Throughout the history of business, we have found ourselves trying to figure out how to maximize our human potential. Meaningful innovation is the most important issue that organizations continue to grapple and struggle with.
As mentioned in a previous post, in our pursuit of innovation, we have created complex organizations, with many moving parts, all adding to the complexity of our solutions, of our lives—until we come to the place of recognizing what the great designer Dieter Rams pointed out many years ago: “less, but better.”
We want to innovate how our organizations can work more simply and allow for shared capacity to solve problems and innovate more freely.
To give you a sense of the magnitude of how important innovation is perceived to be to the success of today’s organizations, one just has to look at the title of KPMG’s 2016 Global CEO survey, aptly titled “Now or Never”. The executive summary delivers a clear message:
“[t]wo-thirds of chief executive officers (CEOs) believe that the next three years will be more critical than the last fifty years. The forces creating this inflection point are the rapidly evolving technology and the speed of transformation it unleashes. In four years’ time, 4 out of 10 CEOs expect to be running significantly transformed companies.”
A review of the results of a number of global surveys of CEOs, C-level executives, and leaders from 2015 to 2017, including the major studies conducted by KPMG, Fortune, IBM, and PwC, provide further insight. With the exception of the Fortune survey (500 companies), most of the surveys we reviewed included more than 1,200 participants. Among the key findings:
- Fostering innovation is one of their top strategic priorities, placing among the top six in every survey.
- Most CEOs are grappling with how to engage their cultures in the change necessary to be more innovative.
- A significant majority (seven out of 10 CEOs) say it’s important to specifically include innovation in their business strategies.
- The majority of survey respondents identify the need for transformational change in their organizations.
- Eight out of 10 are concerned that their existing products and services may not be relevant in three to five years’ time.
- The majority of respondents say their organizations are struggling with the speed of technological innovation.
- Gartner reports that 89 percent of companies believe customer experience will be their primary basis for competition in 2016, versus 36 percent four years ago.
- Accenture reports that 81 percent of executives surveyed place the personalized customer experience in their top three priorities for their organization, with 39 percent reporting it as their top priority.
Innovation and Tempting Failure
What is equally as telling is that, while innovation is consistently among the top six strategic priorities, less than a third believe their organizations’ cultures encourage risk-taking or safe-to-fail environments.
This is important to recognize. Among the more powerful aspects of motivation and human behavior are the needs for predictability and safety.
From childhood through to adulthood, we are literally taught, trained, and reinforced to find the safest paths. As a result, satisfying these needs is paramount to how people perceive the ability to express themselves and take risks. We discover that it’s not a good idea to tempt failure.
However, the process of innovation includes failure. Whether an organization’s temperament and messaging allow for exploration, experimentation, and the potential subsequent failure says a lot about how innovative an environment it provides for its members. It also doesn’t always fall within the context of processes and systems that are designed to limit risk. Or, ways of solving problems and making decisions that advocate adherence rather than possibility thinking.
This is about culture. This is about the pursuit of understanding human behavior and the role that awareness plays. These challenges are clearly defined in the KPMG report of findings:
- Thirty-six percent of CEOs say their organization’s approach to innovation is either ad hoc, reactive or occurs on a silo basis.
- Only one out of four says that innovation is embedded in everything they do.
- Only 29 percent feel that their organization is highly capable of creating a safe-to-fail environment.
This data becomes even more powerful when one considers that only one out of five CEOs note that innovation is at the top of their organizational agendas. This last piece of insight tells us that when identifying an organization’s key strategic priorities, a top-six finish is likely still not good enough.
The most likely explanation is that, for CEOs and leaders, and the people in the companies and institutions they lead, the risk of being innovative is often what keeps their cultures from being more innovative. They are afraid of the risk of failure that comes from thinking outside the box, letting go of the familiar, seeking the possible over the predictable, all while falling into the trappings of that which they perceive will keep themselves safe.
This is a stark reminder that, as a leader, if you’re not willing to fail, others will not take a risk to succeed.
The data also raises the question of how the most successful organizations in the world go about innovating at the level they do, disrupting industries and market segments, quickly turning what were just yesterday stable technologies and ways of life into quickly outdated or obsolete ones. How do they go about creating new forms of industry and markets where none existed? How do they create more meaningful customer experiences and work across internal silos? What is the code to cracking their culture, and what do they do that is so different from the also-rans that they outperform? What are they doing that others aren’t? How did they identify the gap between the average and the means to becoming exceptional innovators?
Edgar Papke and Thomas Lockwood are the authors of Innovation By Design and founders of InnoAlignment, a consultancy dedicated to assisting leaders in designing and building cultures of innovation.