More innovative ideas come from rank-and-file manufacturing employees than R&D departments, but these are in danger of being overlooked, according to a new report from PA Consulting.
The report, Innovation As Unusual, suggests that UK businesses are losing out on £64.7bn through lack of innovation. PA Consulting examined eight sectors in the UK, ranking them by a number of factors that determined how each performed as an innovation leader. The Consumer Products and Manufacturing sector ranked third – behind Life Sciences and Financial Services, but ahead of IT.
One of the key findings for the sector was that 38 percent of respondents said some of their best ideas originated amongst employees, higher than R&D teams (32 percent).
In its analysis of the manufacturing and consumer products sector, PA Consulting identifies a number of other factors inhibiting innovation in the sector. These include:
· Insufficient entrepreneurial thinking: only 44 percent of respondents are strong on entrepreneurial thinking, compared to 76 percent in IT and technology and 69 percent in life sciences. People are unwilling to explore new ways of approaching the market.
· Underplaying digital: while many (74 percent) say digital is helping them become faster and more efficient, far fewer (58 percent) are using digital to disrupt or lead their sector.
· Tight on costs: 38 percent of respondents say they have seen a brilliant idea fail because there was insufficient resource to make it happen.
· Lack of internal co-ordination and management support: 24 percent of respondents say lack of co-ordination between production, sales, marketing and other internal departments quashes brilliant ideas. A similar number (22 percent) blame lack of management support for failure of innovation.
As well as encouraging manufacturing firms to include a wider range of employees in the innovative process the team at PA Consulting also recommends:
· Think of deeper ways of understanding customers: product innovation is built around understanding customer needs. Sometimes a focus group or opinion poll is not enough for this. Think about using knowledge from social sciences, such as psychology and anthropology.
· Test cheaply: often companies do not take a product to pilot test stage because they think it will be too expensive. It doesn’t have to be. Think of ways to pilot parsimoniously.
· Develop digital disruptively: digital is mainly being used to improve efficiencies. Product development teams needs to take greater ownership of digital strategies to take market leading positions.
Tim Lawrence, head of manufacturing at PA Consulting Group, comments: “The best innovators are those that ensure it is a shared effort across their organisation rather than leaving the development of new ideas to siloed teams. Too many organisations continue to view innovation as the responsibility of the R&D department, which severely limits their ability to identify and develop breakthrough ideas with the potential to transform their industry.
“By branching out and involving more employees in the innovation process, manufacturing companies will have a broader pool of knowledge and experience to draw upon, which will help them to harness innovative ideas and better understand customer needs.”
The report also cautions about the risks of buying in innovation – common in the pharmaceutical sector – as it only works if the acquired business is placed within a culture that understands and actively nurtures innovation. Without this culture, the host organisation can quash the newly acquired capability and waste its investment.