The Innovation Gap

Continuing our week of discussion on new directions for innovation David Weiss and Claude Legrand discuss the innovation challenge in an extract from their new book. Innovative Intelligence. Why don't leaders truly lead on innovation?

The CEO raised his voice and challenged his executive team, “I’m not the only leader here.Together, we must radically change our culture and champion innovative leadership throughout our business to compete in our industry. Are you with me?” The executives saw the panicin the CEO’s eyes and nodded in agreement—but they didn’t believe they would make anymeaningful changes—not because they didn’t want to, but because they just didn’t know how to do what the CEO wanted. And they didn’t believe the CEO knew either.

Frequently it is only after the crisis has occurred—after the competition has captured market share, after the market has dried up, after organizations have slashed costs—that organizations react. Then they say they need to “innovate”—as best they can under the pressure of the crisis. Too often, they overreact and confuse systemic innovation with unbridled creativity. This kind of creativity merely produces high-risk ideas with no pragmatic means of applying them and no built-in process to sustain them.

Organizations face three major challenges as they attempt to respond to the innovation gap:

  1. Lack of a common understanding of what innovation is, how it happens, and what prevents it. Despite many attempts at defining innovation, a lack of consensus on a common definition still exists. Too often, leaders define innovation only in terms of technology or scientific research, yetorganizations require innovation in almost all areas.
  2. Lack of innovative leaders. Most leaders have never learned how to be innovative and how to lead an organization so that it becomes more innovative. They may understand that they have a key role in innovation, but they do not know how to systematically generate new and better solutions. They also do not know how to reinforce the right innovative skills for their direct reports and teams.
  3. Lack of enabling organizational practices and cultures to reinforce innovation.

Many organizations inadvertently discourage innovation through their organizational practices (e.g. planning, budgeting, rewards). In addition, many organizations have cultures that drive short-term results and risk avoidance. Without changing some organizational practices and building a culture of innovation, leaders will not close the innovation gap.

Today, innovation is often extolled; however, on closer investigation, far more talk than action occurs. In this context, the old adage “talk is cheap” actually becomes “talk is expensive,” because organizations pay a hefty price if they do not practice what they preach. Failure to innovate can be terminal.

The shift from the industrial economy to the knowledge economy has changed the nature of work more in the last 20 years than it changed in the last century. In the industrial economy, an organization could ask a few elite leaders to be innovative and focus everyone else on simply doing the work. When a problem happened, it was escalated to the elite “thinkers,” who solved the problem and communicated the “right” decision throughout the organization.

In the knowledge economy, there is a need for all employees to use their intellectual potential because the nature of work is constantly changing and presenting complex challenges at every level of organizations. In this new economy, better solutions can only come from new ways of thinking— innovative thinking—not from conventional linear analytical thinking alone.

We need innovative thinking in our schools and businesses, in our health care and justice systems, and throughout our public institutions, in everything from politics to parenting. Even in manufacturing, the traditional hub of the industrial economy, all employees need to contribute toinnovative thinking.

Unfortunately, in the context of today’s collapsed time and increasing work complexity, many complain that there is little time for innovating, and too few people are able to dedicate time to thinking, let alone innovative thinking.

Almost no organization has a culture that allocates thinking time for employees as Google reputedly does—and “lack of time” is the most common obstacle cited by workers when asked why they are not more innovative. Employees who designate office time to think about problems and issues are often assumed to be wasting time—as one bank employee told us: “When I think, I feel guilty because I am not doing.” Some employees cannot think at work because they spend so much time in meetings, and they believe more in an “open door policy” (whereby anyone can disturb them at anytime), than in allocating time for dedicated “closed door” thinking.

In addition, the recent proliferation of smart phones has placed an even greater premium on instant reactions and instant solutions, to the detriment of well-thought-out decisions. As a result, some employees sneak away from their offices, just to have a few moments of undisturbed innovative thinking time.

We need to value thinking at work and create a climate where innovative thinking is legitimized and valued in meetings and during dialogue, and where we confront and understand complex issues that we encounter in the work setting.

The first overriding result in almost every research report is that there is a significant gap between innovation expectations and performance. The dynamic is as follows:

  • Innovation Expectations: Most executives believe innovation is “very important” or “important” for the future success of their organizations, and it is among the top priorities for their businesses.
  • Innovation Results: Most executives are not satisfied with the innovation results their organizations are achieving.

Research validates these findings. The first survey we led targeted senior leaders in 500 large organizations. We found the same dramatic differences between innovation expectations and innovation results. The results of the following two questions illustrate the point:

  • “Innovation is important for our future success” _ 88 percent of respondents
  • “Our organization is effective at innovation” _ 33 percent

Typically, in innovative organizations all the executives believed innovation was crucial to their future success. It was not enough to have only the CEO formally promote innovation. To succeed, the organization needed to align all the top leaders.

  • Most innovative organizations viewed executive teams as good examples of teamwork and as role models of innovation.
  • All leaders were directly accountable and responsible for the success or lack of success of innovation in their organizations.

By David S. Weiss and Claude P. Legrand

Excerpted from Innovative Intelligence: The Art and Practice of Leading Sustainable Innovation in Your Organization. Copyright (c) 2011 by David S. Weiss and Claude P. Legrand. Excerpted with permission of the publisher John Wiley & Sons Canada, Ltd.

About the authors:

Dr. David S. Weiss is President and CEO of Weiss International Ltd., a firm specializing in innovation, leadership, and Human Resources consulting. Previously Chief Innovation Officer in a multinational consulting firm, David’s current university positions include Affiliate Professor at the Rotman School of Management of University of Toronto, and Senior Research Fellow of Queen’s University. David is a sought-after keynote speaker who has presented at over 200 conferences and is the author or co-author of four best-selling business books: Leadership Solutions (2007), The Leadership Gap (2005), High Performance HR (2000), and Beyond The Walls of Conflict (1996). For more information, visit www.weissinternational.ca.

Claude P. Legrand is the founder and President of Ideaction Inc., a consulting firm which specializes in sustainable innovation. For over 20 years he has been one of North America’s leading experts in practical innovation and is an acclaimed and frequent conference presenter. He leads a team of experienced consultants who help organizations become innovation-capable and deliver major innovation projects. In 2007, he was the founding Program Director of the Centre of Excellence in Innovation Management at the Schulich Executive Education Centre. For more information, please visit www.ideaction.net.

  • http://twitter.com/adam_hartung adam_hartung

    There is a LOT MORE to innovating within an organization than displayed here.  Best practices are implemented to optimize historical success formulas, and create active barriers to innovation.  Leaders establish “Status Quo Police” (see Forbes.com for more detail http://onforb.es/kuOcj9 ) with the express role of making sure managers do not veer from the beaten path.

    The only way a company can innovate is not by having the leaders committed and on the same page – that effort is Don Quixotic facing the Status Quo cops and the barriers created.  Instead it requires a willingess to actively attack them – and overcome lock-in to historical practices.  Then establishing White Space where the innovations can be tested and hope to flourish outside the traditional organization.

  • http://www.90PercentDone.com Scott

    I’ve been interested in this topic for a long time.  I think insight on this topic comes from taking a very practical, “in the trenches” approach. 

    What do CEOs REALLY care about?  If you have ever worked for a large company, then you know the in-the-trenches answer is, “Their career.”  If you work closely with a CEO over a long period of time, you will see that they say all the right things about making changes to support a successful business and the importance of innovation – but their primary motivation is keeping their power and their salary and their position as CEO.  Nothing comes close to this first priority.

    In most cases, CEOs are at the end of the line in their career.  They spent decades getting to the top – and the last thing they want to do is risk that position – especially since most are getting close to retirement anyway.  Real innovation is risky.  It really is.  Deep down, nearly no CEOs are willing to advocate real innovation (taking a risk) because it puts their hard-worked-for position in jeopardy.  If they go out on a limb and have a failure (which is major part of how innovation works) they will put themselves in a position to be quickly replaced.  So… CEOs say all the right things, but don’t want to take any risks that could knock them off the throne.

    The one interesting exception (that you point out) is the case where the business gets into such a horrible situation that it is certain to fail if nothing changes.  In that situation, the CEO has nothing to loose by innovating.  (Look at the few times the USA auto industry made real innovation leaps).  At that point, he turns to his staff and can’t understand why none of them know how to innovate.  They can’t innovate because all the innovators quit and went to small companies.  The people that stay at big companies for years and years thrive on no change and will cling to that.  When the CEO needs to innovate as an emergency strategy, he blames his staff for not having a skill that he drove out of the company.

    I do agree with your point about having closed door time for more “thinking time”.  I’ll also say that I get frustrated with employees that work an 8.000 hour day and complain that they have no time to innovate.  As Thomas Edison said, ‘Most people don’t recognize opportunity because it comes dressed in overalls and looks like work.’  If a person does not have a passion about something that drives them to make an extra effort to innovate – then they are not the innovators in the company, they are the complainers.

    I don’t see this changing.  Practically speaking, what I see working is big companies farming out their innovation to small companies (like where I work now) that are lean, efficient, and specialized.  If an innovative idea fails (which, again, is part of the innovation process), its easy for a CEO to bury a small financial loss deep in the Income Statement and avoid the public humiliation of a failed innovative idea that he championed and could threaten his position.

    Scott.
    Scottt@90PercentDone.com

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