When it comes to corporate innovation, there are two things we know for certain.
First, executives recognise its importance and its role in generating growth. Second, despite the C-suite attention it now commands, not to mention the capital which firms place behind it, innovation performance is typically, well, a little disappointing.
Exhibit one — firms are increasing their investment in, and expectations of, innovation
In a recent McKinsey study, 86% of global executives said innovation was a top-three priority for their firm. According to a survey from Boston Consulting Group (BCG), more than 60% of companies planned to boost financial investment in innovation, one-third of them significantly.
86% of global executives said innovation was a top-three priority for their firm
Meanwhile, market intelligence firm IDC claimed that worldwide spending on the digital transformation of business practices, products and organisations would reach $1.3tn during 2020. Further BCG research contends that 65% of large, established enterprises work with startups or new ventures, be that through CVC funds, accelerators, incubators or open innovation programmes.
Exhibit two — the results don’t match the increasing attention
The same McKinsey study which pointed to innovation prioritisation also found that fewer than 10% of executives said they were satisfied with their organisations’ innovation performance.
McKinsey also learnt that 70% of complex, large-scale change programs don’t reach their stated goals, implying that around $900bn of that expected investment in digital transformation during 2020 would likely have fallen short of expectations.
Fewer than 10% of executives are satisfied with innovation performance
As for the enthusiasm for working with start-ups, BCG’s research reported that almost half of companies engaging in a form of corporate venturing expressed dissatisfaction with the results of their efforts, citing a lack of meaningful impact.
Were you to ask 10 chief executives to explain this lack of congruence between innovation ambition and performance, you'd probably get 11 different answers. But you would undoubtedly find one recurring theme: culture.
Are we asking the right questions?
When we think or talk corporate innovation, it’s seductively easy to jump straight to the "what" or the "why":
- What level of capital do we think we can secure?
- Should we create an incubator, an accelerator or a lab?
- What about a venture builder — and do we really know what one is?
- Do we set up a dedicated CVC fund, or do we invest in a third party's fund?
- What sort of operating model are we going for — centralised or decentralised?
- Is this an offensive or defensive strategy? Are we responding to demand or trying to create it?
- What’s driving us — customer, competitors, technology, commercial imperatives, or something else?
- Do we partner with innovation consultancies or try to hire/nurture that skillset internally?
- Which aspects can we outsource, or should we really be doing that anyway?
What’s typically given less attention is the "how":
- How do we transform what we do, or how we do it?
- How do we avoid an immune-response rejection of "the new"?
- How do we attract new types of partners, and how do we work with them?
- How do we encourage and cultivate ideas within and around our organisation?
- How do we get our colleagues, our partners and our customers to embrace change?
- How do we secure and sustain leadership commitment to unpredictable, out-of-the-ordinary and potentially long[er]-play outcomes?
- How do we need to approach risk and failure differently to be successful?
More often than not, asking these questions (and others like them) will determine whether or not your innovation ambitions will bear fruit, or simply stall. The answers may be neither easy nor, in some cases, palatable. But they have to be asked.
Introducing our 12-part series #futureproofonculture
Starting next week, we're embarking on an editorial exploration of culture and innovation. We're seeking out the ideas, the stories and the people behind them that can help spotlight how culture both inhibits and accelerates innovation, what to do about it — and how.
We’re calling it #futureproofonculture, and here’s what you can expect…
- Diverse viewpoints and opinions.
- Candid interviews with innovation leaders.
- Insights and guidance from world-class experts.
- Case studies, capturing the good, the bad and the ugly.
- Findings from new Sifted research on corporate innovation.
And we also want to hear from you as well. Each week, we’ll take the conversation from the latest chapter onto Twitter and LinkedIn, and encourage you to join in using #futureproofonculture. Not because it's en vogue, but because your ideas and your experiences will help to make the series stronger.
To get us started, we’d love to hear your thoughts on one specific question: in your experience, what’s the single biggest cultural barrier to innovation, and why? Simply tweet @siftedeu and the above hashtag with your view — and look out for #futureproofonculture Chapter One, next Tuesday.