Why companies fail with innovation
Oracle report shows that half of innovation projects make it to market. Here are the reasons why innovations fail within organisations
Dubai – Feb 12: On the second day of Oracle Open World, here in Dubai, Oracle released a report based on a survey of decision-makers, titled “Having a successful innovation agenda.” The report shows that less than half of all innovation projects undertaken by organisations find acceptance within the organisation and make it to market.
The 23-question global survey was conducted in November 2018. It targeted 5,488 decision makers with designations as director, vice president, or C-level executives, across 24 markets globally. They have influence in the decision-making process of cloud solutions, platforms, and infrastructure or department-specific software. Respondents worked within organisations generating revenues between less than £1 million to more than £500 million, with 100 to 50,000 employees.
Key findings of the survey
- One-third of companies are overwhelmed by too many innovation projects
- 85% of companies experiencing strong to significant growth are investing in innovation
- 21% say lack of commitment from business is a major barrier to innovation
- 22% say lack of process is hampering innovation efforts, while 22% blame a lack of vision
- 22% say that underinvestment in technology is holding back their innovation program
Addressing the media in a roundtable session, Neil Sholay, Vice President of Innovation, EMEA, Oracle cited three reasons that are holding back innovation in organisations.
“There are too many ideas being generated in the digital garages, the startup accelerators, and the innovation teams. The quality of those ideas doesn’t necessarily meet human needs. No one stops to check if these ideas make sense,” said Sholay.
He said culture is also holding back innovation and it is a challenge for the innovator to take his/her idea and get it through 15 layers of bureaucracy and decision making – and get permission to proceed.
And the third reason is a lack of a formal innovation process.
“Forty-three per cent of clients that we speak to don’t have a formal innovation process. If you don’t have a formal innovation process it is very difficult to innovate once, and then innovate repeatedly,” said Sholay.
The survey also cites some key reasons why organisations fail with projects and innovation.
Not enough focus and structure
Over-commitment is preventing companies from bringing their innovation initiatives to life, with one third admitting to being overwhelmed by too many projects. The issue was particularly evident in high-growth companies, with 38% reporting an excess of parallel initiatives.
Despite ambitions to embed processes that encourage innovation, 22% of organizations said that the ideal workflows had not yet been properly implemented. Meanwhile, 19% of companies said they were being held back by a lack of suitable technology.
Lack of leadership
Insufficient commitment from the business, coupled with a lack of clear ownership, were shown to be key barriers to a company’s success in innovation. Executives (48%) and IT (46%) were identified as common owners of the innovation topic, but other functions were identified as owners in near-equal proportions (35-41%).
Customer engagement as an indicator of success
Organizations are moving away from traditional KPIs of employee productivity (53%) and revenue (53%), and increasingly looking towards customer experience (57%) as a measurement of ROI. However, this shift is drawing attention away from employee engagement, with only 44% looking at organization pipeline as an innovation lever, and only 41% considering company culture.
“Employees will always be a critical factor in any innovation program – both coming up with new ideas that address real problems and seeing them through to fruition,” said Sholay in a press note. “But they need an effective and supporting culture of innovation to be successful. This starts with a clear vision from leaders and the prioritization and funding of chosen projects. Being innovative isn’t just about ideas, it’s about execution.”
Why organisations are successful with innovation
Sholay said there are three characteristics that make organisations high performers and successful innovators.
“They tend to be first movers and launch products before their competitors. Moreover, they are risk-seeking, with higher risk appetite and risk profile than others. The third thing is that their CEO does not delegate innovation. They lead from the front,” he said.
He cited examples of brands like Tesla, DP World, and Virgin.
“When DP World and Virgin announced they were going to build the Hyperloop, Richard Branson and the chairman of DP World did not delegate that to some middle manager. They stood up on stage and said they were going to build the hyperloop together,” said Sholay.
In a release to the media, Sholay said, “Companies must be able to meet changing customer demands by acting on ideas quickly. Take Melia Hotels International; it recognised its customers wanted a getaway where they didn’t need to carry around cash, IDs, credit cards, and keys. It quickly launched a personal passport in the form of a bracelet, giving guests a whole new level of freedom to seamlessly travel around the hotel. The concept went from idea to innovation in a matter of weeks because the chain had technology behind it that was ready-to-work, ready-to-build, and ready-to-go.”
Brian was hosted by Oracle in Dubai for Oracle OpenWorld Middle East 2019