According to NTT DATA’s Innovation Index, 96% of executives say innovation is a primary source of growth for their enterprise. This isn’t surprising; obviously leaders want innovation to drive growth. What’s notable is how few are actually reaching this goal: only 11% said their organizations successfully bring breakthrough innovations to market. At Launch by NTT DATA, we call this the Innovation Execution Gap. We sometimes jokingly say that, “The enterprise murders great ideas with a smile.” What we mean is that your environment is most likely working against you — the structures that surround most companies are not aligned with innovation.
Resistance is everywhere, but this is a feature — not necessarily a bug — of how good enterprises are designed. It’s the nature of repeatability, efficiency, scale, and bias for the status quo. Innovation teams often stumble because innovation itself contradicts many cultural norms of the enterprise. That’s okay. You can recognize it, understand why, and adopt ways to work within the system rather than against it.
Before we discuss closing the Innovation Execution Gap, let’s understand why innovation teams often falter in large organizations. There are a number of environmental factors at play. Innovation invites uncertainty, complexity, and ambiguity. Enterprises want stability. The uncertainty of innovation conflicts with predictable, historic business measurements. Even if a program is launched with top level enthusiasm and support, it’s often shut down when it fails to achieve short-term ROI.
Another issue working against teams is a lack of standards, processes, and management for innovation leadership. Without systems, teams struggle to move smoothly. Incentives within the organization work against new ideas and ways of doing things. Fear of failure kills motivation. We all know the adage that it’s hard to get fired for doing nothing wrong. But innovation requires risk. The ethos in the enterprise is “flaw” focused vs. “potential” focused, and the danger of failing keeps many potential intrapreneurs from even trying.
For organizations that have tried to launch innovation programs or initiatives, a sad but familiar pattern usually plays out: after the initial enthusiasm wears off, momentum stalls. Employees find that new ideas, even ones deemed great, don’t make it to market. Every time that happens, it sows distrust and resistance to future efforts. The cumulative effect is a collective lack of trust for change.
Since the enterprise is structured for stability, many enterprises simply aren’t willing to give up the past to create the future.
Since the enterprise is structured for stability, many enterprises simply aren’t willing to give up the past to create the future. There are innate core business “blinders and blockers” that paired with status quo bias, consistently work against change. Employees are trained to manage the existing business rather than create new markets or products. So yet again, innovation is relegated to siloed efforts vs. a company-wide, customer-centric effort.
Yet given these enormous headwinds, some enterprises DO manage to innovate! Not just once, but over and over and over again. There is no secret, but there are commonalities that we see in successful breakthrough innovators. Whether they’re bringing new products to the market or transforming their own operations, successful companies have corporate alignment and a system concentrated around the capability to innovate. They also have systems in place to define and quantify the impact of innovation activities on their business. Tying your efforts to measurable ROI brings clarity to the business value of innovation and helps protect programs from the blade of budget-cuts.
Alignment sounds kind of fluffy, but it’s essential. Successful innovation requires consistent collaboration between people and systems to achieve the desired goals of the organization and stakeholders. Your innovation strategy should align with the overarching corporate vision. When you get corporate alignment around innovation right, it sets strategy in the C-suite, and filters down to teams. If you’re not sure how your innovation strategy aligns to the business strategy, get clear. There needs to be clear communication and collaboration on initiatives that drive progress towards desired future states. Without alignment, you’ll have people doing innovation activities in pockets, using whatever tool or process they want, that may or may not ladder-up to a larger vision or create impact.
Their innovation team had to get clear and put pen to paper about what they wanted to accomplish as a company, and the timing and runway they’d use to measure economic impact downstream. That alignment and communication helped set their program up for success.
As an example, we work with a nearly two-hundred-year-old company that operates in an industry that’s just as old. Standing up an innovation program there and promoting a culture of innovation across the enterprise took an enormous amount of communication, especially at the executive level. Success hinged on getting buy-in at all the levels, and helping executives understand the benefits they would personally realize from the program. Before working with them, they didn’t have a uniform and aligned agreement of what good “economic impact” looked like. Their innovation team had to get clear and put pen to paper about what they wanted to accomplish as a company, and the timing and runway they’d use to measure economic impact downstream. That alignment and communication helped set their program up for success.
Working closely with their Head of Strategy and Innovation, we focused on two workstreams to customize a program that aligns vision and culture, streamlines paths to profit, and is set up to continuously fuel long-term growth. Our efforts produced 25+ knowledge artifacts that inform the innovation program, and focused efforts to mature their operations, processes, and project pipeline to accelerate their impact for digital transformation. We promoted a culture of innovation across the enterprise through leadership, incubation, and experimentation in the spirit of advancing them as a supply-chain and logistics leader.
Innovation is hard. It requires time, attention, and a willingness to tolerate the discomfort involved. We all know there’s no “one dumb trick” that unlocks it. Even companies with good ideas struggle to operationalize them. Remember that stat about only 11% of the technology leaders feel like they’re successfully bringing breakthroughs to fruition? The majority (59%) of them have a structured process to help them navigate these innate barriers. Consistent innovation ultimately comes back to top-level vision, repeatable systems, and the deliberate practice of working in the unknown.
Trevor Anulewicz is Vice President of Strategy at Launch by NTT DATA.
