US Firms Risk Losing Ground on Innovation - only 5.2% reward risk

A recent American Management Association Global Innovation Survey shows U.S. firms risk losing ground on innovation. Most firms do not have formal processes to foster innovation. More than two-thirds of businesses consider innovation to be very important, but less than a third of American firms have a formal policy to review and evaluate innovative ideas, according to AMA. The results showed a gap in the way that U.S. firms approach innovation versus counterparts abroad, where more than half of the companies have a formal structure in place to reward and develop innovation.

Nearly three-quarters (71.4%) of U.S. respondents viewed their companies as being moderately successful at innovating, which suggests that many American companies feel they are driving breakthroughs organically, with no formal process in place.

Still, more than two-thirds of all U.S. companies (68.1%) surveyed had no formal policies or structures to review and evaluate innovative ideas. This may be due to an overly conservative attitude toward risk at these companies. Only 5.2% of the U.S. companies polled said that intelligent risk taking is rewarded within their companies, implying that companies are hedging their bets on innovation. 

“The American lead in innovation may be at risk,” said Edward T. Reilly, president and CEO of American Management Association. “The increasing emphasis on short-term profits and predictable growth in U.S. business may be creating a culture where failure is not an option, closing the door on new processes that involve big risks and big rewards,” said AMA’s Reilly.  “It could be that the American way of business may very well be squashing innovation right out of the process.”

The findings are contained in the survey The Quest for Innovation: A Global Study in Innovation Management 2006-2016, commissioned by the American Management Association and conducted by the Human Resource Institute (HRI).

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