Research highlights the challenges of finding the right balance between innovation and cost reduction
2 August 2022 –
Almost three-quarters (70 percent) of companies struggle to unlock the value of their data. This has a direct impact on their ability to innovate, say 100 C-level executives from Forbes Top 2000 companies in Europe, including some from Benelux. Nearly a third (30 percent) of business leaders say cost reduction is their most important goal.
But now that a recession is looming, it makes sense to make better use of data, because it can help innovation in the short and long term. Furthermore, 59 percent of respondents believe that companies that make decisions based on data gain market share. And 58 percent are afraid of falling behind their competitors if they don’t make better use of their data. This shows that if companies cannot innovate, it will be difficult to compete against the competition.
If companies are unable to quickly translate ideas into new products, services and strategies, they risk failure. First discussed in Bayes Business School and VMware’s 2018 report, Innovating in the Exponential Economy, this gap between innovation and execution has widened as businesses increasingly grapple with (their) data.
Looking at companies’ top seven strategic goals, according to the business leaders surveyed, four of them require accurate, relevant and timely data over the next two years to aid decision-making – from workforce insight and productivity to improving the customer experience. 52 percent motivate their teams to be more innovative and find new ways to market products, services and strategies.
“Most companies do not lack good ideas. But despite progress in executing their ideas, the gap between innovation and execution has persisted. This is due to a lack of digital capabilities and skills, rigid infrastructures and various limitations and risks related to data sovereignty and compliance,” said Professor Feng LI, Chair of Information Management at Bayes Business School in the City, University of London. He wrote the foreword to VMware’s new Innovation-Execution report, a follow-up to the original 2018 report. Many companies’ current technology stack prevents them from being even more data-driven, causing companies to miss strategic opportunities.”
The barriers to data-driven innovation success
Business leaders cite a number of barriers to data, namely that companies have too much data (83 percent), it is difficult to access the right data (74 percent), and there are technological limitations (60 percent). Data sovereignty, where stored or collected data is subject to privacy laws and governance structures within a country, sector or company, is also a major concern: national (76 percent) and industry (67 percent) guidelines pose significant barriers to realizing the value of data .
Joe Baguley, VP & CTO EMEA at VMware, says: “Innovation cannot be delayed, especially when the economy is in a bad state. It’s in a company’s DNA and you have the time, the right culture, the right processes and the right technology to drive it and make it succeed, it is not a nice to have, it creates competitive advantage, allows companies to hire and retain new employees and also creates shared value Transformation, whether it is large-scale organizational change or identifying ways. to reduce costs and optimize processes, need a digital infrastructure that can support informed decision-making. Data does this. As business leaders can better use their data to make decisions and improve the data literacy of everyone in the organizations, they can overcome challenges such as .eg as data sovereignty limitations t overcome.In addition, they will be better able to reap real business benefits from their investments in innovation.”
Bridging the gap between innovation and execution
Companies that know that data is hampering their ability to innovate and want to address it should focus on people, process and technology to bridge the gap between ideas and tangible impact. And when this connection is made, companies can not only extract value from their data, but use it to become even more innovative: 64 percent use AI and machine learning to drive innovation.
“The companies that do this right and at the right time will increase their market presence and market share,” said a senior physician for a Swiss healthcare organization interviewed for this study. “They will be in a better position ahead of their competitors. Improving data quality and managing data well, while respecting customer privacy, improves the company’s reputation and increases revenue. comply with all regulatory standards set by the authorities, they can innovate using the available data and gain a competitive advantage.”
Download the report here.