A strategic approach to innovation leads to higher productivity

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Middle Eastern companies registered a significant surge in their innovation strategy scores on Accenture’s Innovation Maturity Index, as businesses reviewed their strategies due to COVID-19. However, the new report by Accenture found that despite the pandemic opening doors to embrace new ways of working and doing business, there was only a marginal uptake in companies reimagining themselves, reflected by a 1% increase in the overall index score. This signifies the regional dichotomy between a culture that sets companies up to innovate new ways of working enabled by technology and traditional ways of doing business, which often requires a physical presence.

The report, “Accenture Middle East Innovation Maturity Index 2021”, surveyed C-level executives from 200 large companies in the UAE and Saudi Arabia between August and October 2020 to understand the extent of the region’s innovation maturity at present. The report found that 67% of Middle East executives indicate that they have taken measures to modernize their existing technology infrastructure – moving from data servers to cloud storage – in the past five years. In the next five years, this figure is poised to increase to 86%.

“The pandemic triggered new ways of working and doing business,” said Xavier Anglada, Accenture’s Strategy and Consulting and Innovation lead in the Middle East. “However, only a handful of regional companies have put in place structural actions which could help them become agile and flexible in their workforce. Companies must intensify their innovation and make greater strides in their business transformation.”

Anglada added: “This year, we found that 14% of companies that embedded the innovation framework within their businesses were able to deepen their innovation investments intensity through adhering to actions that govern their innovation efforts. We refer to them as ‘Innovation Champions’. During the last five years, extensive governance earned Champions 27% higher profitability than their peers. In the coming five years, Champions can expect that rate to more than double to 58% and experience even higher employee productivity by continuing to practice meticulous innovation governance.”

The 2021 maturity index featured an exclusive framework designed to measure the enterprises’ innovation maturity capability across industries within two overarching pillars. The first, ‘Innovate by Design’, measures how companies build the foundational governance structures to facilitate innovation by defining an innovation strategy, instilling a culture of innovation, and creating an innovation architecture. The second, ‘Innovation Practices’, measures seven innovation practices that companies embed in their operations to thrive.

Accenture Research’s global work on best practices for governing innovation was applied using the Innovation Maturity Index methodology. Accenture also evaluated the same set of companies for their current adoption of 12 innovation habits and the expected adoption in the next five years to determine the extent of their innovation impact.

For companies to deepen the impact of their innovation and make greater strides in their business transformation, they need to:

  • Inspire: Lay the groundwork and create the environment within the organization for innovation. Innovation needs to be at the center of corporate strategy and built into the business culture, everyday processes, and decisions.
  • Ideate: Generate the ideas upon which innovation of all kinds (incremental, breakthrough, and disruptive) is built. This requires putting formal structures in place to encourage and ensure ideation by, among others, the customer-facing workforce, new product development teams, and within ecosystems with partners.
  • Experiment: Validate, test, and iteratively develop ideas or innovations, investment in experimentation is essential. Companies may approach this in different ways—as part of the budgeting cycle, via investment that may start with seed funding, or by investing in an innovation lab or digital factory.
  • Scale: Working with the right ecosystem partners can accelerate the scaling of the most promising ideas.
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