Leading innovators in the technology, media and telecoms (TMT) industries succeed by identifying and taking action on six key areas that can set their companies apart from the competition.
This is according to a report issued by PwC, “Clearing the innovation hurdles: How leading TMT businesses overcome barriers to make innovation happen”, that is part of a series focusing on how companies address innovation hurdles as they arise, and how these hurdles have unique challenges for TMT industries.
The survey findings, which include responses from 374 C-Suite executives from TMT companies across 20 countries, reflect that the most innovative 20% of TMT companies anticipate hurdles to innovation by focusing on such areas of differentiation as visionary leadership, an open culture, attracting talent, collaboration and partnerships, the right metrics, and higher investment and use of innovation subsidies and tax incentives.
Elmo Hildebrand, PwC partner for advisory services, says: “Product lifecycles are relentlessly shorter for TMT companies, while the speed of technological change is only increasing. The pressure to innovate is fierce – TMT companies have to be committed to creating an environment that can anticipate and eradicate innovation hurdles.”
The report provides practical insights on attributes TMT innovation leaders use to achieve higher returns on their innovation investments. These include:
* Leadership – if TMT executives want their businesses to grow through innovation, then they have to take the lead; they cannot just delegate the responsibility of innovation to bright individuals within the R&D department. Innovation should be inseparable from the growth agenda and owned at the highest level within the organisation.
* Culture – for the 372 TMT executives surveyed, of most importance to fostering an innovative culture is offering employees the opportunity to participate in high-profile innovation initiatives. This is closely followed by recognising and rewarding innovation initiatives and ‘fostering an environment where failure and risk are reasonably tolerated’.
* Talent – the competition for talent is intense in TMT, particularly as the dividing lines between TMT companies and those in adjacent industries start to blur. Leaders are embedding innovation traits into their talent strategies, from training and performance reviews, to attracting new recruits. Alignment is also supported by rewarding and recognising behaviours that encourage innovation.
* Collaboration – leading TMT innovators collaborate more frequently and with a wider spectrum of partners. The most innovative 20% of TMT companies co-create, on average, over 36% of their products and services with external partners. The least innovative TMT companies only co-create about 8%.
* Metrics – the most innovative TMT companies have installed metrics to track and assess their innovation performance, and seek opportunities to use data more effectively to inform decisions about future innovation investment.
* Funding – the survey found that the most innovative 20% of TMT companies invest over 1,5 times more in innovation than others. Investment is only one part of the process, however, as efficient use of funding is a crucial next step.
Further, locating and using financial innovation incentives such as tax holidays and R&D relief, can also help achieve greater innovation.
“Multinational TMT organisations are operating in one of the most complex tax environments in history. Managing a global innovation portfolio requires executives, now more than ever before, to consider the tax implications of their innovation decisions at an earlier stage of business planning,” says Hildebrand.
Failure to consider tax implications may well lead to lost benefits, including potential cash savings, as well as unintended consequences, which divert resources away from creating game-changing innovation for the multinational.
Hildebrand adds: “There is no single right way to innovate, but executives have to make choices about how their company will approach innovation and put their weight behind making this happen. It is more about having a well-defined strategy accompanied by the relevant resources and infrastructure to eliminate the hurdles. By fostering a culture of innovation, using their resources and budget wisely, TMT companies can become the innovation leaders of tomorrow.”