Innovation Is Switching from a Product Focus to Differentiating the Customer Experience, With $1 Billion in Revenues Up for Grabs, Accenture Research Finds

Leading companies are moving beyond products to create a superior
connected customer experience

NEW YORK–(BUSINESS WIRE)–A focus on distinct innovation and product development capabilities is
paying off for some companies as they deliver between three and seven
percent higher annualized revenue than their peers, Accenture
research shows.

A survey of 351 G2000 companies across eight industry sectors and nine
countries — Canada, China, France, Germany, Italy Japan, South Korea,
the United Kingdom and the United States — shows that leaders are
evolving their approach to innovation by developing a total customer
experience that combines product, service, software and hardware. Two
thirds (66 percent) of companies surveyed reported that their most
successful innovations in the last two years have been derived from
improved customer experiences and related new business models versus new
products alone.

Accenture has quantified the economic and financial impact of leading
innovation and product development practices for the eight industries
below. The research and analysis identifies the specific innovation and
product development capabilities that correlate to revenue increase and
operating income lift in each of the eight industries surveyed.

“It is no longer enough to build the next generation car, music player,
crane or plane to satisfy customers. Companies need to provide a
superior experience to their rivals, from the point a customer shows
interest in a product, through the research and purchase, to long after
they own the item, with a series of services to keep the customer
delighted,” said Richard Holman, managing director, Accenture Strategy.
“Companies across all sectors are rewriting the playbook for how they
innovate and organize to drive growth, with leaders achieving between
3.5 percent and seven percent higher revenues that are attributable to
distinct approaches to innovation, product development and solution
development.”

The impact of applying innovation to all aspects of consumer
interaction, rather than just a product will be significant. Accenture
estimates for the automotive industry, the impact of applying innovation
in this way could see revenues increase by up to $1 billion; for
consumer technology the revenue impact could be $633 million; for
medical technology, it could be $581 million; and for industrial
equipment manufacturers, the industry impact of innovation in this area
could see a revenue increase of $567 million.

The research reveals the innovation and product development capabilities
on which leaders in each industry focus. For example, in the
Communication Equipment industry, the focus is on new business
incubation and integration, while in the Industrial Equipment sector,
the leaders focus on innovation and product development. For the
Consumer Goods sector, a focus on corporate & product strategy alignment
is the primary distinct innovation capability focus.

Leading companies are differentiated by “innovating in the new” versus
“innovating in the core.” Traditional hardware companies are being
disrupted by digital technologies and are shifting their strategies to
focus on software and new connected experiences. Industries ranging from
sporting apparel companies, traditional toys and games to refrigerators
and other consumer durables manufacturers are now enabling consumer
services through higher level of interactivity, personalization and
functionality. For the leaders, differentiation comes from being able to
go beyond asking customers what they want and instead targeting
customers’ and consumers’ unmet needs.

Based on the survey data, Accenture has segmented four distinct
categories of innovators: Early Innovator, Value Maker, Market Share
Protector and Efficient Executor. All of the leaders fall in either the
Early Innovators or Value Makers category.

“The leading innovators, who Accenture defines as ‘Early Innovators’ and
‘Value Makers’ are focusing innovation to deliver differentiated
outcomes, solutions and experiences, at a strategic level. They are
seeing higher revenues as a result,” said Eric Schaeffer, senior
managing director and head of Accenture’s Industrial practice. “Only 20
percent of those companies surveyed fell into these two categories, with
the vast majority falling into the other two categories, typified by a
more tactical approach to differentiated customer experience. ‘Value
Makers’ find new ways to connect with customers through platforms and
ecosystems, in which the product or service is just one dimension of a
much larger value proposition.”

Methodology

Accenture analyzed the innovation practices and value performance of 351
businesses from the Global2000 across eight industries (automotive,
industrial equipment, consumer goods, medical technology, enterprise
technology, consumer technology, communications technology and software)
and nine geographies – Canada, China, France, Germany, Italy Japan,
South Korea, the United Kingdom and the United States. Interviews were
carried out with Chief Technology Officers, Division Presidents and
Division Vice Presidents of engineering and innovation, or their
equivalent. The results confirm a clear, empirical correlation between
distinct innovation capabilities and company growth. Leaders benefited
from a 3.5-7.0 percent annualized revenue lift and a corresponding
operating income growth compared to their industry peers. Leaders were
identified as the top 20 percent of all companies as defined by their
industry-specific financial performance along with their advanced
innovation approaches and capabilities.

About Accenture

Accenture (NYSE:ACN) is a leading global professional services company,
providing a broad range of services and solutions in strategy,
consulting, digital, technology and operations. Combining unmatched
experience and specialized skills across more than 40 industries and all
business functions – underpinned by the world’s largest delivery network
– Accenture works at the intersection of business and technology to help
clients improve their performance and create sustainable value for their
stakeholders. With approximately 384,000 people serving clients in more
than 120 countries, Accenture drives innovation to improve the way the
world works and lives. Visit us at www.accenture.com.

Contacts

Accenture
Anthony Hatter, + 44 7810 756 138
anthony.hatter@accenture.com