Ana Paula AndreuDespite two-thirds of companies currently considering innovation a top-three priority, this is, in fact, the lowest level since the financial crisis a decade ago. With the COVID-19 pandemic providing the perfect storm for reframing and reorienting around a new future vision, organisations that aren’t innovation-led will be left behind by those that are as we head towards a post-pandemic future.
Unfortunately, just 13% of leaders see their innovation programmes as integrated or optimised. [1] while, 72% say there is limited visibility of outcomes from investing in innovation. [2] So, are leaders looking in the wrong place or are innovation efforts being wasted? Well, possibly a bit of both; but with a heavy emphasis on wasted efforts. In my work with companies around the world, I’ve seen time and time again how vast resources have been squandered in the name of innovation with little reward.
Innovation is not a bolt-on activity.
It might feel great as a leader proclaiming that “from now on we’re going to be innovative” but to you can’t build a culture of innovation with a speech and a PowerPoint slide! In my experience, the fact that most innovation transformation programmes fail is due to a lack of appreciation of the actual transformation required. To what I’ve observed and now call ‘the three pillars of innovation’: Strategy, Leadership, and Culture.
That’s not an innovation strategy.
Come on; no one else is listening so you can be honest with me. Does your innovation strategy pretty much reflect the same corporation growth approach you’ve always had but with the word ‘innovation’ added in? Innovation is critical but your processes, methodology, training, rewards and so on are pretty much unchanged! That’s not an innovation strategy; it’s a recipe for corporate failure. When I talk about innovation-led transformation, I don’t mean seeing innovation as the icing on the cake. Building a high-value corporate innovation capability, culture, and ecosystem means rethinking the entire cake by aligning all the right ingredients to the new, bold vision.
So, when I see reports revealing that while 69% agree innovation has increased in importance as a growth driver over the past three years but only 50% rapidly explore rough ideas to test and learn. [3] Then, I know that fully developed innovation strategies are still a corporate myth.
Leadership or strategy, which comes first?
Well, you can try to shift strategy without having a leadership mindset geared around innovation, but it probably won’t get you very far. In my book ‘Building a Culture of Innovation’ [4] I comment that if it’s not on the top team’s agenda, it’s not going to be in the culture. If leaders can’t shift to an innovation/growth mindset then not only are they going to struggle to devise an appropriate strategy, but they are also unlikely to display behaviours such as empathy, design thinking, and collaboration, critical to building a culture of innovation.
So, leadership behaviour is critical to delivering and innovation-led strategy. It’s a shame, therefore, that just 16% of total FTSE 350 annual bonus conditions positively encourage spending on innovation compared to 39%, which positively discourage it. It’s also a shame that long-term incentive plans are still even more strongly skewed towards metrics which discourage executives from innovating at a ratio of 6:1. [5] So when we’re talking about innovation strategy and leadership, we also need to completely rethink remuneration and the reward/outcome matrix.
Your people are your culture.
Now for the third pillar of innovation; organisational culture. If you want to shift performance and outcomes, then you need your people to have the confidence and skills to work in entirely new ways. They need to believe that they have the freedom to experiment and to become the owners of customer problems, but for many organisations that means ‘hacking’ the current culture.
Interestingly Accenture’s research on equality and innovation revealed that in organisations with the most equal and diverse cultures, an innovation mindset is eleven times greater than in the least equal and varied cultures. [6]
In summary, when leadership teams struggle to understand why their innovation efforts aren’t working or haven’t worked, it will always come down to one of, or all the three pillars. Unless strategy, leadership, and culture are fully aligned around the pursuit of innovation, innovation most certainly won’t be the outcome.
[1] https://home.kpmg/us/en/home/media/press-releases/2019/09/new-survey-data-
Indicates-increased-confidence-and-investment-in-innovation-among-fortune-1000.html
[2] http://www.infrastructure-intelligence.com/article/nov-2019/innovation-assured-environment
[3] https://www.campaignlive.co.uk/article/marketers-innovate-fewer-resources/1665504
[4] https://crisbeswick.com/books/
[5] https://www.nesta.org.uk/press-release/ceo-remuneration-packages-actively-discourage-innovation-uks-top-companies-new-nesta-analysis-finds/
[6] https://www.accenture.com/us-en/about/inclusion-diversity/gender-equality-innovation-research
Author: Cris Beswick
Cris Beswick is the co-founder of ‘Outcome’, a boutique innovation advisory firm, best selling author of ‘Building a Culture of Innovation: A practical guide for placing innovation at the core of your business’ and a leading thinker and strategic advisor on innovation leadership & culture.
Some of Cris’ clients include: The Government of Dubai, Cisco, SIG, Rank Group, Big Lottery, BHA Group, The House of Commons, Ministry of Defence, GCHQ, Arriva, Roche, Ordnance Survey, Nationwide Building Society, National Bank of Kenya, QinetiQ, DNV-GL, ING and Wärtsilä to name but a few.
Ana Paula Andreu
Ana Elisa Villazana Reyes
