Executive Briefings

When Things Are Bad, Can You Afford to Innovate? When They Are Good, Do You Need to Innovate?

In good times and in bad, companies often struggle with whether or not to invest in innovation. In a recent Accenture survey, only 18 percent of chief executives at 519 companies across more than 12 industry sectors in France, Britain and the United States said their investments in innovation were giving them a competitive advantage. Forty-six percent said their companies had become more risk averse when considering new ideas. And CEOs are supposed to be the optimistic ones.

Finance chiefs hesitate to spend money on innovation too, says Edward Hess, professor at the University of Virginia Darden School of Business. "It's hard to budget and plan for high failure rates, and CFOs tend to be uncomfortable with uncertainty," says Hess. "If you're playing the operational excellence game, you strive for 99 percent defect free," he says. "If you're playing the innovation game, 90 percent of your [projects] are going to fail. You're going to be running a portfolio of initiatives. That's much, much harder."

"CFOs are kind of caught in a quandary," says Mark Zawacki, founder of Milestone Group and 650 Labs, a consultancy that helps large multinationals understand how Silicon Valley companies are disrupting their industries. "When businesses are struggling, there isn't money to innovate, and when they're doing well, they don't naturally think of putting more money into the innovation process." 

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Keywords: innovation initiatives, research & development, talent development, new-product development, business models

Finance chiefs hesitate to spend money on innovation too, says Edward Hess, professor at the University of Virginia Darden School of Business. "It's hard to budget and plan for high failure rates, and CFOs tend to be uncomfortable with uncertainty," says Hess. "If you're playing the operational excellence game, you strive for 99 percent defect free," he says. "If you're playing the innovation game, 90 percent of your [projects] are going to fail. You're going to be running a portfolio of initiatives. That's much, much harder."

"CFOs are kind of caught in a quandary," says Mark Zawacki, founder of Milestone Group and 650 Labs, a consultancy that helps large multinationals understand how Silicon Valley companies are disrupting their industries. "When businesses are struggling, there isn't money to innovate, and when they're doing well, they don't naturally think of putting more money into the innovation process." 

Read Full Article


Keywords: innovation initiatives, research & development, talent development, new-product development, business models