Enterprises Still Struggling With Digital Innovation

by CXOtoday News Desk    Jul 24, 2015


Some of the leading businesses continue to struggle with innovation, as they are still clinging to their age-old traditional R&D model. This is according to a global report by Altimeter Group’s Brian Solis and Capgemini Consulting, the global strategy and consulting arm of the Capgemini Group. 

The report states a shifting approach to digital innovation, with R&D teams at large, traditional corporations viewed as ill-equipped to rise to the challenge of digital Darwinism. Companies however are increasingly looking to launch physical ‘innovation centers’ in major global technology hubs such as Silicon Valley to leverage an ecosystem of startups, venture capitalists, accelerators, vendors, and academic institutions.

“For the world’s largest organizations, innovation has never been more important – or more difficult. We find ourselves in a world where disruption is imminent and can come from anywhere and these digital-savvy competitors are threatening the very fabric of many established industries,” says Brian Solis, Principal Analyst at Altimeter Group. He believes that without constant innovation, once dominant players are finding their tried and trusted paths to innovation are now dead ends. “It’s time to innovate or die!” he states.

The study states 38 percent of the leading 200 companies have set up innovation centers in a global tech hub. Of this, the US and Europe have the largest share with 29 percent of total innovation centers respectively followed by Asia at 25 percent.

Silicon Valley is the most attractive area to locate an innovation center for leading organizations – 61 percent of companies have established one or more centers in the Valley, even though many more hubs are emerging in recent times. These innovation centers help to accelerate the generation and implementation of new ideas, attract talent, drive employee engagement, and establish partnerships with startups.

The most popular areas of research for innovation centers remain well-established technologies such as mobility (63 percent) and big data/analytics (51 percent).

However, while innovation centers are receiving substantial investments from many global organizations and some are seeing significant benefits, establishing a successful center is proving a challenge - the report quotes a seasoned innovation expert as saying that 80-90 The report shows even though, manufacturing is a clear leader at 58 percent, but despite facing increasing pressures from digital disruptions, 

Jerome Buvat, Global Head of Research at Capgemini Consulting, said in a statement, Many organizations are solving the issue of embracing innovation by partnering with or acquiring technology startups, but too often this is a sole focus. A more equal balance between external and internal thinking is required. Innovation centers are proving an effective means to cultivate the agile startup mentality needed to remain at the forefront of the market, but it is clear that establishing an effective center has many challenges.”

The report advises that for organizations seeking to move away from a traditional innovation model, investment in physical centers can deliver huge potential business returns. However, their purpose must be clearly defined and well aligned to the business’ needs.