash in buzz. Successful innovators hunker down on the unglamorous work of creating a repeatable way to generate ideas, assess the risk, hone the best ideas and move them through to a measurable outcome.