A clear sign “ Innovation “ needs to reboot – to better enable organizations to create and deliver meaningful new value
From a recent BCG Innovation Report (based on an innovation maturity model with a 100-point scale surveyed over 1,000 senior innovation executives around the world) –
- Innovation Readiness and Competency has declined from 20 % in 2022 to 3 % in 2024
- + 50 % of Executives indicate an unclear strategy as a top 3 challenge
- Although 86 % of organizations are experimenting with GenAI for innovation, only 8 % are applying GenAI at scale
Among the Executives surveyed, only 48 % indicated their organization made some effort to link its business and innovation strategies – of which only 12 % reported strong links between them and delivering real impact. Interestingly, innovation activity (i.e., the number of active projects) has remained steady.
As indicated in the report – ” We’re observing a troubling picture of zombie organizations just going through the motions of innovation without a clear strategy to focus their efforts. To get back on track, strengthening the link between innovation strategy and business strategy is the most critical place to start.”
The Great Disconnect
When business leaders were asked to rank the challenges facing their innovation teams, strategy concerns topped the list, with 52 % of respondents citing an unclear or overly broad strategy as one of their top three challenges. Rising interest rates and talent constraints were cited among the top three concerns of 47 % and 44 % of innovation executives, respectively.
Unfortunately, not all companies are acting on their concerns. Just 30 % of respondents said they’re planning to refresh their innovation strategy. Instead, 70 % plan to focus on process optimization moves, such as boosting the efficiency and speed of their operating models, and 65 % seek to increase the number of projects in their portfolio. Of those respondents increasing their project load, roughly 1/3 are prioritizing more short-term projects – suggesting a lack of clarity or conviction on medium to long term opportunities.
Many Innovators Are Exploring GenAI
While most organizations were already experimenting with classical predictive AI, the rise of GenAI seems to have shaken many innovators’ assessments of the quality of their AI achievements to date. Between 2022 and 2024, the proportion of Executives reporting their companies had implemented AI with impact has declined from 37 % to 10 % !
Nearly all executives ( 86 % ) said their organizations were experimenting with GenAI for innovation, R&D, or product development – with most projects in the early stages. Just 8 % said their organization is currently applying GenAI at scale. In the GenAI race, ” Ready Innovators “ are already moving forward by applying GenAI more frequently and at scale.
As noted in the report – ” GenAI can boost efficiency and bring fresh perspective to an organization, empowering its innovation function to invent faster and better. But without a strategic North Star to guide the organization, even the most efficient innovation function is likely to underperform their potential “.
June 5, 2024 BCG / CAIL Innovation commentary info@cail.com www.cail.com 905-940-9000