A new study of 1,748 executives by Harvard Business Review Analytic Services in association with Shell has found that innovation in business is heavily constrained by market uncertainty and high ROI thresholds. Furthermore, while many executives are changing personal habits to save energy, only three out of 10 companies said they had adapted existing products or introduced new offerings to meet the demands of consumers for energy-efficient, sustainable products.

Gerald Schotman, Shell’s chief technology officer, said, “Global energy demand is set to double in the first half of this century so it’s more important than ever that businesses work together to tackle the energy challenge. Human ingenuity and new technology hold the key to unlocking the energy that consumers will need to power their lives in the years ahead.”

Business leaders say their organizations can, and will, overcome some of the energy innovation challenges, but they ultimately look to government for leadership to support broad-scale alternative energy development and conservation. Business leaders heavily favor government incentives and funding to foster sustainable energy development. Three-quarters of organizations foresee open innovation as a catalyst for the development of technologies, products, systems, and services.

The survey findings include:

• The gap between energy demand and supply concerns three-quarters of organizations. The security of national energy supplies is of major importance, with over half (54 percent) strongly agreeing it is an issue of global importance.

• Energy issues drive innovation in a new range of products and services to meet the demands of energy-conscious consumers and companies. A third of organizations have remade products to be more energy efficient and plan to introduce new ones based on their energy-saving potential.

• Organizations expect several formidable innovation barriers to begin easing. More than one-third of organizations identify their corporate culture’s resistance to fresh ideas as having been a barrier three years ago, but only 22 percent point to it as one over the next three years.

• Greater collaboration and open innovation are seen as valuable catalysts for progress, yet six out of 10 organizations still identify competitive conflict as a hurdle.

• The majority expects government support and leadership in the drive for a more sustainable global energy resource base.

“Business executives want to see progress on new energy solutions, but feel limited in the scope of their ability to influence change,” said Alex Clemente, managing director of HBR Analytic Services. “They clearly feel that the government must help establish the incentives and infrastructure to make real changes to our current energy supply chain.”

More than half of business executives involved in the study advocate that government and industry develop new infrastructures to support alternative energy sources. Relatively few expect the existing infrastructure to support solar, wind, tidal power, and other favored alternative energy sources. But the survey found no major consensus among the executives around which solutions are best, how they should be delivered, or the role of business in making this happen. Instead, the leaders in the survey made clear that the government must lead in putting new policies, incentives, and infrastructure in place before real changes in energy will occur.

To access the full report, click here.

Publication date: 01/09/2012