It seems like innovation is failing to live up to expectations for many companies globally, with many scaling back their expectations. This is one of the major conclusions to be drawn from looking at the results of a recent Accenture survey of 519 middle managers across large organizations in the United States, the United Kingdom and France.
It’s something of a come-down. Many companies simply seem to have abandoned hope that they can develop disruptive products, services or even business models. Innovation has dwindled to something more limited: a product extension, perhaps, or a new twist on an existing service.
Then there’s the dreary-sounding “frugal innovation”, which basically means stripping out some of a product’s features in order to make it suitable for a developing market.
In terms of results, this means that while 93 percent of respondents felt that innovation was important to their companies’ long-term success, only 18 percent believed it was delivering a competitive advantage (slightly less, at 16 percent, for insurers). In insurance, six percent rate innovation as a top priority, while 59 percent say it’s in their top five priorities.
Don’t get me wrong—all of these lesser kinds of innovation are important but the company that focuses on them is doomed to find itself outmaneuvered by more agile, forward-thinking competitors.
This is nowhere more true than in insurance, which is an industry in flux. Like all the financial services sectors, it lends itself to digitization and so to lowered barriers of entry. The traditional value chain is being reconstructed and non-traditional competitors (like, for example, telcos) are entering the market.
Insurance companies that take too conservative an approach risk being left behind as new competitors, who are untrammeled by the baggage (and thinking) of the past, redefine what an insurance product is, or how to price it, or how to interact with customers. By all means, spend time making successful initiatives more successful, and working out how to tailor them for new markets—but don’t take your eye off the big prize!
In my next blog, I want to continue looking at how to improve returns on your investments in innovation.