Return on innovation investment falls by 27 per cent in five years

Over the last five years, approximately £2.5tn was spent globally on innovation. Yet, the study shows 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 survey of C-suite executives found that:

• Innovation spend is increasing, but returns are decreasing. Return on investment has declined 27 per cent over the past five years

• More than half (57 per cent) of businesses making significant investments in innovation have underperformed against industry peers when it comes to growth or market value

• Almost one-third (29 per cent) of those Accenture surveyed expect to increase their investments in innovation by more than 50 per cent over the next five years

Arabel Bailey, Managing Director UKI and Innovation Lead for Accenture, said:

“Fortune favours the bold when it comes to investing in innovation. The companies reaping the biggest rewards show a “go big or go home” mentality by investing in truly disruptive innovation projects. They don’t just tinker around the edges.

“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. 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.

“Equally some companies chase the latest tech trends without thinking about how to connect what they’re spending to the biggest problems or opportunities in their business. We have developed a more formalised approach to helping companies make more of their investment. It means thinking hard about your company, your market, your customer, your workforce, and placing your innovation bets on the things that can help to address your biggest business challenges.

The research revealed that there are seven key characteristics that can help companies to make more of their innovation spend. Companies need to be:

• Hyper Relevant – sense and address the changing needs of customers
• Network Powered – harness the power of their partners to deliver truly innovative, breakthrough solutions
• Talent Rich – create new, modern forms of workforces (flexible, augmented and adaptive)
• Data Driven – generate, share and apply data to deliver new innovations safely
• Technology Propelled – master leading-edge tech to drive innovation
• Inclusive – incorporate broader range of stakeholders to develop new services that address higher customers’ and societal needs
• Asset Smart – adopt an intelligent asset and operations management plan