Innovation is the key to grow any businesses to a significant scale. Many businesses have started with innovative ideas and grown rapidly by disrupting incumbents in their markets. However, as they grow they have instituted management processes along the way which are designed for disciplined execution. They have unknowing migrated to a culture that values predictable outcomes rather than calculated risk taking. At some point, these companies start losing market share to the next innovators, and the cycle repeats. This innovation cycle is well described in the book “The Innovator’s Dilemma” by the late Harvard professor Chris Christensen. It is well understood by many business executives.
In normal times, the slow decline of market share for an incumbent can take many years. It could be hard to get the topic of innovation on the agenda of its senior executives. However, the COVID-19 pandemic has accelerated the innovation cycle. Most business executives believe the pandemic will force them to fundamentally change the way they do business in the next few years because their customers’ needs and wants have changed. In order to continue the growth trajectory businesses need to innovate. In some cases, innovation is no longer a luxury; it is a necessity. But few business executives believe they are well equipped for innovation. According to a McKinsey study, only 21% of executives believe they have the expertise, resources, and commitment to pursue new growth, and two thirds of executives believe now will be the most challenging moment in their executive career.
Behind every crisis is also opportunity. It is the time for business leaders to reflect on their commitment to innovation, diving deep into their own mindset and their company culture and being radically candor about it. In most companies, there are wall posters describing their core values, which often include the word “innovation”, but is it manifested in their day-to-day operations? Most companies will say no, and that’s why only 21% of executives believe they have the expertise, resources, and commitment to pursue new growth.
The first step toward innovation is to commit to doing it. Once the commitment is made, the company’s culture, organization and management processes need to support the commitment. How do you know a company is committed to innovation? Answers to the following questions will reveal a lot:
1. Are the employees feeling motivated and empowered to bring forth new ideas?
2. Do you value and reward employees’ strength in thinking critically and constantly finding new ways to improve?
3. Do you always encourage diversity of thoughts and opinions in meetings to surface hidden opportunities?
4. Do you make it feel safe for employees to experiment and test new ideas, knowing most of them will fail or die due to limited scalability?
5. Do you ask and support allocating dedicated days in a week for employees in technical development or product development areas to focus on innovative projects?
6. Do you make your senior management team accountable for quantifiable innovation results?
7. Do you consistently review your innovation portfolio, and manage resources to improve outcome?
Depending on the answers to these 7 questions, you may find that your company is well positioned to innovate. Congratulations on that! However, if you are being radically candor, you may find that your company is falling short. Then it’s time to ask the question, do you want to change that? Feel free to contact me for an innovation assessment. Jackie@techcomventures.com. Remember – “Unless commitment is made, there are only promises and hopes… but no plans.” – Peter F. Drucker