Sorry Europe, but US Companies are Better Innovators

How US companies are opening the innovation floodgates.


A recent study has discovered that US enterprises are more innovative than their European counterparts; in fact, they have a track record of bringing products to market quicker, and have more innovative plans in the pipeline. The question is what are they doing better, and how can Europe catch up?

Infographic_Time-to-MarketThe study, Innovate or Perish, carried out by Vanson Bourne and commissioned by Automic, found that while 64% of US organizations develop new products in under six months, only 38% of their UK counterparts and 47% in Germany can say the same.

In addition US businesses are better at keeping up with the ferocious pace of technological advance. 21% of US companies feel their business is on the cutting edge of technology and has kept up completely with customer demands, compared to a meagre 8% in the UK and 14% in Germany.

The figures show technology is accelerating at a much faster pace than our ability to apply it. This is understandable, but rather than accepting the delay, the more ambitious companies gain a competitive advantage from reducing it. As Innovate or Perish shows, only a small fraction of companies are on the cutting edge, meaning others can gain a market share by joining them.

So what is the US doing better?

Infographic_Barriers_to_InnovationOne major barrier to innovation in Europe compared to the US is budget constraint. Almost half (49%) of European companies cite this as a problem in their efforts to innovate, compared to 41% in the US.

It seems US companies are more willing to invest in changing their approach to manage uncertainty. The change to an agile, DevOps mindset requires an investment of time and money. You could say that agile development requires agile finance, and in this respect IT departments in the US are getting more support from their CFOs. However, perhaps the real reason is not so tangible.

Innovation, like Silicon Valley, is a mind-set

This VentureBeat article investigates the ‘mind-set’ that is Silicon Valley. Yes, Silicon Valley is a geographic location but, according to the author, it is so much bigger than that. “Governments around the world routinely invest massive sums of money into taxpayer-supported venture funds, extravagant office parks, and even whole cities, in the hopes of ‘creating the next Silicon Valley.’ But Silicon Valley cannot be replicated from the top down with money and facilities. Why, you ask? Because Silicon Valley is not a place. It’s a mindset.”

Silicon Valley is a physical manifestation of the innovation, drive and energy of tech enthusiasts, entrepreneurs and visionaries. Ever since it became the hub of the global technology sector, it has been a hothouse for creativity and innovation. For over thirty years, European governments have been trying to replicate this environment, to varying degree of success. The ‘Silicon Roundabout’ in London comes to mind.

Even the Japanese tech sector is losing out to Silicon Valley, according to this SFgate article, which suggests that the American mindset is more open to risk-taking. Many entrepreneurs have to leave safe corporate jobs to set up start-ups, and the article suggests Americans are more willing to take this leap of faith.

Are our US compatriots just wired to be more innovative? Our study suggests that the US as a whole is the epicenter of innovation – particularly in the technology sector. In order to keep up, we need to determine why this is.

An Accenture report, “Silicon Valley’s Lessons for CIOs and Innovators” concluded that CIOs in Silicon Valley, “continually turn technology ideas into successful enterprises” and they do this by “combining agile software development methods with a take risks, break things, fix fast approach.”

That philosophy also extends to decision-making. Quick, agile decision-making is prized over slow, methodical consensus-building. People have little tolerance for corporate bureaucracy, government regulations or anything else that might slow them down. Almost 60 per cent of the Silicon Valley respondents said they believe their company makes faster decisions than other firms. Slightly more than 33 per cent of non-Silicon Valley professionals feel that way.”

A no fear approach to business is quintessentially American. Using different technologies and practices to test, break and create is how you stay ahead in this day and age. Innovate or Perish confirms the benefits of this mind-set. Compared to their European counterparts, the US places a high premium on utilizing new technology to sustain high levels of customer satisfaction, agility, responsiveness and innovation.

Opening your innovation flood gates

Change your way of thinking; that’s always the answer isn’t it? You can’t solve old problems with out-dated modes of thinking, right? innovation is a by-product of failure. Companies must encourage the practice of being creative, risk-taking and audacity without fear of budget or regulatory constraints. This mentality is lauded in the US.

A recent TechTarget article outlines one way in which this could be achieved: “One way to keep up with the speed of innovation is to think like a venture capitalist. Take calculated risks in certain disruptive technologies, perhaps even before the business sees their value.

“These risks need to be balanced with legacy investments and be run by the rest of the C-suite. ‘CIOs need to place bets…that a given product or service is going to hit the market at the right time and fill a niche that others don't,’ said former CIO Charles Weston, now a member of VC Sierra Ventures' CIO advisory board. Even after business partners can be convinced of these technologies' potential value, however, CIOs need to be prepared to fail, he cautioned.”

Flood gates don’t need to be opened, just unclogged

The article also features tweets from CIOs who stress that although the modern CIO has to drive innovation as well as keep the lights on, the former should only be explored if the latter is watertight. Kevin Dunn (@KevinTechExec) tweeted: “if the conversation never leaves uptime then you can't lead innovation.” We believe new technology can only be manipulated into game-changing innovation if the CIO’s everyday tasks are automated where possible. Only then can we begin to define our own niche in today’s turbulent digital marketplace.

Click here to read more on how and why US companies are better innovators than their European counterparts.


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