Do Companies Need to Reassess Their Innovation Execution?
To execute innovation effectively, companies need to adopt new approaches to innovation, learn from their past mistakes, and set reasonable goals that they can actually achieve. However, a new Accenture survey finds that U.S. companies are struggling with various innovation pursuits – continuing a problem they have been grappling with for the past three years.
Specifically, the survey of executives and managers within 500 U.S. companies divulges that six in 10 (60 percent) said their companies do not learn from past mistakes. This is virtually double the 36 percent who self-confessed to this three years ago when Accenture last piloted a comparable survey.
In fact, approximately three-fourths (72 percent) indicate their firm’s frequently oversight opportunities to exploit underdeveloped regions or markets, versus 53 percent three years ago. Additionally, more than two-thirds (67 percent) consider their companies as risk averse, a large increase from 46 percent publicized in the preceding survey.
Furthermore, the survey demonstrates that 82 percent disclose they do not differentiate their innovation approaches between incremental versus large-scale transformational change – meaning they use a sole “one-size-fits-all” methodology to accomplish different objectives.
Notwithstanding their companies’ innovation shortcomings, respondents are more certain on disruptive innovation than they were three years ago. For instance, 84 percent said they believe innovation is key for their long-term success compared with 67 percent three years ago. The same percentage of respondents – 84 percent – said they are looking for the “next silver bullet,” meaning a market-defining innovation. Creating new products is a priority for almost half (47 percent) of respondents, an increase of 20 percentage points from three years ago.
However, just how do companies create this innovation within their own company? One way of utilizing and enhancing innovation within a firm is by investing in research and development (R&D). Both economic theory and empirical analysis emphasize the vital position of research and development (R&D) in economic growth and innovation. R&D – which may take the structure of basic research, applied research or experimental development – fundamentally encompasses “creative work undertaken on a systematic basis to increase the stock of knowledge… and the use of this stock of knowledge to devise new applications” (OECD, 1994).
Due the contribution of R&D to productivity growth, economic performance and the achievement of social objectives, governments do have a role in encouraging the appropriate R&D levels and expenditures. In the United States, companies are granted R&D tax credits, which are tax incentives for performing qualified research (not necessarily successful) in the U.S., resulting in a credit to a tax return. Essentially, the government lets you deduct the costs of research and experimentation to develop or improve a product, formula, invention, process or technique. Bearing in mind the broad application of the credit and recent changes to the eligibility criteria, the R&D tax credit could be a huge game changer for companies seeking to innovate. If you want to learn more about R&D tax credits, contact a Swanson Reed specialist today for further information.