A recent study revealed an innovation readiness paradox: while the vast majority of modern businesses treat innovation as the highest priority, they have never been as unready to deliver on their innovative pledges.
A report by Boston Consulting Group (BCG) concluded that global innovation readiness decreased to 3% this year despite continuing corporate experiments with generative AI and other innovative technology.
BCG compares two of its latest studies that reveal a growing innovation readiness gap. While in 2021, 75% of the surveyed companies ranked innovation among the top three priorities, about 20% of respondents were ready for implementation of the planned innovations. In 2024, however, only 3% are in the “ready” zone, based on BCG’s proprietary Innovation-to-Impact benchmark. At the same time, 83% of companies see innovation as a top-three priority today.
Such a discrepancy between theoretical commitments and practical effort means that the majority of global businesses are missing opportunities to reshape their operations and enable new products, services, or business models.
One of the main problems on the way from a priority on paper to practical realization is the absence of a clear innovation strategy. As much as 52% of respondents cited an unclear or overly broad strategy as one of their top three challenges. Besides, only 12% of executives admit their company has a strong link between business and innovation strategies.
Nevertheless, few companies are acting on their strategy-related issues. Just 30% of the businesses are planning to revisit their innovation strategies, while the other 70% plan to focus exclusively on process optimization moves.
Other significant obstacles to implementing innovation at scale were the rising cost of capital and talent constraints – 47% and 44%, respectively. Moreover, 38% blame risk-averse culture for the lack of innovation in their company, and 32% believe the problem is in siloed innovation.
That means that in one-third of the businesses different departments, teams, or business units might work on innovation independently of one another, with little to no collaboration or communication between them. Such isolation leads to wasted or inefficiently allocated resources, a lack of alignment with the general strategy, and missed opportunities for synergies or breakthroughs that could have been achieved through collaboration.
Another 29% quote risks of tech disruption such as generative artificial intelligence (GenAI) hindering their progress towards innovation. One of the main concerns with GenAI is the security of the data used by smart algorithms. Many companies don’t rush to implement this innovative tech until they understand its full implications for the customer and corporate data.
Thus, Chief Executive Officer of Honor George Zhao has recently said that the transformative power of artificial intelligence had no value if user data was not protected. The group of current and former employees of OpenAI and Google DeepMind also shared their concerns about the potential risks associated with the use and development of artificial intelligence.
Notwithstanding, 86% of innovators in the BCG research are experimenting with GenAI to at least some degree. Futhermore, 65% of executives view it as having the most disruptive potential of all existing technologies over the next five years, and 89% of executives see GenAI and AI as one of their organization’s top 3 technology investment priorities for 2024.
