Where AEX companies lack innovative strength, successful start-ups turn their creative power into groundbreaking ideas. In exchange for operational knowledge and capital, large companies can get inspiration from these starting businesses.
Innovation is vital. Not just for organizations, but also for countries and regions. Globally, the lifespan of companies is decreasing and international relations are shifting. In the past, most of the innovative ideas came from Western European countries and the United States.
However, emerging markets such as the BRIC countries are investing heavily in innovation, resulting in twice as many patents as before. These economies used to focus on Western ideas (and countries), but this is changing rapidly. Consider the IT market; currently, most of the software development of large IT companies (and other multinationals) is outsourced to highly qualified engineers in India. Therefore it’s not surprising that innovation is moving to these areas.
The geographical shift is also noticeable in the investments in public and private partnerships. In the Netherlands the investment is near twenty Billion Euros, while in India it is near two Trillion Dollars. Although India is a much larger country, the size of investments underlines where most growth currently occurs.
Many around the world just celebrated the Lunar New Year, marking a time of renewal and for many a time to reset on what’s important. For Accenture, it’s a time when we renew our annual Technology Vision, which outlines some predictions on which technologies will have a significant impact on organizations – for both their IT departments and their businesses overall – in the next few years.
We do this annual report on the future of IT because technology has become pervasive, and is pushing the boundaries of what’s possible in every industry, every market and every business. In fact, we believe that Every Business is a Digital Business – technology innovations now represent trends in both business and technology.
Our premise for the Accenture Technology Vision is pretty simple: if you don’t know what’s going on, you can’t prepare for it, and you certainly can’t take advantage of it. Within Accenture, we use the Vision as an input to guide our technology R&D investments; externally, we use the Vision to help our clients not just identify and understand key emerging technologies, but also use them to make their business performance even better – and stand out from the competition.
This year’s Accenture Technology Vision lays out the following major technology trends affecting organizations in the public and private sectors:
Digital Relationships at Scale: Moving beyond transactions to digital relationships
Design for Analytics: Formulate the questions, and design for the answers
Data Velocity: Matching the speed of insight to the speed of action
Seamless Collaboration: Right channel, right worker, right job
Software-Defined-Networking: Virtualization’s last mile
Active Defense: Adapting cyber defenses to the threat
Beyond the Cloud: Where the Value Lies
Accenture observes that increasing numbers of farsighted organizations are recognizing IT as a strategic asset with which they can renew vital aspects of their operations—optimizing at least and innovating at best. As such, they are investing in the digital tools, the capabilities, and the skills to more easily identify useful data, evaluate it, excerpt it, analyze it, derive insights from it, share it, manage it, comment on it, report on it, and, most importantly, act on it.
But the Technology Vision is just a starting point. Yes, it provides a lens for us to focus in on the technology landscape and shows us where to turn next, but it is only useful if we can translate the Vision into real solutions, addressing real problems in real industries. That’s why this year’s Vision presents 100- and 365-day plans for each technology trend so that organizations can take the insights and act upon them.
Stay tuned to Blogpodium because in the coming weeks I will discuss each of the seven Accenture Technology Vision Trends in more detail and how these trends present opportunities for companies ready to take advantage of them.
In our last blog post, we looked at how parent companies and the spin-offs themselves cut their own chances of success, by smothering a spin-off in cash or IP, by not listening to their market and, basically, or being in too much of a rush to generates sales. However, our study (see below) also found a lot of spin-offs that avoided these pitfalls and went on to become highly successful companies in their own right.
So what are the success factors for a profitable spin-off and a growth engine for the future? Our study identified five main guidelines:
1) Keep them hungry Spin-offs often receive a lot of initial financial capital from their parent companies as well as from public funding programs. Both can actually hamper the successful development of a spin-off. On the other hand, limiting the amount of capital forces a spin-off to sell products at a profit. Profit that provides it with the capital necessary for further investments.
This has three motivational advantages. First of all, selling products shows that an actual need is being met and so the spin-off is listening to the market. Secondly, limited resources means time-to-market has to be as short as possible. And thirdly, the need to acquire capital for investments ensures that the focus remains on profit rather than volumes for volume’s sake.
In their search for sustainable and profitable innovation, many companies opt for a strategy that involves launching a spin-off to focus on undeveloped markets. These strategies have enormous potential but also carry huge risk. After all, they often involve a new technology and products for totally new and unknown markets. And sadly, many of these spin-offs fall at the first hurdle.
As we touched upon briefly in our last blog post, the reason why so many spin-offs fail is that their chances of success are undermined by the generosity of the parent company itself. The parent company’s urgency to develop a new engine for growth can have a disastrous effect. Because the spin-off is given such large quantities of capital, both intellectual and financial, it is less likely to listen closely to its potential market and the time-to-market gets longer.
This can be exacerbated by the skill of the top entrepreneur – the newly-hired CEO – to attract additional capital. This kind of spin-off will simply develop a product and/or service based on the large amount of cash and intellectual property (IP) available and put it out to market; a typical push method. This often fails, particularly in new markets, as the company has failed to listen to its market and to create any ‘pull’ demand for its product or service. And the fact that the spin-off is given so little time to develop and grow is a major limitation of its chances of success. What might have been a hit is transformed into an almost certain miss.
So what is the key to success? Our study (see below) found that most successful spin-offs had a number of things in common. The three most prevalent characteristics we found are the following:
During the TSOC Pitch 2012 event on November 21th the main question was which Dutch innovative products have the potential to become real game changers and transforms the telecom market.
With in total 12 start-ups, including several Accenture Innovation Awards initiatives (i.e. Greencloud, Scoupy and LocalSensor) the event kicked-off with Accenture’s Senior Manager and CMT lead Erik Hoogenhout analyzing the current state of Innovation in the Netherlands. First he discussed the Accenture HPB research which compared the performance of AEX companies with their international competitors, stating that the AEX companies have invested much less in innovation in the previous years than their international peers, resulting in a weaker market position in emerging markets and decreasing revenue growth. Furthermore he discussed the major trends he has seen in this year’s Accenture Innovation Awards concepts, including an increasing number of businesses focused on creating platforms for content and innovation, and the embracement of Cloud computing industry-wide.
Most companies now recognize just how important innovation is to continued profitable growth. The challenge is how to innovate successfully, not just once but again and again. Because real innovation demands constant and continuous renewal, which is hard to realize within an established enterprise.
Many companies see the spin-off as the holy grail of successful innovation. In a recent study on spin-offs in the biotech industry, Accenture and Utrecht University looked at hundreds of examples of how major corporations have launched ‘innovative’ spin-offs only to see them flounder and fail. And discovered some very important lessons about how companies can avoid the pitfalls that doom so many spin-offs to failure.
It’s an all too familiar scenario. After years of success, a major company sees its margins decline and its growth slow. It desperately needs a new engine for growth and because the company is so big it has to be a very big engine. So the management decides to launch a spin-off company to focus on unchartered markets, because these are the only markets with the potential for real, sustained growth. So far so good. The spin-off can operate away from the constraints of its parent company and its often cumbersome organizational structure.
Keep ‘em hungry
However, the first mistake many companies make, we found, is to throw resources at the new spin-off in the form of cash and intellectual property. There’s a lot of pressure for quick results, so apparently the new company needs lots of cash. For one, to hire a high-profile CEO with a proven ability to attract even more investment. But all too often the expected success fails to materialize and the spin-off is a massive – and costly – failure.
So why is it so difficult to launch a successful spin-off and why do so many companies fail? What emerged out of our joint study was that having a generous parent company can be as much a hindrance as a help. The study revealed some of the success factors behind profitable spin-offs. For instance – and this shouldn’t be a surprise – successful spin-offs listen to their markets and have short times to market. Successful spin-offs are patient in terms of growth, but tend to be very impatient for profit.
Of course, this still leaves the question of how can companies create the right conditions for a successful spin-off? The first recommendation sounds counter-intuitive, but may come as a pleasant surprise to many companies. Keep your spin-offs hungry in terms of capital funding!But do make sure they have the right people equipped with the right skills to deal with new technology, new products and new markets. And be patient. You cannot tap truly new markets overnight; spin-offs should be given the time to explore their markets and discover their customers’ real needs.
We’ll be exploring these success factors and the recommendations to companies looking to launch a spin-off in more detail in my next two blog posts.
Masters thesis For his Masters thesis, Tim Agterberg studied the development of various types of start-up companies in the Dutch biotechnology sector. Tim conducted the study during an internship with Accenture, under the guidance of Accenture’s Jeroen Hendrix and Dr. Jan Faber, associate Professor of Innovation Studies at the Copernicus Institute of Sustainable Development, Utrecht University. The study analyzed 540 cases spread across four years, in the period 2002-2005.
With live national radio coverage on BNR Nieuwsradio, 1441 innovative entries and 32000 social votes, the sixth edition of the Accenture Innovation Awards was an even bigger success than last year’s edition. In the Amsterdam Convention Factory over 900 guests joined Accenture in recognizing and rewarding the most innovative concepts in the Netherlands with the Blue Tulip. This year, for the first time in Innovation Awards history concepts could also compete for a special award for the most sustainable innovation: the Green Tulip.
Aiming at honoring, uniting and stimulating innovation in the Netherlands, keynote speakers Wouter van Dieren (Club of Rome), Mike Lee (Appsterdam) and Andre Kuipers (Astronaut ESA) shared their thought and vision on sustainable innovation. Wouter van Dieren kicked-off the event by stating that there are limits to growth, developments and innovations of industrial capital and agriculture. By changing the rules of ‘Business as usual’ organizations can take natural and social capital in consideration, instead of mainly focusing on financial capital. Andre Kuipers took the audience on a breathtaking journey in the life of an astronaut, his daily practices and his experiences during Mission ISS earlier this year. He demonstrated the vulnerability of the Earth Read more…
When Accenture launched the Accenture Innovation Awards (AIA) six years ago, one of our goals was to encourage and promote innovation. The AIA did indeed create a platform for numerous truly innovative concepts from both major corporates and young start-ups. And many winners have gone on to become extremely successful. And yet it is still remarkably difficult for businesses to innovate successfully. This is why Accenture teamed up last year with the University of Groningen to define the so-called ‘Barriers to Innovation’ and identify the differences between AIA winners and non-winners. And to find out whether winning an Accenture Innovation Award offer entrepreneurs tangible benefits?
The study carried out by the University of Groningen in cooperation with Accenture identified six potential barriers to innovation: the cost, financing, HR, marketing, competition and external information barriers. More importantly, the research revealed some striking differences between award winners and non-winners, not just in how they overcome barriers to innovation, but also in their perception of these barriers.
As you can see from the figure above, the study revealed that non-winners recognized more of these barriers than the winners of the awards, especially the cost, financing, information and personnel barriers. They perceived these barriers, or combinations of these barriers, much more as obstacles to future growth than winners. The winners, on the other hand, recognized barriers much more unique to their business, rather than being confronted with a range of barriers simultaneously, so are able to take a much more focused approach to overcoming such barriers.
Magazine Management Trends recently published the following article on the inseparability of leadership and strategy, and how Anja Montijn-Groenewoud endorses this view in her role as Managing Director of Accenture Netherlands. This article is a translated abstract of that article.
In the last decades strategy has grown apart from organizations and people. Due to the importance of measurability, strategy has become less about vision and implementation by leadership and the role of strategist has been relegated to outsourced specialists.
According to Cynthia Montgomery, professor at Harvard Business School, executives and managers need to embrace the original holistic vision of leadership: what impact do they want for themselves and their organization to have on the world and the lives of their customers?
Connection
It is all about passion and motivation as a result of focus. Montgomery emphasizes that managers are not fully aware of these responsibilities: bearing the great responsibility to inspire and for setting an organizational course. She states that managers should not be fixated on beating the competition, because the leader is the strategist who creates market value and value for the stakeholders.
This ‘bottom line’ is also reflected in the believe of Anja Montijn-Groenewoud, Managing Director of Accenture Netherlands. Montijn-Groenewoud emphasizes the importance and pleasure of creating and maintaining connections with customers, partners, employees and, above all, with yourself. According to Montijn-Groenewoud the success of Accenture comes from insights that are not based on product offerings but on customer’s challenges and how Accenture can help them in creating value.
With continuing development and economic growth, the ever-increasing demand for energy is putting enormous pressure on both our energy supply and the environment. While an unexpected breakthrough in nuclear or fusion technology would be a real ‘game changer’ and disrupt the current rules of engagement in our energy landscape, this is not a realistic option currently available. Given these constraints, opinions differ on how we should meet this growing demand in a sustainable and socially responsible way.
The rise of clean energy is highly dependent on technological innovations and the economic feasibility of new initiatives within the energy sector. Companies who are willing to change the status quo need to be both flexible and bold in their search for different kinds of technologies. Innovative companies should make their processes leaner and invest time, money and effort into the development and the scalability of successful technologies.
Traditionally in the energy sector, innovations are mainly within the context of “conventional” or fossil fuels: oil, gas and coal. These investments in the abatement of the negative impacts of fossil fuels remain necessary as these traditional resources will more than likely retain their prominent role in the energy mix for the coming 25 to 50 years. However, a recent study by the National Petroleum Council (NPC) “Advancing Technology for America’s Transportation Future“, in the United States concludes that, despite optimistic foresights on twelve prioritized and differentiated technologies, the aspired CO2 reduction of 50 percent is far from achievable. The study shows that the current R&D investments in ‘clean technologies’ in both conventional fuels and renewables are unlikely to result in the necessary breakthrough innovations.
Marjolijn: Hoi Rob, Dank voor je berichtje, het gaat inderdaad niet altijd zoals je van te voren hoopt. Maar des te mooier als je er met vallen en opstaan...Read the full comment
Where AEX companies lack innovative strength, successful start-ups turn their creative power into groundbreaking ideas. In exchange for operational knowledge and capital, large companies can get inspiration from these starting businesses.
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During the TSOC Pitch 2012 event on November 21th the main question was which Dutch innovative products have the potential to become real game changers and transforms the telecom market.
Most companies now recognize just how important innovation is to continued profitable growth. The challenge is how to innovate successfully, not just once but again and again. Because real innovation demands constant and continuous renewal, which is hard to realize within an established enterprise. 
