British companies are failing to innovate with expensive consequences
PA’s Colm Reilly, is interviewed on BBC Radio 4’s Today Programme. Colm discusses why some companies have failed with their innovation.
The BBC introduces PA’s innovation report, which surveyed 751 companies in 15 countries and reveals 50 per cent of senior executives have seen brilliant ideas fail for avoidable reasons.
The interviewer states that innovation can be notoriously difficult to measure and asks Colm how PA approached this challenge: “Typically, innovation is confused with research and development in executives’ minds. What we’ve done is recognise that research and development – the discovery and development of new products and services – is somewhat different. Innovation is about how you take the discovery – perhaps made elsewhere – and put it into the hands of a paying consumer or customer,” explains Colm.
Colm then goes on to explain how PA measured innovation and why the UK comes in at third from bottom in the country rankings for innovation: “We took an interesting approach to this because for a long time economists have given us macro data on percentages of growth and innovation and what’s happening elsewhere. What we decided to do at PA was to speak to the senior executive teams to understand what is really happening at a company level. 50 percent in the UK are telling us that their innovation has failed and the reason they fail is for avoidable reasons.”
Colm adds: “Interestingly they didn’t quote government regulations or government structures; they quoted internal problems as to how they could remain competitive or improve productivity by bringing these innovations to market.”
The interviewer reiterates the striking point that these senior managers have confessed to seeing an innovative idea fail for avoidable reasons at their organisation. Colm is asked what these senior executives see as the avoidable reasons: “[They] can sometimes be the reasons that make them successful heretofore. They’ve got operating models and value chains that already deliver products and they couldn’t introduce new products.”
The interviewer then asks Colm if it is conservatism, rather than fear, that is causing organisations to stick with what they know. “That’s at one level, and the other level that came out is that there is a risk aversion within the structure of companies,” says Colm. “Although the idea might be good and the business case may be strong, if it extends over a 12 month period no one wants to invest in it.”
The interviewer asks Colm whose responsibility it is to make that change. Colm explains: “Ten years ago we talked about information technology, we talked about security and we created chief officers at the board levels at these companies; it’s time for us to create chief innovation officers who will drive these initiatives.”
To conclude, Colm is asked if innovation is the answer to the productivity problem. He responds: “It is essential to productivity. Companies create productivity and innovation is the only means of doing it in this world.”
You can listen to Colm’s interview here in full, 24 minutes and 20 seconds into the programme.