New York - Consumer electronics companies must rethink the old
technology-driven approach to innovation because industry convergence has made
this model obsolete, claims a study by Accenture.
CE companies around
the world "are losing the innovation battle due to widespread flaws in their
innovation management and processes," said the management consulting,
technology services and outsourcing company.
In the converging
world, "high-performance businesses in the CE industry have begun to embrace a
consumer-engagement-driven model of innovation," but many CE companies have
not. Even those companies embracing the new approach to innovation, however,
have difficulty converting successful concepts into successful products and
services, the study said.
For its study,
Accenture surveyed key executives in multiple industries around the globe. It
found that, in the past, the "traditional technology-driven CE innovation model
worked because it allowed CE companies to control the technology, licensing,
and content provider relationships." A single successful technology "would
allow a CE company to enjoy a reputation as an "innovator" (for example, Sony's
Walkman), creating extremely high barriers of entry for new players."
Today, however, CE
technologies have converged with "media, IT technologies, games, Internet,
[and] mobile...into the same marketplace and compete against each other." As a
result, "the traditional eco-system is transformed. Technology, licensing, and
content provider relationships no longer determine who dictates the rules of
the game," Accenture said. "The traditional standardization and alliance
processes are becoming less effective due to competing interests, business models
and strategies of ever more players and industries."
"With so many
industries competing for the consumer's attention, the consumer has become the
new focus," the study claimed.
In this new
environment, CE companies can better position themselves to accelerate growth
if they "embrace a consumer-engagement-driven model of innovation," Accenture
contended. To accomplish this, "CE companies need to engage with consumers at
the onset and throughout the innovation process."
CE companies must also
"take control of the ecosystem by forming alliances with partners that share
interests, using technology as an enabler to deliver the next generation of
consumer-focused innovations," Accenture continued. The focus at CE companies
must be on "demoting technology to an enabler of innovation [and] mastering key
innovation capabilities that allow them to exercise increasing control of the
ecosystem to deliver consumer-focused innovations."
To win in a
converged market, Accenture contends companies "should view innovation as a
core business discipline" and "not waver from their innovation strategy or
investment commitments in challenging economic cycles." Such companies are led
by executives committed to innovation and "instill a similar self-confidence
and willingness to never stop innovating within their employees and throughout
Such companies also conduct
a lot of consumer behavior research, but their research does not always take
the form of traditional market research studies, the company said. Their
research tends "to more observational and ethnographic in nature."
In many CE
companies, the ability to innovate is held back by a "weak commitment to
innovation from leadership ranks and through economic cycles, business unit
silos [that] impede commitment to innovation strategy, over-reliance on
traditional market research for unique customer and market insights, and hesitance
to source ideas beyond the company's four walls," Accenture said.
To strengthen their commitment
to consumer-focused innovation, Accenture contended, CE companies should:
- assign ownership
and accountability for the company's innovation initiatives
- go beyond
traditional market research activities and use advanced ethnographic techniques
to understand customer's spoken and unspoken needs.
- source innovation
ideas from internal and external stakeholders, including customers, employees,
- CE companies "make
the mistake of prioritizing short-term financial results over longer term
investments and opt for line extensions over breakthrough ideas instead of
building a balanced portfolio of strategic short- and long-term incremental and
groundbreaking innovation initiatives," Accenture added.
To execute on their
commitment to innovate in a new way, companies must:
- foster a culture
that rewards risk and failure to enable innovation beyond line extensions and
- evaluate successful
and unsuccessful innovation initiatives to enable continuous improvement.
- reorganize functional
silos to enable innovation
- and attract and
retain creative and operationally minded talent.
"The culture is
important," added on CE executive interviewed for the studies." In my
experience, it has to be bottom up. In our business, innovation doesn't come
from senior people. It comes from junior people with fire in their bellies who
get weird ideas they want to pursue. If you have a culture where these ideas
never come to the surface...it's not good. You're dead in the water."