admin Innovation has traditionally swung into and out of fashion: popular in good times and tossed back into the closet in downturns.
But as globalization tears down the geographic boundaries and market barriers that once kept businesses from achieving their potential, a company’s ability to innovate—to tap the fresh value-creating ideas of its employees and those of its partners, customers, suppliers, and other parties beyond its own boundaries—is anything but faddish. In fact, innovation has become a core driver of growth, performance, and valuation.
Research bears out this point that more than 70 percent of the senior executives in a survey that was recently conducted said that innovation will be at least one of the top three drivers of growth for their companies in the next three to five years. Other executives see innovation as the most important way for companies to accelerate the pace of change in today’s global business environment. Leading strategic thinkers are moving beyond a focus on traditional product and service categories to pioneer innovations in business processes, distribution, value chains, business models, and even the functions of management.
Given the limited time and means—as well as the short-term performance pressures that executives constantly face—pursuing innovation with anything other than existing talent and resources often is not an option. The following three fundamentals are a practical starting point to improve an organization’s chances of stimulating and sustaining innovation where it matters most—among a company’s people.
Leadership Of Innovation
While senior executives cite innovation as an important driver of growth, few of them explicitly lead and manage it. Some companies manage innovation as part of the senior-leadership team’s agenda. How can something be a top priority if it is not an integrated part of a company’s core processes and of the leadership’s strategic agenda and—above all—behaviour?
In a separate survey of 600 global business executives, managers, and professionals, the respondents pointed to leadership as the best predictor of innovation performance. Those who described their own organization as more innovative than other companies in its industry rated its leadership capabilities as “strong” or “very strong.” Conversely, those who believed that the ability of their own organization to innovate was below average rated its leadership capabilities as significantly lower and, in some cases, as poor.
The way leaders behave sends strong signals to employees. Innovation is inherently associated with change and takes attention and resources away from efforts to achieve short-term performance goals. More than initiatives for any other purpose, innovation may therefore require leaders to encourage employees to win over their hearts and minds. The failure of executives to model innovation—encouraging behaviour, such as risk taking and openness to new ideas, places second. Rewarding nothing but short-term performance and maintaining a fear of failure also make it to the top of the respondents’ list of inhibitors.
Senior executives say that the top three ways they spend time making decisions about innovation involve determining what types or strategies to focus on, who gets to work on the resulting projects, and how to commercialize the fruits. Few spend time on targets, metrics, and budgets for innovation. That is telling, since executives whose companies do have such targets and metrics feel the greatest confidence in their decisions.
Building Innovative Networks
Certain innovative companies’ employees who are passionate about innovation and others who feel uncomfortable about any topic related to change. Recent academic research finds that differences in individual creativity and intelligence matter far less for innovation than connections and networks—for example, networked employees can realize their innovations and make them catch on more quickly.
Since new ideas seem to spur more new ideas, networks generate a cycle of innovation. Furthermore, effective networks allow people with different kinds of knowledge and ways of tackling problems to cross-fertilize ideas. By focusing on getting the most from innovation networks, leaders can therefore capture more value from existing resources, without launching a large-scale change-management program.
Shaping innovation networks is both an art and a science. Any network is unpredictable and, in the end, impossible to control. Focusing on the replacement of one or two ineffective members has less impact than establishing the conditions for vibrant networks and taking advantage of the connections through which, they flourish.
A team or network in need of more ideas might get additional idea generators to fill the gap. If the challenge is commercializing the right ideas, management might opt to add producers and experts. In our survey of professionals, respondents who regarded their companies as more innovative than competitors in the same industry were also more likely to work for companies that had larger numbers of producers.
Circle Of Trust
Senior executives say that making top talent available for projects to meet innovation goals is their single biggest challenge in this area. Some 40 percent of them also believe that they do not have enough of the right kinds of talent for the innovation projects they pursue. A different view emerges from below, however. Employees are more likely to believe that their organizations have the right talent but that the corporate culture inhibits them from innovating.
Managers and employees broadly agree about the attitudes, values, and behaviour that promote innovation. Topping the list, in our research, were openness to new ideas and a willingness to experiment and take risks. In an innovative culture, employees know that their ideas are valued and believe that it is safe to express and act on those ideas and to learn from failure. Leaders reinforce this state of mind by involving employees in decisions that matter to them. Trust and engagement are the mind-sets most closely correlated with a strong performance on innovation.
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