American Management Association Survey Shows U.S. Firms Risk Losing Ground on 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 American Management Association (AMA).  The results, revealed in an AMA global survey on innovation, 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.

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).  (The complete survey is available on AMA’s Website at www.amanet.org/research.)

“The American lead in innovation may be at risk,” said Edward T. Reilly, president and CEO of American Management Association.  “U.S. firms need to avoid becoming complacent; clearly, foreign companies are adopting formal structures for fostering innovation, which may erode America’s competitive edge in the years to come.”

To be sure, 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 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.”

It is not all bad news, however. The findings brought to light in the AMA/HRI survey offer hope as well.  Many companies are fostering customer-centric cultures that are focused on innovation, and these companies offer lessons in how firms can stay competitive.

Reilly said that U.S. companies can take steps to drive innovation in-house.  “U.S. firms need to start looking at innovation as a business process that should influence every segment of their organization,” Reilly said.  “Fostering innovation for the long term must be accorded the same significance as other well-developed initiatives like improving productivity or managing cost control.”

About HRI

For over 30 years, the Human Resource Institute (HRI) has remained dedicated to providing world-class research in the area of people management issues, trends and practices. Founded in 1969 at the University of Michigan’s Institute for Social Research by Dr. William Pyle in collaboration with Dr. Rensis Likert and Dr. George Odiorne, HRI is currently affiliated with the University of Tampa and is widely recognized as one of the top five institutes of its kind in the United States. HRI provides its members with accurate and timely research that helps facilitate a better understanding of all the people management issues that member organizations face today as well as the trends that are shaping the future. Currently, HRI is following approximately 150 demographic, social, economic, technological, political, legal and management trends, and there are over 100 major corporations supporting this research with annual grants.

About AMA

American Management Association is a world leader in professional development and performance-based learning solutions. AMA provides individuals and organizations worldwide with the knowledge, skills and tools to achieve performance excellence, adapt to changing realities and prosper in a complex and competitive world. Each year, thousands of customers learn new skills and behaviors, gain more confidence, advance their careers and contribute to the success of their organizations. AMA offers a range of unique seminars, workshops, conferences, customized corporate programs, online learning, newsletters, journals and AMA books. AMA has earned its trusted reputation as a successful partner in worldwide professional education and development that improves the immediate performance and long-term results for both individuals and organizations. For more information, visit www.amanet.org