Companies That Govern Innovation Extensively Achieve Twice the Revenue Growth of Those That Don’t, Accenture Report Finds
January 14 2020 - 7:29AM
Business Wire
Just 12% of companies govern innovation
extensively today; the rest govern it more haphazardly
Fewer than one in eight companies govern innovation extensively,
and those that do have achieved twice the revenue growth of the
vast majority of companies that govern innovation in a more
haphazard way, according to a new report from Accenture (NYSE:
ACN).
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The report, titled Governing Innovation: The Recipe for
Portfolio Growth, is based on a global survey of executives at
nearly 1,100 companies, a financial analysis of those companies,
and in-depth interviews with innovation experts in business and
academia. The goal of the research was to determine how
organizations apply different types of innovation across their
business portfolios, identify how they allocate innovation
investments, and help executives understand how to govern more
strategically across their business portfolios to get greater value
from their innovation investments.
A key finding: Only 12% of companies govern innovation
extensively, and those companies achieved a compound annual growth
rate (CAGR) of 5.9%, on average, from 2013-2018, compared with a
CAGR of 2.9%, on average, for the 88% of companies that govern
innovation more haphazardly.
Accenture defines extensive innovation governance as adoption of
at least six of 12 governance practices, or “rituals.” (see Figure
1).
While the vast majority (84%) of executives surveyed said they
direct innovation centrally — e.g., through a chief innovation
officer or an innovation committee — the report notes that
centralized direction and management might not be enough.
“The growing hunger for innovation is putting it at the core of
every new business decision, but many companies lack the discipline
needed to turn their innovation investments into growth,” said Paul
Daugherty, Accenture’s chief technology & innovation officer.
“While many see innovation as a creative force that can’t be
controlled, our research reveals that a systematic approach to
managing innovation and governing it extensively can provide
tangible financial impact.”
The report leverages Accenture’s Portfolio Innovation model,
which looks at the application of three types of innovation
(incremental, breakthrough and disruptive) across businesses of all
maturity levels (legacy, growth and emerging; see Figure 2).
Once it’s clear which type of innovation is needed — and in
which businesses — organizations need to identify the right
governance rituals to ensure that their innovation investments are
geared toward achieving the desired growth.
One example illustrated in the report is Schneider Electric, a
leading company specializing in energy management and industrial
automation. The company takes a pervasive approach to innovation,
applying incremental and non-incremental innovation across its
entire portfolio of businesses. Doing this has enabled Schneider to
generate balanced growth — increasing revenues in both its core and
newer businesses in 2018 by 7% and 9%, respectively.
Accenture discovered that organizations are better able to exert
control over their innovation investments when they follow at least
some of the 12 rituals — and that the more rituals they follow, the
greater their revenue growth. In fact, organizations that approach
innovation haphazardly today, but plan to switch to governing
innovation investments extensively, expect to more than double
their compound annual revenue growth at the portfolio level — from
2.9% today to 6.5% in the future, on average.
“Innovation governance rituals are the bread and butter for
insatiable portfolio growth,” said Dr. Vedrana Savic, a managing
director with Accenture Research. “While some people fear that
governance will stifle innovation, the reality is that having a
systematic approach to managing innovation is the key to achieving
greater financial performance. This new and active form of
governance is ultimately about being a more strategic innovation
investor at the portfolio level.”
For more information on Governing Innovation: The Recipe for
Portfolio Growth, please visit:
http://www.accenture.com/portfolioinnovation.
About the research
Governing Innovation: The Recipe for Portfolio Growth examines
how innovation is and will likely be governed in the future. The
research comprised three components: (1) a telephone survey of
1,090 executives at 1,090 companies above $1billion in annual
revenues across 11 industries in 15 countries — Australia, Brazil,
Canada, China, France, Germany, India, Italy, Japan, Netherlands,
South Africa, Spain, Switzerland, the United Kingdom and the United
States; (2) a financial performance analysis on the 1,090
companies; and (3) in-depth interviews with 20 innovation experts
in business and academia. The research was conducted between
January and June 2019.
About Accenture
Accenture is a leading global professional services company,
providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining unmatched
experience and specialized skills across more than 40 industries
and all business functions — underpinned by the world’s largest
delivery network — Accenture works at the intersection of business
and technology to help clients improve their performance and create
sustainable value for their stakeholders. With 505,000 people
serving clients in more than 120 countries, Accenture drives
innovation to improve the way the world works and lives. Visit us
at www.accenture.com.
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Tourang Nazari Accenture +1 202 262 5574
tourang.nazari@accenture.com
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