Companies are pursuing innovation now more than ever before.

Companies are pursuing innovation now more than ever before. Source: Shutterstock

More money than ever is chasing new (tech) opportunities

THIS is an exciting time to be alive.

New technologies such as cloud and big data, artificial intelligence, and the internet of things, have come of age and moved out of the labs and into the commercial space for businesses to experiment with.

Emerging technologies such as swarm intelligence and quantum computing are on the verge of breaking into the commercial environment, ensuring that companies embrace the mantra of continuous improvement and are always preparing for what’s coming next.

However, the reality is that although new and emerging technologies provide the tools for companies to innovate and create outsized opportunities for themselves and their stakeholders, there’s quite a bit of chaos when it comes to actually implementing bleeding-edge solutions in the workplace.

According to a new study by Accenture, only one in seven companies is able to tap into the full potential of technology-enabled innovations, with most others missing out on an opportunity for both strong growth in profits and market capitalization.

The research found that return on innovation investments have declined 27 percent over the past five years, however, analysts do believe that the gap between what technology makes possible and the ability of companies to realize that value is only going to grow.

Unfortunately, in the short term, this creates a steady supply of “trapped value” — the value that businesses could be releasing or sharing if they could change faster and more fundamentally in ways that would enable them to capitalize on technology-enabled innovations.

The good news is that the declining costs of advanced technology are presenting new opportunities for companies that have been increasing their innovation investments.

According to Accenture’s estimates, incumbents and start-ups spent a combined US$3.2 trillion on innovation-related activities over the past five years, and this trend is expected to continue — almost one-third (29 percent) of those Accenture surveyed expect to increase their investments in innovation by more than 50 percent over the next five years.

Of the 56 percent of respondents who reported increasing their innovation investments by at least 25 percent in the past five years, more than half (57 percent) underperformed their industry peers in growing profits or market capitalization.

An analysis of the innovation portfolio shows that much of the prevailing inability to generate ROIs is due to spending predominantly on incremental innovation, which is how nearly two-thirds of non-high-growth companies directed their spend, rather than on disruptive innovation.

“To unlock trapped value through new market opportunities and improved operational performance, companies must dare to focus on truly disruptive, step-change innovation, applying it persistently and intensely across their entire business,” explained Accenture’s Communications, Media & Technology Operating Group CEO Omar Abbosh.

Truth be told, innovation isn’t easy, but it’s important that companies stay focused on unlocking its value. Doing so will not only help fuel growth but also give a unique competitive advantage to the business.