Capacity to Innovate Driven by Culture, Strategy and Structured Process [REPORT]

Organizations worldwide have increased their focus on innovation. Yet, too often, they’re stymied by ingrained fear of failure and internal politics, as well as a lack of clear strategies and repeatable processes to make innovation measurable and accountable across the enterprise, according to a study released by the Business Performance Innovation (BPI) Network.

The study, entitled “Innovation: The New Competitive Equation,” finds that 8 of 10 executives now rate their organization’s commitment to innovation as either “very high” or “growing.”  Meanwhile, global executives are dissatisfied with the caliber of innovative thinkers and change agents coming from universities and business schools.  Just three percent of executives rate higher education as “excellent” in turning out innovators, while 14 percent rate its performance in this area as “poor.”

“The capacity to innovate—to more rapidly develop productive new ideas, processes, products and models that move the business forward—is tantamount to competitive advantage in today’s economy,” said Donovan Neale-May, Executive Director of the BPI Network. “As this study shows, business leaders in virtually every sector are struggling to address this imperative.  For most, it requires significant cultural and operational changes from the existing ways businesses are run.”    

Innovation Roadblocks and Accelerants

The study identifies major obstacles and requirements for improving the innovation dexterity and productivity of organizations. Too often, fear and political infighting—as well as lack of a clear strategy with supporting processes and metrics—stand in the way.

Among key findings of the study:

•     CEO-driven cultural commitment is seen as the most critical step to advance innovation, identified by 42 percent of all respondents, followed by removal of organizational siloes and roadblocks (31 percent).
•     Self-preservation and fear of failure is the biggest obstacle (42 percent), followed by internal politics and organizational siloes (37 percent).
•     By a huge margin, respondents say the most important way to make innovation actionable and accountable is to ensure that innovation is a clear part of enterprise strategy (65 percent), followed by innovation skills development and evaluation models (37 percent) and metrics for measuring progress (36 percent).
•     Top areas in which innovation leaders should focus resources include: defining innovation strategies and deliverables (34 percent), revitalizing the organizational mindset (33 percent) and cultivating bottom-up ideation and non-traditional thinking (31 percent).
•     Formal processes for evaluating and rewarding innovation across the organization is seen as the most important need for encouraging innovation (44 percent), followed by structured programs for “intrapreneurship (40 percent), and a defined of set innovation principles and practices (36%).
•     Only 3 percent of respondents rate universities and business schools as “excellent” in turning out innovators and change agents, while 14 percent rate their performance as “poor” and others giving schools middle-of-the-road grades.

Bottom-Up and Customer Driven Innovation

Bottom-up ideation from employees and customers is seen as a powerful source of inspiration and new thinking. In fact, the study finds that customer engagement needs to be both a leading target for innovation and a top mechanism to inspire new ideas and solutions. For example, respondents identified “new ways of engaging customers and sustaining relationships” as the single most important area where innovation is needed in their organization. They also said that better use of customer feedback systems represents one of the top ways companies can advance innovation in 2015.

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