More than 90 per cent of executives think innovation is the key to corporate success - but two thirds are dissatisfied with their track record on creativity.
Research from consulting firm Bain and Company among senior executives from 200 global companies has found that conventional methods to spark innovation are falling short.
Two thirds of the survey's respondents admitted dissatisfaction with the quality of their innovations or the frequency with which they came up with new products or services.
Eight out of 10 rated "becoming more innovative" in their top three business priorities, and 91 per cent said increasing their company's capacity for innovation was critical to creating future competitive advantage and earning profits.
Bain and Company director Darrell Rigby told vnunet.com that innovation was one of the biggest issues facing companies in today's competitive environment driven by shortening product lifecycles - particularly among technology companies.
Companies that had slashed research and development (R&D) budgets during the economic downturn were "mortgaging their futures", Rigby said.
Even those planning to increase their R&D spend when the economy picks up could fall behind their competitors, and those counting on acquisitions to buy in new ideas in the upturn are likely to be disappointed with the outcome.
"Academic studies show that every $1 spent on R&D leads to $2 of profit and a $5 increase in market value over seven years.
"If you can't afford to continue to invest the same amount you need to find other ways to get return from your R&D dollars," Rigby said.
The consultancy says breaking the 'not invented here' syndrome is key to higher quality and lower cost innovations.
Opening up innovation borders to vendors, customers and even competitors can help businesses improve the speed, cost and quality of innovation.
"Companies like IBM have learnt that they can export their innovation rather than letting it gather dust.
"When countries reduce their trade barriers they see a dramatic increase in gross domestic product. This is a similar concept," Rigby said.
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