Financial Times, April 28th 2014
UK big business lagging on innovation uptake
By Brian Groom, Business and Employment Editor
The leaders of Britain’s large businesses admit to being slow to pursue innovation, threatening their ability to keep pace with global rivals in the economic recovery.
Seven in 10 corporate chiefs say their company is over-reliant on fading revenue streams, and more than a quarter fear their current business model will no longer work by 2017, according to a survey.
?What If!, the innovation consultancy, questioned 400 chief executives and directors in banking, energy, consumer goods, healthcare, insurance, manufacturing, media, professional services, retail and telecoms.
Its findings cast doubt on the readiness of UK business to make the switch from an emphasis on cost-saving and efficiency to a more growth-focused strategy now that the economic climate has improved.
Companies are taking, on average, more than 19 months to get a product based on a new idea to market, the survey found. Only 3 per cent of business leaders said they could do this within six months. Despite this, 94 per cent claimed to be satisfied with their innovation pipeline.
“Despite recognising the acute need for innovation, most corporate leaders are struggling to create the conditions for new ideas to thrive,” said Matt Kingdon, the consultancy’s co-founder.
He added: “With a few notable exceptions, our research shows [that] efficiency-focused leadership, disconnected structures and laborious processes are stunting hopes of an innovation-led UK recovery.”
Business surveys suggest that corporate investment is set to pick up sharply this year, but the report questions how effective this is likely to be.
Three-quarters of company chiefs recognised that fast-changing market conditions were forcing companies to reinvent themselves more quickly than ever.
But more than a third also admitted they did not know where a significant proportion of this year’s revenue would come from.
Mr Kingdon said boards needed ideally more than one “innovation champion”, and should create the conditions for experimentation within their organisations, without giving up at the first sign of failure.
The consultancy, founded in 1992, worked with Kraft to develop a whole-bean instant coffee, and has other customers including Barclays, Four Seasons, Google, PepsiCo, Pfizer and Virgin.
More than half of the directors surveyed conceded that their management team was failing to lead effectively on innovation, and three in five said they believed that those at the top did not understand their customers.
Two-thirds considered their leadership teams better at delivering bottom-line efficiencies than top-line growth. Almost two-thirds said their teams had no problem coming up with ideas, but 62 per cent said it was almost impossible to gain support to test and develop these new concepts.
Bureaucracy was stopping innovative ideas before they reached fruition in 59 per cent of companies, while more than half missed out on innovation opportunities because employees could not see the bigger picture.
Mr Kingdon said: “Large companies, whose size was once considered a guarantee of survival, perhaps even a ticket to dominance, must respond quickly and with courage to maintain their relevance and grow.”
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