accenture uk and ireland (uk&i) innovation maturity index

WINNINGIN THE AGE OF DISRUPTIONAccenture UK and Ireland (UK&I) Innovation Maturity Index Report 2020

2020

Executive Summary

EXECUTIVE SUMMARY

2 | WINNING IN THE AGE OF DISRUPTION – Accenture UK and Ireland (UK&I) Innovation Maturity Index Report 2020

Innovation-driven disruption is challenging every business today. In the Accenture UK and Ireland (UK&I) Innovation Maturity Index report 20201

(a survey of 200 business and IT executives), nearly two-thirds of respondents said they expected technology-driven innovations to be the number one factor disrupting their businesses over the next three years.

Accenture research shows that every industry in UK&I is susceptible to disruption: none can bank on durability in the face of increasing disruption2. While this research was carried out before the COVID-19 pandemic, the disruption that this has created reinforces the importance of innovation to building a sustainable and resilient business.

UK&I companies understand that they should evolve—often radically. But for many, putting that understanding into action is hard. They are stuck in their current business models and overly focused on preserving traditional “core” businesses, rather than trying to access “new” value.

Our survey shows that over 20% of UK&I companies continue to focus innovation

in their legacy businesses, using mostly traditional approaches. As a result, most companies are missing opportunities to release a tremendous amount of unrealised value inside their current business models, supply chains and wider markets.

This “trapped value” is typically unlocked by disruption, so if companies don’t get to it themselves, others will.

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DISRUPTION DEMANDS AN INNOVATIVE RESPONSE

| WINNING IN THE AGE OF DISRUPTION – Accenture UK and Ireland (UK&I) Innovation Maturity Index Report 2020

Champs changeEmbrace change to manage disruption like a Champion.‘

ACCENTURE’S INNOVATION MATURITY INDEX – UK AND IRELAND MARKET

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These UK&I Innovation Champions capitalise on a comprehensive awareness of the state of innovation in the UK&I market through an innovation mindset –being the disruptor rather than the disrupted – and this is driving higher returns from innovation.

Our analysis reveals that these companies do two critical things that make them Innovation Champions.

• First, they have successfully created a smooth, reliable, and repeatable innovation process, which we call “Innovate by Design”. This focuses on defining an innovation strategy, creating a culture that rewards innovation, and building a formal innovation architecture.

• Second, and perhaps more importantly, these companies have undertaken fundamental organisational change to embed innovation across the enterprise and make it part of everyday business. This change is reflected in seven traits or

“Innovation Practices” that successful innovators share: they are hyper-relevant, network-powered, technology-propelled, asset-smart, inclusive, talent-rich, and data-driven.

One of the key characteristics UK&I Champions display is an innovation mindset which is focused on driving value (to be an Innovation Champion, companies should earn higher revenues and profits from innovation).

UK&I Champions are achieving this through Innovation by Design to build the capacity to innovate. They are never complacent in the face of rapid technical and social change and are investing more to address volatility.

By continuing to exhibit the qualities and behaviour that position them as leaders, UK&I Champions are likely to have weathered the COVID-19 crisis better and emerge stronger from it.


What makes an Innovation Champion?

The overall country score on the Accenture Innovation Maturity Index in the UK&I was 61 out of 100. But a small group of Innovation Champions— 11% of the sample—averaged 71 points.

5 | WINNING IN THE AGE OF DISRUPTION – Accenture UK and Ireland (UK&I) Innovation Maturity Index Report 2020

UK&I Champions are dealing with disruption and making their businesses more resilient while forging a new path. They have understood and harnessed changes in their industry and the wider economic environment to inform and accelerate their progress, and, capitalising on an innovation mindset, they understand when and how to focus their innovation efforts to release trapped value.

MAKING A (WISE) INNOVATION PIVOT

Future readyInnovation Champions don’t just expect disruption, they embrace it.‘

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A DIFFERENT OUTLOOK


Innovation Champions have a different outlook. Their innovation mindset means that they both expect and are actively managing disruption; many Champions not only expect to be disrupted, but also have different expectations of where those disruptions are coming from.

In addition to being concerned about disruption from technology, Innovation Champions were also concerned about disruption arising from competitors, macro-economic shifts and the impact of social/cultural changes.

Innovation champions were particularly focused on disruption from social and cultural changes,

showing a difference of over 25% between themselves and competitors on this dimension (figure 1).

In 2020, nobody could have predicted that a business disruption from the COVID-19 virus. However, it has made our survey of innovation, and now companies to address disruption, more valid.

In fact, we believe it’s a predictor of future success, because the organisations which are ready to innovate in the face of the current disruption are likely to emerge stronger from the crisis as everyone is being forced to innovate at speed.

9%

18%

17%

16%

11%

25%

63%

14%

19%

19%

24%

38%

43%

62%

Figure 1 - To what extent do you expect your industry to be disrupted by the following in the next 3 years?

Indicated “Large extent” or “Very large extent”

Source: UK&I Innovation Maturity Index 2020

Innovation Champions

Rest of the market

New innovations brought by technology

New competitors

Social and cultural shifts

Maco-economic changes

Environmental/ecological change

New regulations

Demographic shiftsN-200 respondents

The COVID-19 pandemic has also demonstrated the importance of being more regionally networked in the UK as most of the population moved to work from home and the focus on London, as a centre of innovation, for example, is suspended. In fact, UK&I innovation champions were already showing that they were well networked, making them fairly city agnostic. Rather than placing all their bets on London as a location for innovation, they tend to rate several UK cities equally in terms of how they support innovation and were not making a sole bet on London (figure 2).

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Figure 2 - UK&I Champions Are Rating A More Diverse Number of UK&I Cities for Innovation

Champions are diversifying their innovation locations in the UK&I

While UK&I companies generally associate innovation with London, champions recognise numerous cities across the UK and Ireland.

Here are Accenture’s suggestions for how you can accelerate your innovation processes.


Which of these UK cities (shown right) would you rate as a UK city which supports innovation? (top 7 shown only)

MORE DIVERSE LOCATIONS



Rest of the market

65%

Leeds

London

Glasgow

Manchester

10%

57%

Edinburgh

7%

Liverpool

Dublin

0%

24%

Bristol

41%

Belfast

Birmingham

Coventry

1%

25%

Newcastle

Cardiff

11%

Southampton

24%

Sheffield

87%

19%

38%

24%

18%

10%

29%14%

8%

19%11%

24%6%

24%

2%

0%2%

0%

3%

UK AND IRELAND PRIORITY? MAKING A WISE PIVOT TO INNOVATION

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As UK and Ireland businesses navigate through the current crisis, making a wise pivot should now be a matter of urgency as COVID-19 has intensified the need to innovate.

Only a small proportion of UK and Ireland respondents are using innovation to unlock value in new business. Of the 200 companies we surveyed, only around 20% of respondents are using innovation to unlock value in new business, while most of them (50%) are using innovation to unlock value in their legacy and new businesses simultaneously. In fact, just 25% of companies surveyed said that they were agile enough to prioritise and reprioritise their projects to be able to transform their business.


INNOVATE BY DESIGN

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UK&I Champion scores are most differentiated in Innovate by Design measures in Innovation Culture

Too often, companies still view innovation as an ad-hoc “creative” process. But real innovation requires persistent effort, well-defined processes, and true commitment, and governing innovation extensively over time can also bring stronger revenue growth3.

Innovating by design is a framework for building the mechanisms for reliable innovation. It involves defining an innovation strategy, instilling a culture of innovation, and creating an innovation architecture.

Figure 3 – Innovate by Design UK and Ireland Scores

Innovate by Design


StrategySuccessful innovators share a similar approach to innovation strategy. They aim for disruptive advances, rather than incremental improvements.

CultureCompanies that succeed in innovation have a culture of innovation in which creativity is encouraged and rewarded.

ArchitectureThe innovation architecture comprises the processes companies use to find ideas and bring them all the way to full-scale innovations.


Sample: All UK&I respondents (n=200)

Innovation Culture

Innovation Strategy

Innovation Architecture


Others

1 point 4 points

0 points

INNOVATION PRACTICES

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Innovation Champions build innovation into the fabric of their businesses by adopting practices that make them:

• Asset-smart. Innovation champions adopt intelligent asset – and operations – management approaches to run businesses as efficiently as possible and free-up capacity for innovation.

• Inclusive. Innovation champions take an inclusive approach to innovation and governance, involving a broad range of stakeholders.

• Hyper-relevant. Innovation champions strive to always be relevant by sensing and addressing customers’ changing needs.

• Talent-rich. Innovation champions create a new type of workforce—flexible, augmented, and adaptive—to gain a competitive advantage in fast-changing markets.

• Network-powered. To bring the best innovations to their customers, champions strive to harness the power of a carefully managed ecosystem of partners.

• Technology-propelled. Innovation champions master leading edge technologies that enable business innovation.

• Data-driven. Innovation champions generate, share, and deploy data to support innovation.

As the Innovation Maturity Index demonstrates, the best performing UK&I companies are applying innovation broadly across their activities. This is because they have made significant organisational changes that make them more open to new thinking, more attuned to customer needs, and more adept at using data and digital tools.

These changes are captured in a cluster of seven characteristics we use in the index. Today, the average company in the UK&I lags Innovation Champions in each of the seven key innovation characteristics (Figure 4).


Mindsetover matterInnovation Champions are willing to challenge themselves to outperform their peers.‘

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The largest difference between the UK&I Champions was regarding the Innovation Practice of being “Asset Smart” where Champions were focused on actively transforming their core business to cope with disruption by divesting assets to free up capacity for the New. They have been proactively divesting under-performing assets over the past five years (76%) and plan to keep doing so over the next five years (86%).

Figure 4 – Innovation Practice: UK&I Champions Versus Others

Innovation champions differentiate themselves in all the seven innovation practices.

They stand out most in their ability to continuously be more asset smart, inclusive and hyper relevant than other UK&I companies.

By adopting the practices that are associated with these characteristics, the average UK&I company can start to release trapped value and accelerate growth.

Innovation Champions STAND OUT

UK&I Innovation Practices

UK&I Champions are most differentiated in being Asset Smart


N-200 respondents


Others

Asset Smart

Network Powered

Inclusive Hyper-Relevant

Talent Rich

Data Driven

Tech Propelled

20 points

14 points

1 3 points

12 points

12 points

11 points

7 points


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Their innovation mindset means that they both expect and are actively managing disruption; They are concerned not only with technology disruption but also possess higher rates of apprehension about competitors and social/cultural change.

Innovation Champions are investing more and are therefore better equipped to handle the evolving forces of disruption. They are more differentiated from other companies in their spending, focusing on technologies such as blockchain, autonomous vehicles, machine learning and 3D printing.

They have a sharp focus on financials associated with innovation; they prioritise funding as the first step towards becoming a Champion and make corporate venture capital funding a priority to drive innovation.

Their innovation mindset means that have an all-encompassing approach to innovation and see the potential of several UK cities for innovation – they are well networked and fairly “city agnostic”. In this way, they are actively focused on building wider innovation ecosystems in many cities.


Champions are never complacent

Champions say, “show me the money”

Champions spend more and differently

Champions are better networked

CONCLUSION

To be classed as an Innovation Champion, companies must be driving higher revenues and profit from innovation.

UK&I Innovation Champions are doing this through an innovation mindset which focuses on driving value from innovation and the innovation practices they follow.

Mind theTrapTrapped value is leavingorganisations vulnerableto disruption.‘

HOW TO PUT INNOVATION TO WORK ACTIONS TO TAKE NOW

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TARGET ENTERPRISE-TRAPPED VALUE

RELEASE ENTERPRISE-TRAPPED VALUE

BE CHANGE-ORIENTED

Identify which target characteristics (e.g., becoming talent rich) are central to your growth strategy, and how intensely you are prepared to drive innovation-led change.

BE OUTCOME-LED

Prioritise investments in those capabilities that you can bring back into your 'core' to help modernise the existing ways of working (e.g., acquisition of artificial intelligence or cyber security capabilities).

BE DISRUPTION-MINDED

Aggressively direct your investment capacity to Innovations that help expand your footprint into new markets, with foresight (e.g., using blockchain to improve woman inclusion in insurance).

Test and embrace multiple Innovation practices to redefine the most established ways of doing business (e.g., rotation of talent from business-as-usual roles to 'innovation gigs').

Tie your innovation investments to the desired long-term performance (i.e. growth revenue, profit, customer value growth etc.), not only to short-term efficiency benefits.

Organise differently for disruptive innovation initiatives (e.g., go beyond experiments, and turn those initiatives with the highest potential—or your 'moon shots'—into businesses at a faster pace).


Figure 5 – How to put Innovation to work

As the UK&I innovation journey carries on into the next decade (for the UK, outside the EU while continuing to closely collaborate with it) companies will continue to prioritise innovation. This will involve driving broader innovation partnerships while capitalising on higher investment capacity for innovation and building a greater awareness of wider socio-economic challenges impacting it. It will be those companies that can create and nurture an innovation mindset who would emerge as winners and who understand how to put innovation to work (Figure 5).

REFERENCES

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1 A Survey of 200 C-suite executives from 11 industries across the UK and Ireland between June and August 2019. The survey objective was to learn how large companies are prepared to respond to disruptive change, both in terms of improving their innovation capabilities to unlock trapped value and their efforts to use digital technology to transform legacy business and build new businesses.

2 Source – Accenture Disruptability Index 2.0. Percentages denote proportion of companies in given year that are in an industry that falls into the quadrant based on the given year’s weighted averages for Susceptibility and Current Level of Disruption

3 Accenture - Governing Innovation, The recipe for portfolio growth - https://www.accenture.com/gb-en/insights/consulting/innovation-portfolio


Are yousitting toocomfortably?Increasing disruption isthreatening the status quo.

https://www.accenture.com/gb-en/insights/consulting/innovation-portfolio

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Julie Adams

Julie Adams leads Accenture’s Energy Research team globally and is based in London in the UK. She has had a long career in Research, Industry and Consulting, working to help Accenture and its clients understand rapidly changing business environments and how key trends in areas such as technology, digital and innovation impact on them.

Prior to joining Accenture, Julie worked as a commercial negotiator for the major oil company ENI. She also has extensive strategy consulting experience, gained as an energy consultant with Arthur D. Little Ltd where she worked on a variety of consulting projects all over the world.

Arabel Bailey

Arabel joined Accenture in 1991 after graduating from Manchester University. Since being promoted to managing director, Arabel has held a number of leadership positions in Accenture Technology and Accenture’s mobility business and more recently as the lead for Accenture Digital in the UK and Ireland.

Named as one of the top 50 “Power Part Timers” by Timewise, Arabel champions inclusion and diversity in the workplace and flexible working. She has also been recognized by Green Park as one of the top 25 women redefining the workplace and twice short-listed for “Digital Leader of the Year” at the Women in IT Awards.

Arabel has played a pivotal role over the years spearheading Accenture’s rotation to the New with Accenture Digital, building the Client Innovation Services team, sponsoring the deployment of FORM, and creating cross-industry practices for HR and Finance transformations, that have helped paved the way for our new growth model.

Innovation, for Arabel, is at the heart of the next wave of growth and the reinvention of strategy and consulting. As team captain for the Innovation & Design Network, she promotes innovation as the antidote to disruption and believes that everyone across the company can contribute.


Sheena Sudra

Within Accenture’s Client Innovation Services Team, Sheena supports clients across industries to generate break-through ideas and leverage design thinking, rapid prototyping and co-creation to drive business growth.

Her aim is to work with client executive teams to imbed innovation into the DNA of their respective organisations, unlocking potential for new business models, products, services, markets and skills that will transform their businesses for future success.

ABOUT THE AUTHORS

About AccentureAccenture is a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all of these services. We combine unmatched experience and specialized capabilities across more than 40 industries —powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. With 513,000 people serving clients in more than 120 countries, Accenture brings continuous innovation to help clients improve their performance and create lasting value across their enterprises.

Visit us at www.accenture.com

About Accenture ResearchAccenture Research shapes trends and creates data driven insights about the most pressing issues global organizations face. Combining the power of innovative research techniques with a deep understanding of our clients’ industries, our team of 300 researchers and analysts spans 20 countries and publishes hundreds of reports, articles and points of view every year. Our thought-provoking research—supported by proprietary data and partnerships with leading organizations, such as MIT and Harvard—guides our innovations and allows us to transform theories and fresh ideas into real-world solutions for our clients.

For more information, visit www.accenture.com/research

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