95 percent of innovative ideas flop

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Certainly, an amazing idea is a good start. However, in the final analysis, other factors decide whether it can be translated into a successful product or service. A recent study showed that there is an enormous waste of promising potential.

Everyone wants to be the world champion in innovation. After all, new products ensure the success of companies and economies. The ideal way to achieve this would appear to be high investments in research and development. In international companies, these investments can quite easily be in the billion-dollar range. Considering this, the result of an empirical study of more than 370 technology-focused companies by IAI Bochum in Germany is quite shocking. According to this, 95 percent of ideas for new products come to nothing. And, on top of that, only 50 percent of those that reach the market launch stage are successful.

Apparent customer focus

In many cases, the expensive flops are due to a misunderstanding of what the customers want. For example, often there is no real knowledge of the customers’ applications and uses. This is replaced by an assumption of what the target group needs. The survey also showed that only a minority of companies (38 percent) include “customers” as a factor when looking for new innovation ideas.

Even researchers and developers see only limited sustainability for their own innovation portfolio. More than three quarters of the respondents are convinced that their company does not make the most of the opportunities that are available. In more than 57 percent of the cases, they complained about the strategic alignment of their own R&D activities. In other words: The people involved in R&D are very much aware that they are not doing enough for the business of the future and are still focusing resources too much on the present.

More than two thirds of the respondents also said that this is due to the frenetic pace of day-to-day business that leaves no time for long-term research and development activities. And almost half of the companies admit that they spend too much time on short-term customer-focused projects.

No cash, no innovation

In addition to the “pressure to achieve results in the short term,” in about a third of the companies a lack of cash prevents them making adequate provisions for the future. And about a third of the R&D experts complain about a lack of orientation.

In the operational area, factors such as organizational shortcomings and personnel availabilities are responsible for potential being underutilized. Companies that carry out too many projects at once (57 percent), wait too long for decisions (47 percent), and have too few researchers and developers to work on challenging projects (57 percent) shouldn’t really be surprised by the high failure rate. Overworked key people (77 percent) also don’t make successful innovation work any easier.

The innovation researchers in Bochum have worked out how to use scarce resources more beneficially. Contrary to common ideas, the aim is not to just increase efficiency. They warn against one-sided alignment to short-term goals: “Otherwise there is a risk of doing the wrong thing very efficiently and missing fields of interest for the future.”

The study “FuE-Management: Mehr aus knappen Innovationsressourcen machen” (R&D Management: Making More Of Scarce Innovation Resources) (ISBN 978-3-928854-39-9) can be purchased from the IAI Bochum for €39.


Innovation (Image:  pixabay/Gerd Altmann).

A frenetic pace of day-to-day business leaves no time for long-term research and development activities. (Image: pixabay/Gerd Altmann).