Without leadership support, most corporate innovation programs are doomed. While grassroots movements can have some early success, if it stays that way, their long-term prospects are also poor. This is because the corporate antibodies that attack new initiatives, including innovation programs, are very strong !
In enterprises, the long term success of innovation depends a lot on the level of support and contributions that innovation teams get from leadership. The role of the CEO is particularly important since they have the power to influence attitude and to effect changes that are necessary to successfully drive innovation programs. With innovation now viewed as one of the top three drivers of growth, progressive CEOs are actively engaged with innovation to meaningfully improve business outcomes with new capabilities as well as to remove obstacles and prudently manage risk associated with change.
With this it’s important to understand how a CEO can best support innovation – and not succumb to innovation myths. An example of a myth is the belief that innovation can be managed using the same tools and processes that are used to run the core business. This is problematic because it disregards the uncertainty associated with new ideas / initiatives / products / concepts / technologies / markets / etc. Further, since enterprises focus on execution, there is a risk that CEOs will fund and allocate resources to launch and scale untested ideas or have unrealistic expectations from the project. And recognize being good at business innovation is about “ Process and Predictability “ + “ Insight and Inspiration “. Since this respects it’s a combination of art and science, the need is to have an “ Innovation Mindset “ to innovate for impact that leverages internal and external resources to better assure success and get past the challenges of doing “ the new “.
To be a “ Innovation Leader “, what are the important characteristics ? What does a CEO that “ gets it “ look like ?
To meaningfully improve outcomes from innovation means being accomplished at having an innovation culture that includes – Strategic Guidance, Resource Allocation, and Portfolio Management.
A CEO that gets it understands that they have two jobs that are equally important – achieving current success and preparing the organization for the future. They also understand that they cannot apply the same strategy and processes they use to run their core business to explore future opportunities, create new value, etc. So, in addition to defining a clear strategy for the current business, there is also a need to create a distinct innovation strategy that is aligned with the company’s overall goals and future plans. Since creating new products or services and scaling the business requires significant resources and support from various stakeholders in the organization, the best innovation strategies answer the following questions –
- Where is our company currently in terms of a value proposition, business model, developing future competencies?
What is our corporate identity and / or brand value ?
- Where are the opportunities ?
What are the key trends ?
What are the risks for the organization ?
- How can we use innovation to create new capabilities and value ?
In which markets are we going to play and what will success look like ?
After developing the innovation strategy, it should be clearly communicated throughout the organization – not in pockets of the company. The strategic guidance should be spoken about at important meetings and everyone should know about it. With the strategy in mind, innovators can start to create relevant innovation programs across the company and leaders can make the appropriate investments based on metrics, strategic importance, reward / risk, etc.
A CEO that gets it personally spends their time on innovation. While recognizing a CEO’s time and knowledge is very valuable, the more progressive ones invest at least 20 % of their time on innovation to develop their competencies and an entrepreneurial culture – to send a clear message throughout the organization that innovation is critically important. With others in the C-Suite following suit, this better ensures that resources for innovation are allocated and is integral in the business – and to prevent money and resources from being taken away from innovation to cover operating budget shortfalls, etc. An example of ensuring resources for innovation is most effectively done from the top is organizations that commit at least 1% of annual revenue to innovation initiatives.
Innovation also needs legitimacy and power. A CEO that gets it appoints innovation leaders at the highest levels within the organization and gives them power and budgets to do their work. The best-case scenario is a C-Level Innovation Leader in the Executive Suite with a clear mandate and budget for innovation. Further, a CEO that gets it supports the company’s innovation leaders so that they don’t have to keep justifying their existence !
As well, an Innovation Leader ensures that Departments or Business Units within the company allocate resources and time to support innovation. This includes Biz & Product Development, Sales, Marketing, Finance, HR, Compliance, Procurement, Legal, etc. – since it’s virtually impossible for innovation teams to create, launch and scale new products and services to meaningfully improve outcomes without support from these groups.
The better CEOs also understand that, when it comes to innovation projects, there are issues in trying to pick a winning idea or expecting quick results. This means avoiding pet projects since this can create problems for those responsible for and those involved in innovation initiatives. With the huge pressure to succeed, failure is not an option since nobody wants to tell the CEO their baby is ugly ! Further, backing a specific team or idea with a large investment early is typically a mistake since it’s better to make modest initial investments in various projects and with follow on funding for initiatives that show promise – to build a portfolio of multiple and better quality innovation projects.
Rather than trying to pick a winner, let the winning ideas emerge by making evidence-based decisions. No team should get a large investment based on their business plan alone. Instead, the team should get a small investment that provides them with the opportunity to test and substantiate their idea. Only after finding evidence that supports their idea should the team get further investment. If a team fails to find evidence to support their idea, the innovation project should be reviewed to determine if there is a need to pivot or kill it. With this, it’s recognized failure is an opportunity to learn, motivation to be better at developing look ahead skills, improving the innovation process, etc.
Companies that have a CEO Innovation Leader meaningfully improves outcomes and better manages the risks associated with – creating new products and services, expanding opportunities and revenue streams, improving financial results, evolving the business model, building significant additional value, having competitive advantage, better positioning the organization to attract and retain top talent, etc.
While recognizing running an enterprise is a big job, the CEO is also responsible for preparing the organization for the future. To assess the skills of the CEO and others in the C-Suite on their innovation competencies to achieve the significant advantages above, how would they and other stakeholders rate them ? If highly rated, then great. However, with the stakes being high, it’s probably a good idea to get insights from others in the innovation ecosystem about having the mindset to innovate for impact. If of interest, you’re welcome to contact CAIL or Strategyzer.