Executives are typically doing a good job at managing existing business, but the omnipresent need for growth requires ever more from them. Growth opportunities by way of product development and tweaking the existing business models have usually already been realised. Companies know well that their today’s products/services and business models are going to have a lifetime and are ultimately going to fade. But this fact of life doesn’t really need to matter as long as companies are continually changing, reinventing and transforming themselves by way of innovation.
Companies have started doing innovation
Many companies have some form of innovation initiative in place, hoping these will lead to the next “big thing”. Some are pouring funding into R&D, others are training teams and setting up new innovation processes. But too many companies engage in an “innovation theatre” in the forms of massive company-wide calls for ideas, internal hackathons or a pilgrimage-like trips of executives to Silicon Valley.
Most companies still fail at innovation
However, such programmes often fall short and the failure rates of even well-funded corporate innovation projects are still above 80%. With all their resources, experience and talent too many companies have failed spectacularly in their attempts at innovation. Some have then given up and declared that they’ve given innovation a go, but it doesn’t work.
Reasons of failure
Researchers have identified several causes for the typical failures of corporate innovation attempts. For instance, companies are overly protective of and focussed on the core business, which doesn’t allow for keeping up with the pace of change. Internal innovation programmes fail not because of a lack of ideas, but because they’re often vague and haphazardly put together. Research shows a big gap between executives’ acknowledged need for innovation and the companies’ capabilities to actually do it. This gap has its root causes in the lack of proper: innovation strategy, innovation culture, and innovation structure.
Companies that are successful at innovation have a strong mandate for innovation, usually from the board of directors, and the CEO is their innovation champion. They have innovation embedded in their strategy and have in place the right culture and structure to enable innovation.
To move forward with innovation, executives should:
- Recognise that innovation isn’t about pushing the existing business aside but building on it and expanding it into the future.
- Understand that innovation can be managed and innovation competence of employees can be developed.
- Take the reins of innovation, become innovation champions. If innovation is not fostered from the top, it’s not going to happen.
- Stop thinking of innovation as the outcome. Innovation should be seen as a capability of an organisation.
Codirector of the Postgraduate programme Business Innovation