In a recent study released by McKinsey, 84% of CEOs say that innovation is extremely important to their company’s growth. Another in a growing list of data points showing that C-level executives who are not attending to the creation of a culture of innovation are sleeping at the helm.
Potentially worse are the boards that are not demanding they do so and by so doing put long term shareholder value at serious risk. Yes, with some deft M & A moves we can perhaps clear a few nice quarter-on-quarter returns, but the old play of “when the going gets tough, the CEO should go shopping” only works for so long. If we are going to move from volatility to stability we need our companies to grow organically. And we can:
Yes, the rules of the commercial playing field have changed. Organizations that are not paying attention to the new playbook are as endangered as a track coach who still believes the “proven fact” that a human being is incapable of running a mile in under 4 minutes (see also Roger Bannister).
Over the last 50 years or so there has been a steady but quiet focus on researching why some people, business units, companies and executives out-innovate others. How it is that even though most of our firms have the word “innovation” someplace in our corporate values, only a small subset have figured out how to regularly and measurably operationalize that value such that it leads to revenue. But some have.
The facts are clear now and the pathways to innovation excellence have been blazed. As senior executives we will either move down that pathway now, or later. Move now, and we’ll grow organically, take share in our sector and attract capital. Move later, and we’ll just be playing catch up.
The same McKinsey study determined that more than half of the CEOs feel they are better at innovation than their peers (someone has to be wrong there, eh?). Yet 71% say they have either a very poor strategic plan for driving innovation or none at all! Why the disconnect? Fifty percent of executives feel that their companies have lots of good ideas but do a poor job getting them through to commercialization. What’s getting in the way of launching these ideas?
Most companies take a meandering approach, because too few senior executives have been trained in what it takes to create a sustainable culture of innovation. Since well-designed and accurate innovation focused educational programs for managers and senior leaders have only recently become available, it’s understandable -- but not acceptable.
The historic focus has been on creativity at the individual level, and while necessary, such a focus is insufficient at the enterprise level, since people don’t exist in a vacuum; they work in groups, teams, departments and divisions. As an organizational development firm specializing solely in the area of people skills for innovation, we see too many organizations where there is executive intent to see more innovation, but little or no executive direction via systems of metrics and accountability.
The exceptions are the trail blazers that have listened to the scouts and natives of the innovation terrain. In these exceptions, we see senior executives who understand that they must drive accountability for the behaviors that foster innovation down through their organization. One example is a president of a division of GE who put in his teams accountabilities that they would “search for the value in all new ideas.” Similar leaders are making people accountable to measure and deliver on not only “innovation as something we sell” (i.e. a product or service), but also the innovation enablers of culture, supporting systems, governance policies, budgeting priorities and training. And they’re making reports on progress in this regard as important and rigorous as those for the financial health of the enterprise.
The McKinsey report illustrates the dynamic of low accountability at the mid management level. Fully one-third of the respondents said that internal politics get in the way of commercialization. “No surprise,” you say? True, but what a colossal waste of effort! And we regularly witness this in situations when we train individual contributors. Smart employees, with market ready ideas and cost-saving concepts are stymied not through necessary and wise governance but through immature politics of personality. How does this energize our organizations to excel in our sector? Answer: it doesn’t. Yet this is something the research and practice shows us how to fix, and the trailblazers know how to break this dysfunction.
Good news: if you are in a senior leadership position and are reading this, have faith. You can load your company safely and profitably into the wagons that will move it down the innovation trail. Just hire a guide to get you well equipped for the journey. There are short-cuts. (see "map" to right) If you are an individual contributor who cares about the company you are travelling with, ride up to the front of the wagon train. There is a fork in the road ahead. Yogi Berra was right. Tell them to take it! Oh, and pick up a map by reading deeper in this blog and in our newsletter. If you are a board member or investor, make sure that “innovation” is not just a word corporate communications is putting on the lobby wall, into the company’s prospectus, and/or CEO communications. Make sure that there is a system to rigorously measure it. If it’s only talk, with no one doing the walk, then it’s time to grab the reigns and demand action.
Comments