Study: U.S. companies still waiting on an innovation ROI

Global companies agree that innovation is critical to survival but not enough projects are successfully driving growth and increasing revenue.



Specifically, two-thirds (66%) of global organizations said innovation is crucial to their longevity, but only 28% are seeing returns on their investments (ROI), according to “Innovation Matters,” a report from PA Consulting Group. The report tapped 821 senior executives across C-level, senior VP, board and director level positions.



American companies were just about average among countries surveyed in terms of those that felt innovation efforts were producing results. Yet, more than half of companies in the U.S. surveyed (58%) said innovation efforts have not been successful in helping them achieve growth. Nearly the same number (55%) said innovation had not helped achieve profitability either.



Despite this skeptical view of ROI in innovation, U.S. companies do believe that change is coming and quickly. In fact, when asked what changes their company had taken over the past three years and what change they foresee taking over the next three years, 57% of respondents said the biggest was their approach to innovation — the number one issue identified. Additionally, 38% of respondents — the top response — said they see innovation change in their company ramping up quickly.



"You have many companies in the U.S. that are highly innovative and are highly successful as a result," says Peter Siggins, U.S. region head for PA Consulting. "However, there is a constant competitive threat for these companies and to stay in the race, they cannot stand still when it comes to sustained innovation.”



Global leaders have created a clear pathway for achieving innovation success. These companies are more likely to:



• Focus on the future. They believe their organization can deploy technology to meet customer needs (59% versus 49% of less successful peers), and excel at measuring the business case for innovation (57% versus 41%).



• Design for innovation. These companies measure the value of innovation (61% versus 47%), and take new products and services to the market faster (61% versus 42%).



• Create an innovation culture. They kill off 'zombie' projects earlier than their less successful peers (54% versus 40%), and reward employees for innovation (81% versus 69%).



• Build a network for innovation. Successful companies source ideas for innovation from outside the organization (61% versus 52%), and have executive and leadership teams with a diverse range of skills and professional backgrounds (78% versus 66%).



"On a global scale, the companies that are most successful at innovation build it into the very fabric of their organization, use agile techniques across the business, and learn from their mistakes and successes," states Hsiu Mei Wong, business design expert at PA Consulting and an author of the report.



"In the U.S., it's evident that companies realize not only that innovation is critical to their survival, but that current approaches have not produced the return they desire,” Wong added. “As a result, change is ramping up in these companies and quickly. We anticipate a significant re-directed effort regarding innovation from U.S. companies in the months ahead, which will set them up for future success in the long-term."