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Blog : BOARD TALK

Lack Of Innovation : Danger Danger For The Boardroom

Posted on February 27, 2013 at 12:35 AM

There's something in the wind - or rather, the problem is, there isn't - and that something is 'innovation.'


Of particular importance to technology companies perhaps, but actually I think  a concern for all business, regardless of sector.


Boardrooms everywhere should have it highly placed on their agenda, and in the UK it doesn't look as if many of them are paying attention. This came up recently when I was talking to Michael Jackson, a former chairman of Sage, the FTSE 100 software company.


Earlier this month, CA Technologies, the software company, released an independent survey it had commissioned, which revealed that only 18 % of IT spend in the UK is devoted to innovation. Of the eight countries surveyed, (UK, US, Brazil, France, Germany, Australia, Singapore and Japan), only the US spends less.


The country with the highest spend is Brazil, with 29 per cent. Coincidentally, it also seems to be remaining BRIC everyone is getting excited about, and it isn't only the climate...


 

The survey also found that  the UK respondents reported spending much less time on "activities that are a core part of the innovation process." Examples: only 23 % of them placed significant emphasis on ‘exploring the unknown’ (compared to 35% worldwide) and  25% ‘hypothesizing and learning’ (v 39% worldwide). It seems we hold tightly to our 'set agenda' in this country.


CA says: "This is not a good outlook for UK enterprises given that the proven benefits of innovation include higher customer satisfaction (33 per cent), increased speed to market (32 per cent), competitive advantage (28 per cent) and increased profits (31 per cent), to name a few." 


But there is a disconnect : the study nevertheless shows that there is an expectation that those benefits will be achieved as a result of innovation.


Now I find Arthur D Little (ADL) the management consultancy, is singing the same tune.


Its 8th Global Innovation Excellence Study, a cross-industry survey of trends and best practice in innovation management, shows a significant decrease in innovation performance of up to 25% since 2010, yet satisfaction with the level of innovation achieved has increased significantly from 25% to 42%.


ADL says: "This may be driven by the tough market conditions which have forced companies to focus on short term performance."


It has made the toolkit developed for the study available for all firms interested in exploring their own innovation performance and you can download it here.


Wihin this broad picture what interests me most is what CA found. When asked who was the biggest instigator of innovation in an organisation 34% of global respondents working in IT cited IT as the main instigator, but only 14 % of business executives cited IT. Instead, they identified top management as the main instigators.


 

And then there's the UK, where only 20% of respondents reported a collaborative process between IT and the business when it comes to innovation, compared to a global figure of 30%.


 

CA points out that the results of the worldwide survey also found that "customers are the number one instigator and are also among the top triggers for innovation." 


You probably see where I am going with this...it's what they call a 'no- brainer.' Make sure your boardrooms don't forget to talk about product innovation, and have people in them who are customers, or are at least attuned to what a customer looks and sounds like, and wants....it's why we keep going on and on and on about diversity.


It's good for business, and it may well be essential for survival in increasingly competitive markets.





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