Only one in four large Indian enterprises is able to tap into the full potential of technology-enabled innovations, with most others missing out on an opportunity for both strong growth in profits and market capitalisation, an Accenture report said on Monday.
The report, titled "How to Unlock the Value of Your Innovation Investments", surveyed C-level executives at 840 large companies across 14 industries and eight countries, including 106 large companies in India.
It found that approximately one in four (25 per cent) of Indian organisations surveyed are generating significant value from their innovation investments as it identified the innovation approach of these high-growth companies and what other companies can learn from them.
"Our research highlights that Indian companies apply innovation more comprehensively compared to their global counterparts.
"In fact, almost 90 per cent of Indian companies have plans to increase their innovation spending by more than 25 per cent over the next five years," said Anindya Basu, Geographic Unit and Country Senior Managing Director, Accenture in India.
"However, 70 per cent of Indian companies are focusing their investments on incremental innovation, which limits their ability to derive tangible value from their investments," Basu added.
The research found that companies' return on innovation investments declined 27 per cent over the past five years.
The gap between what technology makes possible and the ability of companies to realise that value is only going to grow, it added.
Globally, incumbents and start-ups spent a combined $3.2 trillion on innovation-related activities over the past five years and this trend was expected to continue.
"Almost one-half (50 per cent) of those Accenture surveyed in India expect to increase their investments in innovation by more than 50 per cent over the next five years," the report said.
Of the 75 per cent of Indian respondents who reported increasing their innovation investments by at least 25 per cent in the past five years, more than one-third (38 per cent) under-performed their industry peers in growing profits or market capitalisation.
"The analysis shows that much of this is due to spending predominantly on incremental innovation, which is how nearly three-fourths of non-high-growth Indian companies directed their spend, rather than on disruptive innovation," said the report.
According to Basu, high-growth companies are not only investing aggressively, but also taking a distinct, disruptive approach to innovation to reinvent their businesses.