Management in the Gulf need to take more risks and develop staff to think creatively, according to a new global innovation survey designed to help companies stop wasting their best ideas and flushing billions of dollars down the drain.

Announced in Abu Dhabi today (August 30) by PA Consulting Group, a global multi-faceted consulting firm, the report highlights an overwhelming view that leadership of organisations in the UAE, Saudi Arabia and Qatar is not good at nurturing innovation.

It says that companies in the three Gulf countries are not big risk-takers when it comes to innovation, and only 27 per cent are striving to be pioneers or pursuing risky but high potential innovations.

The survey findings have been revealed following the announcement of a new UAE Innovation Week, set to take place from November 22 to 28 in Dubai, UAE.  

The overriding message of the PA Consulting Group global innovation survey of 750 senior executives, spanning 15 countries and nine sectors is that innovation, one of the key factors that determine productivity levels, is broken.

Jason Harborow, head of PA Consulting Group, Mena, said: “Seven years on from the global financial crisis, many executives still refuse to invest in projects that do not guarantee a strong ROI.  Yet these tight expenditure controls are actually stifling future growth by preventing potentially brilliant ideas from making it to market.”

According to 67 per cent of survey respondents in the Gulf, less risky types of incremental innovation deliver greater value to them than breakthroughs. Only 22 per cent say they talk more about innovation than they do it.

“These figures are encouraging, but a low failure rate does not mean the best ideas are being developed in the Gulf,” said Harborow. “Managers in the region appear to acknowledge the need for more creative approaches, with 78 per cent saying they need to develop staff to think more creatively.”

The PA Consulting Group innovation study is based on an international survey conducted between March and May 2015 involving 750 senior business and government executives from Denmark, Germany, the Gulf (Qatar, Saudi Arabia and UAE), Mexico, the Netherlands, Norway, Sweden, Austria, Belgium, Luxembourg, Switzerland, the UK and the US.

Private sector respondents comprised 75 per cent of the total, and of these 47 per cent had annual revenues between $100 million and $1 billion, and 32 per cent had revenues exceeding $1 billion.

The research identified five common ‘innovation killers’ that are stopping organisations from realising the potential of their innovation activity.

These are fear of backing high potential risky innovations, lack of focus and a clear innovation strategy, failure by organisations to develop and commercialise their best ideas at pace, difficulty in measuring ROI and reluctance to invest.

“Taken together, it points to a deeply ingrained culture of risk-aversion where cost-cutting almost always takes precedence and investment in innovation is viewed as a ‘nice to have’,” said Harborow.

“Our overall view is that companies need to shake up the board and bring in new skills and talent, create a Chief Innovation Officer role; focus on value, not profit and loss; make innovation a whole-company priority and incentivise employees by making innovation part of their total reward. We think getting innovation right, and preventing brilliant ideas failing for avoidable reasons, can solve the productivity crisis," he added.

PA Consulting Group estimates that UK organisations alone are flushing GBP64.7 billion ($99.5 billion) down the drain each year on innovation failures.  This is the equivalent of over half of the EU’s annual budget of €145 billion ($162 billion) and the opportunity cost in terms of lost revenue will be many times this figure.

Key findings from respondents in UAE, Saudi Arabia and Qatar:

16 per cent - Have seen a brilliant idea fail for reasons that could have been avoided

27 per cent - Are striving to be pioneers

60 per cent - Are developing digital capabilities to disrupt or lead their sector

38 per cent - Say innovation has, at times, proven to be a costly failure

22 per cent - Talk about innovation more than they do innovation

35 per cent - Say people use ‘innovation’ to describe different things

4 per cent - Provide rewards or bonuses to staff to encourage innovation

0 per cent - Strongly agree their leadership is good at nurturing innovation

Top barrier to innovation (44 per cent): Difficulty in measuring ROI

Top strategy to improve innovation (78 per cent): Developing staff to think creatively

Top area for investment (49 per cent): Product and service development – TradeArabia News Service