Innovation We should as it is not in a good state today

Who cares about Innovation? We should as it is not in a good state today

Good innovation is notoriously hard to achieve. There are so many obstacles and uncertainties as you take an idea or concept through to eventual release. Often, we are dealing in the unknowns and uncertainties.

We continually lack facts, we keep seeking validation. We are pressured for results. Others looking at the innovation progress keep demanding tangible evidence and quantifiable guarantees that the outcome provides clear returns.

Much of the innovation discovery journey is a disappointing one. A hunch or insight becomes a dead end. A promising idea did not foresee a roadblock that cannot be resolved. Resources constantly “churn” and get depleted, waiting for others to be brought up to speed. Those not involved directly within the innovation project constantly remain sceptical or require more proof. The status quo of the existing places an increasing drag on the forces of change.

Then we have that often-delusional aspect; where the organization has this total belief they are well ahead of their competitors and simply point to their financial performance as the justification that their innovation is superior when it is so many other factors that have determined that. Superior is often so transitory.

When they are constantly scanning reports on the “state of innovation” it can often lull them, to give some that warm glow, others quickly being dismissive, disregarding many of the key messages as “not applicable to me”.

Then disruption suddenly hits. The cries of “Where did that come from” and a doubling down occurs firstly on costs as that is easy to stop things, fire a bunch of people or plunge into a reorganization that “actually been in the works for months” A quick ramping up of innovation to counter the attacks, to regain the initiative is simply not possible, as the resources are not there, the systems not in place, the more radical innovation unobtainable. Simply there has been a lack of sustained investment in the exploration and exploitation of the “pursuit of innovative ideas,” that are pushing new concepts, that often lie at the edge of the organization.

I mean anyway, come on: “we really don’t believe in innovation, it all is full of risk, uncertainty and all those unknowns and that is the last place to go when you are fighting in a different set of market conditions, isn’t it?” Cut costs are the recognized solution not thinking your way out within innovation. Thinking about innovation implies the longer-term and that is not so welcome at board level in today’s volatile world.

So where does innovation sit within your organization?

Two reports recently came out. Both are, I feel, “painting” a realistic picture of where innovation does sit within organizations. Am I happy with either of these, no of course not but in my view “nothing can change until something does change” What do I mean by that? When innovation becomes paramount to the future at board level then a change can occur. I don’t mean lip service to innovation, I mean deep, defining and structured thinking on innovation

The two reports, one from CB Insights,  who I believe do a consistently brilliant job at “tear downs” and evaluations of industries, markets or topics. The other reflection on innovation comes from a most dependable source, researchers moving towards their doctorates at the Harvard Business School and the necessary research support to get them there.

Lets briefly look at both.

I’ll start with the one from Yo-Jud Cheng supported by his professor Boris Groysberg and a co-author, Michael Slind from HBR. The article was “Innovation Should Be a Top Priority for Boards. So Why Isn’t It?”  The survey was conducted asking over 5,000 board members from around the world asking “do they do enough to support innovation?”

The outcomes cover more than innovation but provide a good overview of board thinking and priorities for areas such as strategic challenges companies face, governance activities and processes that boards are good at, expertise sitting on the board, and the hard aspects of being a board director. Innovation gets caught up in so many, sometimes conflicting issues but in many respects does not get the attention it deserves, especially as it is the most important catalyst for growth.

Innovation is well behind many other issues being focused upon by directors. The survey exposes the myth that it is not one of the three top challenges, innovation ranks fifth as it follows the more conventional concerns of managing talent as the top (and that did surprise me) and regulatory and competitive threats. Technology trends lay in the seventh position in this “biggest strategic challenges.”Reading through the responses, the lack of faith in their processes was disturbing. Risk management is rated far more than innovation as a better process.

To quote

“When we asked directors about the effectiveness of their board’s processes for supporting innovation, 42% rated their processes as above average or excellent. In contrast, 70% of respondents think their boards have effective processes for staying current on the company”

Both, for me a little damming for preparing for a disrupting world or positioning innovation as the future catalyst for growth.The other valuable point for me was another insight from the survey

“We also found that a focus on innovation tends to go hand in hand with longer-term time horizons. Companies that are organized around creating and enhancing value over the long term were more likely to have boards that prioritize innovation, as compared with companies that are primarily focused on achieving short-term results. Laying the foundation for innovation requires a forward-looking mindset throughout the firm and the board”

Strategy & Innovation Consultation

The two major takeaways for me

The report can be viewed here but finishes up with a good quote (correct insight in my opinion or validation of many):

“As one director noted, “We spend a lot of time on operational strategy — growth, acquisitions, etc. — [and] not much on risk, people, innovation.”

Now that is very disappointing but what do we expect from innovation?

In one final quote from this article:

“when boards seem to have a “widespread lack of board-level engagement in innovation processes (that) could be a major blind spot and a potential liability”

My second report is the one from CB Insights

CB Insights recently released a report on the “State of Innovation” where they surveyed 677 corporate strategy executives. It does fit or correspond to the HBR researchers thinking, it gives a closer fit of what is going on with innovation in today’s organization. You do need to provide your email for access and to download of this report.

The report is a visually very easy read but gives a clarity to the big issues constraining innovation. I do like this style of reporting, offering up one page per insight. It brings them specifically into “stark relief”. This approach is really good to bring out the impact of that particular point. A good lesson in presentation, certainly for me!

I picked out these as my specific takeaways:

  1. 41% of executives said their companies are extremely at risk or very at risk of disruption
  2. Corporate strategists talk the talk but don’t walk the walk
  3. Companies focus on incremental innovation with 78% of portfolios allocated to continuous innovation instead of disruptive risks
  4. Customers and employees are driving innovation. My thought is what do you expect if boards are not as engaged as per the HBR report above stating?
  5. 57% of respondents said their companies do not follow formal innovation processes and executing remains mostly ad hoc and unstructured. Even the majority don’t have processes for ideation and development phases. Now that is shocking!
  6. Companies lack confidence in their ability to innovate and it progressively gets “less effective” in each of the phases of innovation. Idea Generation, Development/Design, Commercialization/ Launch, Optimization/ Management and Product Retirement
  7. Companies take an insular view of how they will attack innovation
  8. Finally: Because they prefer to build (themselves), corporate innovation is slow.

When I look at this list I really do go “oh dear”. There are some clear positive takeaways also in this report such as “high performing companies build cultures of innovation across functions” and achieve a 5X increased performance due to this and “high performing companies invest in disruptive projects”.

The issue for most is “how do they become high performing? Until we treat innovation as a core process, disciplined, structured set of activities that are managed in different ways than the existing business, we will struggle. Embracing the aspects of a high performing business within innovation offers significantly increased performance. The ability to grasp all that this entails and establishing a set of innovation management disciplines, most will simply “bounce” along on a very unsatisfactory innovation projection of mediocre growth and return.

So to download the CB Insights report go here “State of Innovation”. It is well worth reading and is in such an easy, digestible format

In Summary

I would suggest you go and take a look at both of these reports. They reaffirm that innovation is not the priority it should be at board level, both offer a devastating reality of poor innovation processes and structures and a lack of corporate design for salvaging innovation out of its current mire of incremental, ad hoc and risk constraints due to this lack of top focus.

Innovation is full of rhetoric and hot air. Those in the trenches are believers but they are battling forces that make it doubly hard to make a success of innovation. The internal forces are as much against them as the external unknowns.

As I opened with as my title “What do we expect from Innovation? Mostly disappointment.” We can only dream that we are still moving towards my view of that “New Innovation Era”. It still lies ahead if we want to recognize the valuable contribution innovation does make to the future growth and, more importantly, to their ongoing sustainability.

These two reports reflect the potential of where innovation can go but do offer a snapshot of the present reality of why it cannot until multiple aspects of innovation management are addressed and accepted. These changes are essential to underpin innovation with a clear focus, dedicated resources, recognized as a functional discipline, well thought-through processes and a top to bottom recognition and focus on its importance. Will something change? I seriously wonder although I’ll keep banging the innovation drum, hoping some will (eventually) listen.

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