In the age of AI, many companies are exploring solutions that utilize ChatGPT and other LLMs, AI Agents, etc. Yet, a critical gap remains – a genuine understanding of technology and how to be good at innovation. Interestingly, many business leaders (including SMB owners and Executives in enterprises), are pursuing AI initiatives without a background in technology or mastering the fundamentals of innovation. This oversight is problematic since it is a recipe for poor decision making, missed opportunities, stagnation, failure and other issues.
Why Understanding Innovation Fundamentals is Essential
Why does a business leader need to understand what it takes to make innovation more rewarding ? An example of this is an organization with a third-generation family business conglomerate, believed they had innovation covered. The CEO, also the eldest son of the owner family, assumed that appointing someone as the head of innovation would suffice. With healthy profits and a diverse portfolio of businesses, the organization seemed poised for success. However, the CEO didn’t understand technology or the mechanics of innovation, nor did the person he put in charge ! While the “ head of innovation ” reported everything was on track, in reality the company was barely tapping into 5 % of its innovation potential. Despite having thousands of employees and operating as a B2C (business-to-consumer) enterprise, they lacked a proper system to capture and utilize customer feedback. They were out of sync with their consumers’ needs and preferences, missing out on crucial insights that drive true innovation. Understanding the basics of innovation enables decision makers to see through the noise and superficial reports to determine whether their innovation efforts are effective or not. Without this foundational knowledge, leaders can’t ask the important questions, struggle in determining metrics and planning for project development and rollout progress, scoping the risks associated with change, holding their teams accountable for results, or providing good guidance and oversight to evolve the business in an increasingly digital world as well as successfully addressing the new notions of value and rising User expectations.
The Need to Know How to “ Innovate for Impact “
Innovation is probably the most misunderstood driver of company success. While nearly every company touts innovation as a core value, very few truly walk the talk. The reason is simple – to genuinely innovate and implement new capabilities at scale, one must understand what it takes to effect change with the knowledge and competencies needed to achieve the desired outcomes. This understanding requires a deep grasp of the human creative process – something most people are not educated about. Unfortunately, with a lot of misunderstanding in the C-Suite and boardrooms about innovation, leaders need to develop the mindset to “Innovate for Impact “. This is essential to realizing their organization’s potential since this frequently requires the creation of new digital services to expand opportunities and relevance as well as to meaningfully increase revenue and deliver new value. This understanding enables leaders to put the right people in charge, identify real opportunity and ineffective efforts, and be good at challenging conjecture and avoid chasing fads or supposed trends. Unfortunately, this widespread misunderstanding of innovation and lack of technology awareness by decision makers is a huge impediment to progress. Bottom line, with innovation and technology, when you don’t know what you don’t know, there is a high cost and a high risk of failure.
The Importance of “ Creativity “ in Business
An example is Steve Jobs leveraged his understanding of creativity, honed through calligraphy and design, to revolutionize the tech industry and turn Apple into one of the most valuable companies in the world. Similarly, Paul Allen, the co-founder of Microsoft, was an accomplished guitarist. Quincy Jones, the legendary music producer, once remarked that Allen could play guitar just like Jimi Hendrix. Allen’s mastery of a creative skill translated into his innovative thinking in business, enabling him to meaningfully contribute to his many endeavours. These examples aren’t widely known because they don’t fit the conventional image of a serious businessperson. While the public and media often overlook the crucial role that mastery of the creative process plays in business success, those that have this competency have an advantage recognize the creative process translates directly into world-class innovation.
Knowing How to Use AI to “ Innovate for Impact “
Also recognize using AI without understanding innovation is like giving a Stradivarius violin to someone who’s never played music. It won’t make them a great musician – only expose the gaps in their musical deficiencies ! To truly harness AI, leaders must first build the right foundations – a culture of innovation, curiosity, processes that support creative problem-solving, and leadership that understands portfolio theory, the changing nature of risk, can think differently, etc. that is results oriented + have a structure and processes to test and implement ideas + a mechanism to extract real-time feedback from customers + encourages experimentation and rewards learning.
Ensure there isn’t an Innovation Bottleneck at the Top
One of the examples on future-proofing their organizations is the former CEO of Nokia – specifically, the man who was in charge just before the smartphone revolution. When the internal reports clearly showed that a new wave of smartphones was about to change the industry, the Nokia CEO simply couldn’t see it for what it was. And it wasn’t because he lacked intelligence or experience. You don’t make it to the top of an enterprise without being highly capable. The issue was psychological – what behavioral scientists call the privileging hypothesis – the tendency to give more weight to the version of reality we want to be true than to the facts in front of us. His mental model of Nokia’s continued dominance blinded him to the shift that was unfolding. The rise of the smartphone didn’t fit his internal narrative, so he unconsciously rejected the warning signs. This is a huge issue since there many examples of decision makers being blind sided by innovation and industry paradigm shifts – Blackberry / RIM, Blockbuster, Kodak, Xerox, IBM, etc. The antidote is the Stockdale Paradox – which says that the most resilient and successful leaders are those who can confront the brutal facts of their current reality – no matter how painful – while at the same time maintaining unshakable faith that they will prevail in the end. The Nokia CEO had the faith, but not the realism. That combination is fatal in a world that’s moving quickly. If innovation is to flourish, it must be championed – and protected – by those at the very top. That means creating an environment where ideas can come from anywhere, where people are rewarded for achievement and learnings ( not punished for failure), and where leadership is actively removing the roadblocks, (not creating them).
To Make Innovation More Rewarding with AI –
- Master innovation before you scale AI.
Recognize – AI is a multiplier, not a miracle. Without innovation fundamentals, it will only accelerate your mistakes. - Challenge the innovation and digital competencies of decision makers and influencers.
Recognize – If you’re not creating space for bold thinking and different views, you’re blocking innovation. - Confront harsh truths early.
Recognize – previous success is a double edge sword, and results depend on how you use it ! Reality doesn’t care what you believe – it rewards those who adapt.
June 2, 2025 by Tom Oliver / CAIL – CAIL Innovation commentary
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