With tech startups rapidly eating into traditional sectors, large organizations face an increased pressure to innovate. The challenge is that traditional innovation approaches are broken. A recent study revealed that only 5% of R&D staff feel highly motivated to innovate. In certain sectors, more than 85% of new products fail and an overwhelming 90% of companies consider they are too slow in launching new products and services. The weaknesses of traditional innovation approaches have led some organizations to explore different avenues and seek new inspiration. These organizations have launched innovation centers in major technology hubs with the explicit mandate to accelerate digital innovations. These innovation centers, comprising teams of people and often physical sites, are established in a global tech hub. The goal is to leverage the ecosystem of startups, venture capitalists, accelerators, vendors, and academic institutions that these hubs provide. Major global technology hubs are the preferred destinations for setting up innovation centers. 60% of companies that have set up these centers have a presence in the Silicon Valley but many more hubs are emerging – the top 10 cities in our analysis represent only 33% of total innovation centers. The US and Europe have the largest share with 29% of total innovation centers closely respectively, followed by Asia at 25%. Penetration varies significantly between sectors; manufacturing is a clear leader at 58%, but despite facing increasing pressures from digital disruptions, Financial Services lags at only 28%. It is extremely challenging to make a success of innovation centers. Success factors include clarity on the role of the innovation center, governance for innovation implementation, and a strong connection with the rest of the business.

1. … But success is difficult, and hinges upon
multiple factors
Innovation Centers help companies
accelerate innovation...
But the penetration of centers varies dramatically
across sectors
Define the right focus—
not too futuristic, not
too current
Ensure strong CEO
support for the
innovation centers
Set up a governance
model with stakeholders
from across the business
Create a diverse
cross-functional team
Prove value and extend
innovation across the
enterprise
Ensure that business
units are closely
involved
Engage with diverse
partners in the innovation
ecosystem
Quickly sunset infeasible
programs, but at the
right time
Hire employees that thrive in both
structured and unstructured
environments
The Innovation Game: Why and
How Businesses are Investing
in Innovation Centers
65% of senior executives face
increased
pressure to
innovate
52% of Fortune 500
companies have
merged, been
acquired or gone
bankruptsince 2000
...However, the traditional innovation
approaches are broken
R&D
investments
increasing, but
R&D returns
decreasing
Only 5%of
R&D stafffeel
highly
motivatedto
innovate
In certain sectors, more than
85%of new
products fail
The main focus is a mix of Technology
and Customer aspects
Staples’ innovation lab
helped launch digital
wallets in 9
weeks—
Staples’ fastest
deployment ever
Zappos lab
enabled
Zappos to
launch its “Ask
Zappos” digital
personal assistance
service in just 12 weeks
AT&T’s Foundry
innovation centers
have
significantly
cut the time
from idea to
launch—collaboration with
startups has delivered
successful solutions such as a
personalized video bill service
and a self optimizing network
Walmart’s search
engine was
developed at
Walmart Labs
in 9 months
with just a
handful of
employees—the tool
drove a 20% increase in online
sales conversions
“As many as 80-90% of Innovation Centers fail”
- Seasoned innovation expert
Main focus of Innovation Centers
% of companies
35%
65%
Gaining access and exposure
to latest technologies
Deeper Understanding of
Customer Needs
Innovation Centers Map
Top Ten Locations
53 centers
Silicon
Valley
Chicago (4)
North America
LLLoooooonnndddoon (10)
Paris (9)
BBBBBeeeerrrrllllliiinnn (((5555))))
Municcccchhhhhhh ((((((5555555)))))))
Europe
Asia
Singapore (7)
Tokyo (6)
Seoul (4)
Bangalore (4)
Shanghai (6)
TTTT
Tel Aviv (4)
Shanghai
Silicon Valley
Chicago
Tokyo
Berlin
London Paris
Munich Tel Aviv
Singapore
In response, companies are beginning
to set up Innovation Centers
29% 29%
61%
of companies with
innovation
centers have a
presence in the
Silicon Valley
of all
innovation
centers
…But other hubs
are also
emerging—the
top 10
locations
represent only
35%
Breakdown of innovation centers
by region
58%Manufacturing
Telecom
Automotive
Consumer Product & Retail
Total
43%
30%
30%
38%
Financial Services 28%
Sector-wise penetration of Innovation Centers
% of companies
25%
Asia
Innovation is more critical than ever...
Innovation has never been more important ... or so difficult
38%of the largest 200 companiesby revenue, across
sectors, have set up Innovation Centers
Follow us on Twitter
email dtri.in@capgemini.com
Learn more at: www.capgemini-consulting.com
@capgeminiconsul