UK companies must rediscover the lost art of innovation

UK survey highlights

 

Transcript

Britain’s management teams need to step off the sidelines and back bolder innovations that will secure their companies’ futures and the UK’s economic recovery, future growth and competitiveness.

Our innovation survey of 1,757 c-suite interviews with companies (including 201 companies in the UK) shows a direct link between companies that focus on innovation successfully growing faster.

From a UK perspective, companies are far less likely to focus on product innovation than their international competitors. Also, despite a clear competitive advantage in the UK’s university sector, a significantly lower proportion of UK companies plan to collaborate with academics over the next three years. They’re failing to exploit this key resource.

Innovation delivers growth

The top 20% of UK companies recognise the importance of innovation as a mainstream activity that must be sponsored by senior management and run in a structured way.

The UK’s most innovative companies grew on average 50% faster than the least innovative over the last three years. The picture outside this top 20% cohort, however, is not so encouraging.

  • Only 32% of UK companies see innovation as ‘very important’ to their success compared to a global average of 43%.
  • Only 16% of UK companies see product innovation as a priority over the next year, compared to almost a third globally.

Technology and services over product innovation

One of the most significant differences revealed by the survey between UK and global businesses is our focus on technology and services. By contrast, 29% of global companies focus much more strongly on products, compared to 16% in the UK.

UK businesses have real strengths in services. But they’re harder to export, especially into emerging markets with faster growth. Product businesses by comparison are going from strength to strength.

On the positive side, UK businesses focus strongly on technology and innovative value propositions. They are pioneering the use of social media to interact and innovate together with their customers.

Restarting innovation

Industrial, cultural and recent economic history all play a part in the UK’s diminished interest in innovation.

The move away from manufacturing towards financial services and property since the 1980s was part of a trend that led to many UK companies approaching innovation in a half-hearted way. Such companies are now falling behind their international competitors in terms of growth.

Interestingly, 76% of UK survey participants say they aim to grow in the next 5 years, and 23% aim for ‘aggressive’ growth. However, other data suggests that mainstream UK businesses are missing a trick when it comes to the bolder innovations that drive higher rates of growth.

These findings echo our 16th annual global survey of CEOs, published earlier this year, which found just 17% of UK CEOs rated research and development as one of their top three investment priorities over the coming 12 months. This is fewer by far than any other comparable economy. Read our CEO Survey  http://www.pwc.co.uk/ceo-survey/index.jhtml.

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