From genetics to space exploration to quantum computing, we are living in a time when investment in, and expectations from, tech-fueled innovation are skyrocketing.
Opportunities created by technological advances are more abundant than ever. And with the performance of advanced technologies vastly improving, the potential for innovation feels limitless. This is enticing many companies to focus on innovation more extensively.
That’s good news for executives. In fact, our survey shows that a majority of companies are planning to increase investments in innovation by more than 25% over the next five years.
But there is a challenge. Though opportunities are abundant, many companies struggle with how to fully realise the value from their investments in innovation. In fact, our research shows that spending is increasing, but returns are decreasing.
Based on Accenture analysis:
of respondents from Australian companies, who increased their investments in innovation by more than 25% underperformed their industry peers.
decline on the return on innovation-related spending globally over the past 5 years.
High-growth companies, however, are succeeding in turning innovation investments into value. Who are they? These are companies that know how to put innovation to work, at the right pace and in the right place.
Our research reveals they exhibit seven key characteristics that are adopted by practicing innovation deliberately.
Explore the seven characteristics
Innovate for Change
As high-growth companies innovate for change across these seven characteristics they are releasing value to reinvent the way they do business.
Consider Equinox, the upscale gym brand located throughout the United States that is investing in technology-enabled innovation with success. Heavy investments in AI and mobile apps led to solutions like a "digital coach" bot, which learns from members' activities and wellness goals. Then, it puts those insights to work, curating digital content, optimising schedules for each location and hiring the right talent to teach classes. It could even identify what kind of exercisers its members are and nudge them toward certain activities.
The result? Within six months of product launch, Equinox reported that mobile app check-ins were up 40% compared to nonusers.
Equinox also used a network powered ecosystem of partners to help in its quest to deliver better member experiences. Strategic partnerships have further strengthened talent investments to provide better classes for members. And for Equinox's biggest bet - and expansion into wellness tourism in 2019 with the Equinox Hotel, further expanding its revenue channels and engagement with members. In short, the Equinox example shows how the company used an opportunity to unlock trapped value in its business of serving fitness-oriented customers.
What's trapped value? Simply put, it's the gap between what's possible and what's being achieved today. Every business, in every industry has some trapped value.
Here's where trapped value can be found:
Enterprise trapped value exists when an economic opportunity is visible, but unreachable. This means it can’t be unlocked by existing business models or capabilities.
Industry trapped value exists when a few companies are reaping rewards where others could also benefit, or where partnerships that would accelerate innovation aren't being pursued.
Consumer trapped value exists when there’s a cost burden for the consumer, like international call costs.
Societal trapped value exists when commercial activities aren’t creating benefits, like job creation, for the general public.
What can you do to seize new opportunities?
Based on their financial performance, we've identified a small group of high-growth companies - 6% - that are investing aggresively and are taking a distinct approach to innovation that is changed-oriented, outcome-led and disruption-minded.
Spanning industries from fashion to entertainment and energy, these high-growth companies have focused on changing at the fundamental level. They connect innovation efforts to financial performance and invest with disruptive innovation in mind.
So, what can we learn from these high-growth companies and what insights can be gleaned from the ways they have approached innovation?
About the research
Our research covers how companies across industries are unlocking trapped value, and how they can learn from the distinct approach and key characteristics of high-growth companies.
For an expanded listing of the industries and countries we surveyed,
please view the full report details.