Corporate Innovation, Theater Bullshit or Future Shaping Capability

Organizations the world over continue to profess high levels of innovation capability, embedded innovation cultures and needle-shifting outcomes. But, hugely credible global surveys continue to highlight that on the whole, the real state of innovation maturity for many organizations may just be a somewhat inconvenient truth. No organization can plot a course to a desired future state if it’s unclear about it’s starting point! So, with access to an accompanying slide deck, this thought piece is designed to help facilitate an honest conversation inside your organization to establish the truth about your current corporate innovation capability.

Where does innovation stand within your organization? Are you one of the 57% of companies that don’t have a formal innovation process [1] or do you see yourselves as part of the 41% which view themselves as being innovation pioneers? And to be quite honest, even if you believe you sit in the 41% category, is innovation really as embedded within your organization as it needs to be in order to drive significant growth and value?

From my work with organizations across the globe, I understand how easy it can be to think you’re being innovative, only to find that results would say otherwise. So what is missing? Perhaps it’s time to bring a little honesty to the conversation about innovation, to have a different discussion about whether your organization’s innovation activity is more theatre, BS, or true future-shaping capability.

This thought piece has been designed to be read as an adjunct to the set of slides released under the same title at the April 2019 Innov8rs Conference in Paris. It adds a small amount of narrative to the statistics as a means of helping organizations to further explore and question their own pursuit of innovation. And in the spirit of collaboration being one of the key drivers of innovation success, the slides have been released as an open-source document, freely available to all those who want to have a different and honest conversation about where true innovation could take their organization.

We now have lots of robust data and research around innovation maturity…..

But, is what it reveals an inconvenient truth? How can we make sense of the data and the truth about our current innovation maturity? What does it say for us as a business and as a leadership team? Have we truly set out to embed innovation at every level across our organizations, or are we still tinkering at the edges of the possible? Are we fatalist, believing that innovation is the preserve of the start-up organization; or, worse still, are we still mired in the belief that past success will give rise to future performance?

Well, just maybe CEOs have started to think again. A 2018 IBM study commented that “innovation is no longer the province of the hungry upstart” whilst another report in the same year [4] concluded that since 2014 there has been a shift from small businesses and entrepreneurs driving innovation to larger businesses. This suggests that large organizations are now fighting back against the viewpoint that innovation is solely the preserve of start-up and fast-growth businesses, but that is no reason for complacency.

Innovation theatre is dead; or is it?

• 72% of CEOs admit their companies are too reliant on fading revenue streams
• 74% of CEOs say fast-changing market conditions are forcing companies to reinvent themselves quicker than ever before
• 93% of CEOs say their long-term success is dependent on their ability to innovate

So we know that we need innovation and we know why we need innovation; and in my experience, there’s always lots of talk about innovation across executive teams. But, as leaders, what are we actually doing? Are we all talk and no action; or, worse still, are we throwing out lots of initiatives under the name of innovation but not putting the structure or understanding in place in order to support them?

And before you say that these statistics were derived a number of years ago, let me give you some food for thought. The Moorhouse 2018 Barometer on Change report revealed that 90% of senior executives and leaders believe that the pace and pressure of change have grown in the past three years. Moreover, the Innosight 2018 Corporate Longevity Forecast [8] headlined with the comment that “Creative destruction is accelerating,” going on to comment that at the current churn rate half of S&P 500 companies will be replaced in the next 10 years. In other words, the current state of innovation is, if anything, even more perilous than it was some five years ago.

Why? Have we really been all talk and no action or are organizations swimming against the tide, doing just enough to stay afloat but not enough to take control of their innovation destinies?

It’s time to ignite hearts and minds, not only to signal that innovation happens here but also to act as a catalyst in order to change mindsets and behaviors. And there is nothing wrong with a little drama, using innovation theatre as a primer for innovation. But beware; this is a launchpad not a destination and the theatre has to be underpinned by an integrated change strategy.

How do we close the innovation BS gap?

Well now we are on familiar ground because change and strategy are fundamental elements of leadership. We may feel uncomfortable with the theatre associated with big innovation initiatives but when it comes to strategy, leadership and culture we know how to deliver! Or do we? The statistics indicate otherwise. Let’s look at a few, starting with strategy and leadership:

• 53% of leaders say their board often talks about innovation, but nobody seems clear what it means.
• 56% of leaders say they are unclear on how to think about innovation strategically.
• 33% of leaders say they are unclear about their innovation leadership responsibilities.
• 41% of leaders say they are unclear how to define the desired outcomes of innovation.

And if that’s not bad enough let’s take in a few cultural home truths:

• 66% of leaders say their organizational structure makes it difficult to share knowledge and understanding.
• 59% of leaders say bureaucracy is stopping innovative ideas before they reach fruition.
• 60% of leaders admit their leadership team fails to understand their customers.
• 61% of leaders claim innovation is difficult because most people in their organization think in the same way.

Here again these statistics may be from a few years ago but when they came to light they should have acted as a catalyst to immediate action. And yet PWC’s 2017 innovation benchmark [10] says that 65% of companies investing 15%+ of revenue in innovation admit their top strategic challenge is aligning business strategy with innovation vision. And other reports reveal similar stories.

Quite simply, the data suggests that big innovation initiatives don’t work and can be looked at as historical ‘Theatre’! So to get our current innovation practice unstuck and in order to unlock true innovation potential, do we need to look at how we’re applying the fundamentals more effectively i.e. leadership development, curiosity, creativity, collaboration, culture, strategy, alignment, etc?

Does creativity leadership rock

In 2010 a survey revealed that around 60% of CEOs acknowledged creativity to be the number one leadership quality to succeed today and in the future. Fast forward to 2018 and a report on the business value of design revealed that less than 5% of companies say their leaders could make objective design decisions whilst another report revealed that 60% of companies still take a year or longer to create new products.

Leaders don’t have to be hands-on in product development but it is their energy, creativity and commitment to innovation which acts as a catalyst to organization-wide development. For the alternative, we only have to look to Nike’s Mike Parker, widely considered to be one of the world’s most creative CEOs when he said:

“One of my fears is being this big, slow, constipated, bureaucratic company that’s happy with its success. Companies fall apart when their model is so successful that it stifles thinking that challenges it.”

Is our organization genuinely structured to pursue innovation?

“While there is variance between the frameworks, they all put the user in the center. Human-centered approaches are no longer a curiosity or a ‘nice to have’, they are the future of business.”

Teaque Lenahan National Director of Design + Innovation at Fjord (Accenture)

If we recognize that methodologies and mindsets like design thinking or jobs to be done aka outcome-driven innovation are the routes to success, then how will we design our organization to support that behavior and activity? It’s time to deconstruct our innovation ambition into three basic subsets and ask ourselves whether we have the people structure in place to succeed.

(1) Define: how do you expect to unearth high-value problems when…60% of major business leaders admit their senior teams fail to understand their customers 

(2) Develop: how do your people collaborate in order to develop compelling solutions when…
66% of major business leaders claim their current organizational structure makes it difficult to share knowledge and understanding

(3) Deliver: how do you match the pace of change when…68% of corporates take just as long to get new solutions to market now as they did five years ago

We’ve already seen that in 2018 sixty percent of companies admitted that it takes a year or more to get products to market. More worrying still 57% take more than 9 months even to respond to change with just 18% able to react in the current quarter.

And to be quite honest I could overwhelm you with further statistics on the way in which companies align, or rather don’t align, their structure, culture and people towards innovation but that’s not really the point. What is important is that leaders who are genuinely committed to pursuing innovation have to be prepared to realign their organizations, to engage their people and to provide them with the skills they need in order to infuse an innovation mindset throughout the organization.

Our ambition is to be an innovation pioneer?

41% of companies see themselves as innovation pioneers. Whether they are delivering is another matter. Let’s be honest, the innovation road is long and takes energy and commitment. Many, particularly long-established, organizations have low energy levels aligned to legacy processes and procedures. This simply isn’t going to deliver on any ambition to be an innovation powerhouse.

It’s time for leaders to ask themselves:

• How do we acknowledge where we are on the energy/innovation trajectory?
• Also, how will we build our organizational energy either before or in parallel to trying to build innovation capability?

I would also suggest that there is still a huge leadership gap in understanding how to design and align innovation strategies with corporate growth strategies. Not only that, there is also a gap in perception between leaders and their people in viewing the innovation imperative. When nearly 75% of leaders believe they have a culture of innovation, experimentation and risk-taking but unfortunately only 37% of employees agree, I would suggest a huge commitment gap.

So maybe the first question leaders should ask themselves is to what extent their innovation ambition is even reaching out beyond the top table. Maybe it’s because 57% of companies don’t have a formal innovation process. And even where there is a process nearly 78% of organizations just focus on incremental changes.

Now whilst there is no one correct innovation mix, incremental changes are never going to change the world. And that world is just waiting for innovation to deliver on its potential. So much so that at the 2019 Davos meeting of the World Economic Forum it was predicted that The Fourth Industrial Revolution will unlock $3.7 trillion in economic value by 2025. Moreover, one-tenth of the economy today is in sectors where four firms or fewer control two-thirds of the market. Those sectors are ripe for disruption. The opportunity ahead is huge.

If we want to shape the future, these are the questions we should really be asking.

These aren’t the only questions but they could be a starting point as a catalyst for change. The key to success is to be honest and to look for honest answers not just at the top table but throughout the organization. It’s time to:

Discuss, answer, action and start to shape the future!

1. Is what we are doing now working well enough to dramatically drive growth and value? If not, how do we answer the key question; what do we do/where do we go next?
2. To deliver the above, we’ll need a change of perspective at senior level. But if we acknowledge that traditional leadership development isn’t enough to answer question one, how do we enable our leaders to shape the future?
3. Doing something dramatically different requires a combination of dramatic and different. As leaders, what does that look and feel like and how will we bring it alive?
4. As part of answering question one, do we shift from trying to win the ‘finite’ game to prolonging the ‘infinite’ game?
5. If scaling innovation capability relies on embedding new work practices, how do we use ‘innovation theatre’ to energize our organization and in turn, scale corporate innovation performance?
6. What does our innovation culture and ecosystem need to look like in order to deliver the innovation investment promise and enable us to genuinely shape the future?