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Accenture Says Tech-Driven Approach To CE Innovation Outdated

11/10/2009 03:29:25 PM Eastern

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 the organization."

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, and partners.
  • 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 incremental improvements.
  • 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."

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