Most Companies Fail to Invest in Sustainable Innovation

By: Braden Kelley

You can’t go an entire commercial break during the World Cup or a State of the Union address without hearing the word innovation pop up at least once or twice. Companies have added innovation to their company values and mission statements in accelerating numbers.

Innovation is everywhere.

You can’t go an entire commercial break during the World Cup or a State of the Union address without hearing the word innovation pop up at least once or twice. Companies have added innovation to their company values and mission statements in accelerating numbers. Some organizations have implemented idea management systems and others are willing to spend large sums of money on design firms and innovation boutique consultancies to get help designing some new widget or service to flog to new or existing customers. Based on all of that you would think that most companies are committed to innovation, right?

If you asked most CEOs “Is your organization committed to innovation?”, do you think you could find a single CEO that would say no?

So, why do think I feel confident making the following statement?

The reason I feel confident making this statement is that when it comes to fostering continuous innovation, most organizational cultures stink at it.

Some organizations succeed in creating an innovative product or service every once in a while, but the majority of organizations fail to understand not only what kind of culture they have, but also fail to grasp what it takes to build a culture that fosters sustainable innovation.

90+% of organizations fail to invest in sustainable innovation.

Let’s look at some data because if you are a committed innovator and not just a creativity fanatic, you should love data (especially unstructured data from customers):

1. Over the last 50 years the average lifespan of a company on the S&P 500 has dropped from 61 years to 18 years (and is forecast to grow even shorter in the future).¹
2. In a worldwide survey of 175 companies by Hill & Knowlton (a communications consultancy), executives cited “promoting continuous innovation” as the most difficult goal for their company to get right. “Structurally, many companies just aren’t set up to deliver continuous innovation.”²
3. 84% of more than 2,200 executives agree that their organization’s culture is critical to business success.³
4. “96% of respondents say some change is needed to their culture, and 51% think their culture requires a major overhaul.”³

What can we learn about the importance of innovation and a healthy innovation culture from this data?

For one thing, the data helps to reinforce the notion that the pace of innovation is increasing.

But one thing the data doesn’t show is that organizations are as committed internally to innovation (by investing in creating a sustainable innovation culture) as the level of commitment to innovation that their words externally communicate.

Why is this? Well, as fellow Innovation Management contributor Jeffrey Phillips once said:

When it comes to innovation, ideas are the easy part. The cultural resistance learned over 30 years of efficiency is the hard part.

And when you get right down to it, most employees in most organizations are slaves to execution, efficiency, and improvement. And while those things are all important (you can’t have innovation without execution), organizations that fail to strike a balance between improvement/efficiency and innovation/entrepreneurship, are well, doomed to fail.

This increasing pace of innovation along with the lower cost of starting/scaling a business and the always difficult challenge of building a productive culture of continuous innovation, is the reason that the lifespan of organizations is shrinking.

So if it isn’t enough to talk about innovation, or to invest in trying to come up with new products and services, shouldn’t more organizations be also investing to making sure their innovation culture doesn’t, well, stink?

The obvious answer is… (insert yours here)

So, if your innovation culture stinks, I encourage you to check out my free virtual video keynote on innovation culture at Pipeline 2014 that explores this topic. In fact, it is titled:

“Our Innovation Culture Stinks – Five Ways to Make it Smell Better”

It’s a free session and available as an on demand video with recorded Q&A.

Or you can also download the white paper on the same topic for free.

I look forward to hearing your comments on what you think it takes to build a sustainable innovation culture!

By Braden Kelley

Sources:
1. Innosight/Richard N. Foster/Standard & Poor’s
2. Hill & Knowlton Executive Survey
3. Strategy& Global Culture and Change Management Survey 2013