Businesses increasingly invest in innovation centres

17 September 2015

Without innovation, many old giants like Blackberry and Kodak have come to hit the dust. Innovation remains a gamble however. While more than $1.5 trillion is spent on innovation, 85% of new products bunk. In a recent report from Capgemini, the state of the adoption of innovation centres is considered as a way of overcoming the glut in internal R&D project engagement. The firm finds that 38% of 200 of the world’s largest organisations are experimenting with such centres.

In its ‘The innovation game: Why and how businesses are investing in innovation centres’ report, Capgemini Consulting and Altimeter Group explore the effect of innovation centres on the innovative outcomes of organisations. For the research, the consulting firms approached companies above $5 billion in revenue for direct interviews, as well as involving 200 companies across a diverse range of industries in web-based research – with a total of 309 innovation centres reached.

One key finding from the report is that innovation remains a key element in the success of businesses. In a recent survey of large corporates, 65% of senior executives face increased pressure to be innovative. However, the pressure comes in part from the difficulty of being innovative. In 2014, $1.6 trillion was invested in R&D (Research and Development) globally. Yet despite this investment, success can be difficult to find and 85% of new product lines fail. The normal R&D functions at large corporations face issues and, according to the survey, only around 5% of those working in these large corporate functions are highly motivated to innovate.

Penetration of Innovation Centers by Sectors

Innovation centres
One way to potentially improve the innovation output of a business is to create a semi-standalone innovation centre. Innovation centres, comprising teams of people and often physical sites, are established in a global tech hub with the goal to leverage the ecosystem of start-ups, venture capitalists, accelerators, vendors, and academic institutions that may come to collaborate at hubs. Capgemini finds that 38% of the leading companies have set up an innovation centre. Different fields have different levels of adoption however, with particularly manufacturing companies in the high-tech sector deploying such centres at 58%, followed be telecom companies at 43%. Financial services have the least investment of the sectors surveyed, at 28%.

City locations
In terms of the location of centres, most are situated in Silicon Valley, which houses 53 centres. The next largest concentration is in London with 10, followed by Paris on 9. Berlin and Munich each house five. In Asia, the largest concentration is in Singapore, followed by Tokyo and Shanghai with 6 each.

Location of innovation centres

Focused mission
The research further highlights what companies are investing in when it comes to innovation. Of the 200 companies approached, 63% are investing in mobility technology and 51% in Big Data/Analytics. The Internet of Things is seen as important at 39% of such centres, while 13% see robotics is valuable area of focus.

Besides the kind of focus the centre has, the consultancy also asked respondents to identify the primary mission of the centre. For 65% this is to gain access to the latest technology and for 35% to better understand their customers’ needs, with recent changes in behaviour through tech advances coming to transform traditional behaviour.

Innovation focus and mission

“Many organisations are solving the issue of embracing innovation by partnering with or acquiring technology start-ups, but too often this is a sole focus. A more equal balance between external and internal thinking is required,” comments Jerome Buvat, Global Head of Research at Capgemini Consulting. “Innovation centres are proving an effective means to cultivate the agile start-up mentality needed to remain at the forefront of the market, but it is clear that establishing an effective centre has many challenges.”

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Two thirds of UK employees not empowered enough to innovate

18 March 2019

A culture of equality can drive innovation at work, but only a third of UK employees feel empowered to innovate at present. This demonstrates a significant disconnect between workers and their bosses in the UK, with 76% of business leaders also claiming they empower employees to be innovative.

Despite innovation increasingly being seen as integral to the survival of businesses, innovation remains relatively difficult to achieve. A lagging disconnect between management and staff remains the driving force behind this. One study by PA Consulting previously confirmed that while 66% of companies believe they will not survive without innovation, only 24% said they had the skills needed for that, and only half thought they had the right leadership in place to change that in time.

In order to find a way around this problem, global consultancy Accenture has completed its own study into innovation, polling around 700 bosses and workers across the UK to do so. The key finding of the research is that companies with a culture of equality can see an individual’s willingness and ability to innovate improved by seven times that of the least equitable workplace cultures. At the same time, an innovation mindset is almost twice as high in the most-equal companies as in typical ones.

91% of employees want to innovate but just 34% in typical United Kingdom companies feel empowered to

What remains clear, however, is that most companies are failing to adequately create an equal culture, where staff of all ranks feel comfortable contributing new ideas. 91% of employees want to innovate but just 34% in typical UK companies feel empowered to. That is higher in the most equal companies, where 75% of staff feel confident making suggestions, compared to just 5% of the least equal, and 34% of typical companies. Since those equal companies are comparatively fewer, when averaged out, only a third of UK staff feel they are empowered to innovate.

That figure stands in stark contrast to the perceptions of UK executives, however.  76% of business leaders in Britain believe that they do indeed regularly empower their employees to innovate. As a result, it seems that leaders mistakenly believe that some circumstances encourage innovation more than they actually do. For instance, they overestimate financial rewards and underestimate purpose.

The opportunity which is presented by addressing this divorce is enormous. Accenture calculates that global gross domestic product would increase by up to £6 trillion over 10 years if the innovation mindset in all countries were raised by 10%.Top 10 workplace culture factors - by strength of impact on innovation mindsetAccording to Accenture, the best way to impact positively on a company’s innovation mindset is through the provision of relevant training – associated with a 10.5% uplift to staff’s confidence innovating. Allowing the freedom for employees to be creative followed, contributing an 8.1% boost, while ensuring that training times are flexible and the firm allows a healthy work-life balance both see a more than 7% improvement. Similarly, remote working being available and being common practice will buoy creativity by 6.9% – further demonstrating the importance of flexible working to improve innovation culture at a firm.

Commenting on the report, Rebecca Tully, executive sponsor for Human Capital and Diversity for Accenture in the UK and Ireland, said, “Our research reveals that a workplace culture of equality is an overlooked driver of innovation within companies. By understanding what motivates their employees and fostering an environment where people feel empowered, business leaders have the opportunity to unleash the innovation required to compete effectively in an era of disruption.”

The research came as part of a global survey by Accenture, which queried more than 18,000 professionals in 27 countries and 150 C-suite executives in eight countries. The overall research determined that an empowering environment is by far the most important of the three culture-of-equality categories in increasing an innovation mindset, which consists of six elements: purpose, autonomy, resources, inspiration, collaboration and experimentation. The more empowering the workplace environment, the higher the innovation mindset score.