Innovation Myths Can Hinder High Performance

Mastering innovation in today’s hotly competitive global market is essential for industrial equipment companies striving to achieve high performance. But, there are some basic innovation myths that may impede their ability to succeed.

According to a recent survey of 600 executives in the manufacturing sector and other industries at major companies in North America and Europe, innovation is on the radar screen of many companies. But misconceptions can thwart efforts to establish the right strategic direction from the outset. The survey, commissioned by Accenture and conducted by the Economic Intelligence Unit, reveals three of the most important myths. They are:

1. Technology equals innovation or products
2. Innovation is a long-term project
3. Innovation happens by chance.

Here are the facts about these myths:

Innovation can address several dimensions, not just technology or products. Technology is a key part of innovation, but it would be a mistake to equate the two. Some of the most powerful instances of successful innovation show the limits of this equation. For example, 20 years ago, consumers might stop in a gas station for “coffee-to-go” that cost 50 cents. Today, the national brand associated with coffee and a customer experience that provides a comfortable place for socializing and working has succeeded at price points 10 times that amount. As an innovator, the national brand has developed a variety of new products, entering the popular lexicon, whereas previously, coffee was thought of as two offerings—regular and decaf.

When many think about innovation, the focus is on new, shiny product offerings in the marketplace, such as a new line of harvesting equipment, an MRI machine or a fuel-cell car. But as the coffee example demonstrates, multiple innovation dimensions offer opportunities that can create and capture new value that go beyond technology and products.

Innovation can deliver value over multiple timeframes. The survey also showed that companies agree that innovation is important to their growth strategy, but faced with Wall Street quarterly performance pressures, struggle to practice it. Often, the thought is that investing the resources and time required to innovate detracts from meeting quarterly targets.

In reality, however, innovation is about creating and capturing new kinds of value in whatever way is most relevant to a particular industry over a range of timeframes. In its best sense, innovation is a steady flow of new releases over time, and not an occasional blockbuster product or service. Companies should view innovation as a portfolio, laying out a set of initiatives that will be ready for release over different timeframes. Initiatives can be designed to pay off now, or five to 10 years from now.

Innovation is a discipline, not a random process. The third myth is that innovation is a random, chaotic process, a black box of creativity. Indeed, creativity is a driving force of innovation that ingeniously responds to gaps in the market or spoken or unspoken customer need. However, industrial equipment companies that succeed as innovators over the long-term harness that creativity and use it to strengthen processes, repeatability, predictability and better management.

Three Capabilities

Accenture identifies three fundamental innovation capabilities for generating and sustaining consistent value. They are:

Foundation—Collect insights from customers and their workforce to create the environment necessary to establish a high-quality foundation from which to launch innovation initiatives.
Conversion—Synthesize intelligence, converting foundation insights into economically viable and profitable offerings.
Consistent Execution—Develop and manage structured, robust processes to consistently elevate innovation performance.

The challenge and opportunity for companies is to identify weak areas, apply structured levers and step up innovation performance.

James Robbins, james.a.robbins@accenture.com, is North American Industry Lead for Accenture, a consulting firm in New York City.
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