Susan Popper, SAP's SVP of Marketing Communications knows I'm an innovation hound. I love trying to drive in directions that will grow the business. So she handed me the latest McKinsey Quarterly entitled, "How companies approach innovation: a McKinsey Global Survey."
The abstract of which says:
...executives say innovation is a top priority for driving growth... but respondents point out flaws in how their companies manage and govern innovation. Most companies don't focus on innovations they say will have the greatest effect on performance, for example, and innovation is seldom a part of leadership agendas.
Although 70% of leaders tap innovation as a lever for driving growth, the above is depressing, at least for an innovation hound like me because...
...[these] leaders lack confidence in their innovation decisions.
But companies, which talk the talk around innovation tend not to put in place management and governance structures which enable innovation. According to the survey, companies tend to focus on product and service innovation, NOT breakthrough or institutional innovation.
Again from the survey:
Top managers and other executives agree the the more important drivers of innovation are culture and people -- and that companies face significant challenges with both
This is another area for concern because as we all know, culture is a tough nut to crack. Its so difficult to change because its coded in the DNA of the organization. So if you work at an organization that doesn't have a culture that (1) values innovation and (2) places governance, budget and resources around innovation - not that it never will but it may be a cold day in hell before Innovation becomes mainstream. Further, many top managers agree that corporate policy actually tends to offer limited incentives to innovation or limits it by placing an innovation team in a risk averse organization or business unit or having no plan to deal with failure other than to junk the team and start over. Some say this is a talent issue, other execs say its a cultural issue. The answer is "yes."
Another key point made by the survey is that many companies seem to "isolate innovation projects within business units, even when they see bigger opportunities." Don't do this!!! Don't isolate your innovation teams. Your innovation teams should be allowed to embed in multiple functional groups, be encouraged to experiment and fail, experiment and succeed and ensure innovation has both formal and informal ways to express itself and influence multiple lines of business.
I am not surprised by any of these findings. I'm not surprised that many large companies face challenges in the innovation arena. And that only a small percentage of organizations have "figured it out. " According to McKinsey,
The key organizational difference is the use of innovation related metrics in performance reviews.... only 29 percent of all companies include these metrics in reviews of C-level executives and business unit heads... whereas... 47 percent do so at organizations where innovation is a top priority and 50 percent at organizations where executive are confident in their innovation decisions.
Talking the talk is not enough these days. If companies say they use innovation to drive performance, you should be seeing the metrics around innovation being put in place, you should see reliance on and corporate reporting of customer satisfaction or net promotion and you should be seeing talent and organizational shifts to embrace and drive innovation. If you don't, then its all just lipstick on a bulldog.
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