Innovation Index Executive Snapshot

Our first annual Innovation Index reveals business success depends on understanding the external forces and trends that keep our digital world in flux. Some findings include:

  • 60% are unprepared for the pace of technology change
  • Half still view innovation as ‘nice to have’ rather than critical for survival
  • 66% say customer experience is a top priority but only 16% focus on employee retention
  • 67% say managing data keeps getting harder
  • Many emerging technologies still lag in investment

Digital Strategies for an Era of Constant Disruption

77% of organizations are not prepared for continued disruption

Organizations are still riding the tumultuous waves caused by the pandemic, including rapidly changing customer demands, the “Great Resignation” that has triggered a war for talent, and accelerated technology adoption to fend off competitive threats.

There is no new normal, but rather changing patterns and pressures that are creating fresh waves of technology-focused disruption. Our research shows that although uncertainty should be forcing changes in strategy, most executives say they are unprepared for challenges:

Although competitive threats and industry disruption still weigh on the minds of business and IT executives, our research indicates external factors beyond market competition will now significantly affect organizational operations in the next two years.

The constant pressure of delivering quarterly results is challenging, but over the last year, it has required a herculean effort. No wonder most organizations are focused on improving process efficiency and productivity (57%), improving financial performance (64%) and increasing customer loyalty (66%). These ideas are the foundation for most organizations, but in unpredictable times, leaders are refocusing on these priorities to stabilize for future success.

The Innovation Index provides insights into how organizations are re-centering their priorities to drive three critical elements:

  • Building organizational confidence in decision-making
  • Fostering loyalty with customers and employees
  • Driving performance through technology investments
Eric Clark headshot

Eric Clark

Chief Digital & Strategy Officer, NTT DATA Services

"When times are uncertain, it is a natural response to tighten budgets and focus on short-term goals that bring revenue, but this comes at the expense of innovation and future goals. Our Innovation Index explores how business and IT leaders across 16 industries are prioritizing digital investments to combat constant disruption.”

 

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Key Findings & Emerging Trends

Customer loyalty in the spotlight; employees on the sidelines

Our research reveals that close to 70% of executives prioritize customer satisfaction despite more than half saying customer wants and needs are changing too quickly to deliver high-quality experiences. When it comes to ensuring customer satisfaction and loyalty, product and service quality, speed of service and product introductions, and digital experiences were ranked the three most important factors.

Technologies boosting customer satisfaction: CRM (71%); Mobile Apps (59%); Conversational AI (57%); Cybersecurity (45%)

Surprisingly, respondents did not place high value on the people in their organizations who support the customer experiences–employees.

66% prioritize customer satisfaction. Only 16% say employee engagement is a focus area

Only 16% of executives cite employee engagement and retention as a focus area for the next two years, and just 5% say employee demand helps drive strategic and operational decisions. This is worrisome for the future of empowered work, especially in the backdrop of an increasingly employee-driven economy.

High expectations but low investments for emerging technologies

Most respondents have made or are making significant investments in foundational technologies, such as ERP, CRM and cloud, to drive performance. Nearly three-quarters of respondents use them in at least some functions and report higher financial performance, growth and ROI through their use. Almost three-quarters also report gains in customer satisfaction.

On the flip side, our research shows most organizations are not moving fast enough, with only 40% feeling prepared for the pace of technology change and fewer still investing in emerging technologies. But organizations do see potential in these technologies, with high expectations from composite applications, RPA and virtual assistants. Meanwhile, early adopters are reaping the benefits of their investments—more than two-thirds have realized improved financial performance from established and emerging technologies.

Lack of data management undermines confidence

The ability to predict trends and make informed decisions gives organizations an edge over their competitors, especially in times of uncertainty. Our study shows nearly half of respondents say information highly influences their supply chain efforts, customer interactions, and process design, but more than two-thirds indicated the work of becoming data-centric and the management of these digital resources is becoming increasingly difficult.

Organizations are indifferent to culture and innovation

Technology adoption aside, organizational culture and the ability to innovate are critical for future success. However, our research indicates organizations could do far more in this space.

Only 43% say innovation is critical to survival.

Only about one-third claim to effectively provide a sense of organizational purpose, and just one-fourth have successfully developed an innovation-focused culture. It’s alarming to see that close to half say they are reactive to market needs and more than 40% view innovation as a “nice to have” rather than critical for survival. Without the right culture and investments in innovation, how can organizations succeed in the future?


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Leaders Navigate Disruption

Only 6% of organizations are considered innovation leaders, and they are outperforming their peers in terms of performance and growth.

  • +56% Productivity
  • +50% Profitability/Effectiveness
  • +33% Customer Satisfaction
  • +25% Cost Reduction
  • +19% Employee Satisfaction