Indian companies should direct more of their innovation expenditure towards disruptive and pioneering technologies

An Accenture report surveyed 106 companies in India. It found that approximately 25% of Indian organisations surveyed are generating significant value from their innovation investments. Their research highlights that Indian companies apply innovation more comprehensively compared to their global counterparts. In fact, almost 90% of Indian companies have plans to increase their innovation spending by more than 25% over the next five years, however, 70% of Indian companies are focusing their investments on incremental innovation instead of the disruptive kind. Of the Indian respondents who reported increasing their innovation investments by at least 25% in the past five years, 38% under-performed their industry peers in growing profits or market capitalisation, and much of this is due to spending predominantly on incremental innovation.

Incremental innovation focuses on cost or feature improvements in existing products or services. Disruptive innovation, on the other hand, creates a dramatic change that transforms existing markets or industries, or even creates new ones, by introducing groundbreaking new products. Thanks to incremental innovation’s low level of uncertainty and risk it is by far the most popular form of innovation. A good example of incremental innovation is Google’s Gmail. When first launched, Gmail had few features, but did one thing very well—it delivered e-mails quickly. As time passed, Google introduced many additional features and improved its service, making it faster and better. Due to the high risk factor of disruptive innovation, smaller companies or start-ups usually play important roles in disruptive innovation because, although the costs of this innovation might prove a barrier, the companies might not even need to compete for market share since there is no similar product/company in the market. Swiggy is an excellent example of the same in the domestic landscape. So, although Indian companies are spending adequately on innovation, maybe they should direct their expenditure on more risk-heavy technologies to reap even greater rewards.