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Survey Says: Global Leaders Not Cultivating Innovation

In today’s marketplace, change is inevitable.

January 17, 2008
Related Topics: Technology
KEYWORDS technology

In today’s marketplace, change is inevitable. The pace of business has increased dramatically due to globalization, consumer diversity and the availability of new technology. These factors require that leading organizations employ any and all advantages in order to stay ahead of the competition. Yet, innovation is one competitive advantage many organizations are not taking advantage of.

A recent study from Oliver Wyman’s Delta Executive Learning Center showed leaders that don’t actively work to establish a culture of innovation may find their organizations experiencing faltering growth in the marketplace. The study is part of Oliver Wyman’s Global Leadership Imperative series and resulted in a white paper titled “Building an Innovation Engine.”

Companies that excel at innovation have three traits in common, said Carole France, partner, Oliver Wyman’s Delta Executive Learning Center. They have leaders who create a climate for innovation, a culture where most, if not all, employees believe they play a role in innovation and a structure that supports idea generation and the execution of those ideas.

This structure can take on different forms based on the industry and the company, but France said it likely will include some mechanism for employees to talk across boundaries, functions or business units. The structure also will encourage conversation with outside partners and provide a way for management to filter ideas in a very transparent process, so everyone in the organization knows how ideas are put forth and how decisions are made on what ideas to develop.

France said many of today’s top companies aren’t actively promoting innovation among their senior leaders simply because it’s hard to do. Further, innovation may not immediately produce a tangible benefit, which bumps it down on the leader to-do list.

“It isn’t that you can do all one thing,” she explained. “You can’t just say let’s all get behind one structure. It’s a whole set of complex, interdependent elements, and our survey results indicate that you’ve got to do almost all of them at the same time. For example, you have to create a compelling vision. You have to create this climate. You have to create some sort of structure, and if you just do one of these, it’s going to be shortsighted and it’s probably not going to succeed. It takes a lot of focus, a lot of energy and a great deal of commitment without necessarily getting an immediate return.”

Despite the lack of direct bottom-line correlations to success, it’s difficult to ignore the benefits innovation can bring. For instance, according to the Manitoba Business Information Service and Statistics Canada, successful small and medium-sized organizations consistently associate innovation with success, and innovative enterprises gain more market share and enjoy increasing profitability and stronger growth than those do not innovate, creating new products and services that enable them to successfully compete internationally.

But in order to establish an innovative culture, one that supports the generation and execution of new ideas and rewards contributors, France said talent management leaders must believe innovation has value and make it a top priority.

“They have to decide that innovation matters, and they have to communicate that it is a business priority throughout the organization,” she said. “Then it’s a matter of setting a tone at the top and behaving in ways that create this sort of climate. It would start at the very top with the executive committee where they are behaving in a very cross-functional, collaborative fashion, and they are communicating that it’s OK to fail. Obviously not always, but failure should be accepted and even celebrated.”

France said there is no structure that works universally, but whatever structure is put in place should facilitate leaders making tough decisions, such as how to allocate resources and what kind of processes to implement to ensure an innovative idea gets somewhere. Essentially, there should be some mechanism for innovation and a discipline for execution.

“It’s more about people in leadership roles communicating very consistently and then acting on what they say,” she said. “If they say it’s OK to fail, that they in fact allow people to fail and support that, it’s just plain, really good leadership and management with an emphasis on innovation.”

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