A new report from PA Consulting Group, Innovation Matters, finds that organisations are missing out on the potential of innovation to drive progress. Two thirds (66%) of companies are convinced that innovation is crucial to their survival. Yet only 28% say they are innovating successfully to drive growth. And just 39% of executives are confident they have defined the skills they need to be innovative.
At a time when some organisations are adopting a cautious posture in the face of global political and economic headwinds, investing in innovation is more important than ever. PA’s research makes clear that innovation not only helps organisations survive, but also thrive amidst uncertainty.
Learning from the leaders
Even with uphill challenges, the innovation leaders in PA’s survey pointed to a clear pathway for achieving innovation success. Successful innovators are more likely to:
- Focus on the future – believe their organisation can deploy technology to meet customer and employee needs (59% versus 49% of less successful peers) and excel at measuring the business case for innovation (57% versus 41%)
- Design for innovation – measure the value of innovation (61% versus 47%) and bring new products and services to market faster (61% versus 42%)
- Create an innovation culture – kill off ‘zombie’ projects earlier than their less successful peers (54% versus 40%) and reward employees for innovation (81% versus 69%)
- Build a network for innovation – source ideas for innovation from outside the organisation (61% versus 52%) and have executive and leadership teams with a diverse range of skills and professional backgrounds (78% versus 66%).
The impact of technology on innovation
Technology creates new platforms in which innovation can take place. The mobile app universe and IoT networks, for example, are both fertile ground for innovation. Bill Yost (pictured right), technology expert at PA Consulting Group, points out that by “using these platforms, innovators have changed the ways in which we do business, connect socially, and manage appliances. Both new and existing enterprises have benefited from the ideas that have emerged and generated value in these spaces”.
Technology has also accelerated the pace at which innovation scales and generates value. “Apple made a splash when it went public in 1980,” says Yost. “As a five-year-old company, it achieved a market valuation equivalent to US$5bn in today’s dollars. In contrast, when Snapchat held its IPO this year it was valued at US$33bn and the personal shareholding of its CEO, Evan Spiegel, alone was worth US$5bn.”
Today’s so called, “unicorns” are still the exception rather than the norm, but many of them have reached their 10-figure valuations in less than three years. “All of this is possible because companies such as Snapchat can reach a global audience with little effort, thanks to mobile and internet technology”. Although there is an argument as to the real versus perceived value of these companies, according to Yost “there is no doubt that having a pathway to create so much value, so quickly, is a powerful motivator for anyone seeking to bring new ideas to life.”
The innovative leaders
Innovation starts with leaders who recognise its importance and are willing to do something about it. Globally, 81% of the innovation leaders profiled in the report offer their employees an inspirational sense of purpose.
Big game-changing innovations take vision, the ability to communicate them, and the resources to put ideas into practice. Certainly Elon Musk (Tesla, SpaceX) and Sergey Brin and Larry Page (Alphabet, Google) have done exactly this and are driving towards innovations in energy, transportation and even healthcare.
However, Yost points out that notable innovation leaders don’t necessarily have vast resources of their own. “Instead, they are effective at bringing networks of people together and marshalling collective efforts to address big issues”. A good example of this kind of leader is Ellen MacArthur, who is leading her eponymous foundation to drive growth in the circular economy. Yost explains that PA Consulting, along with dozens of the world’s largest companies, have joined with start-ups, governments, and universities, in the foundation’s CE100 programme to collaborate on efforts to reduce waste and improve energy efficiency according to Ellen’s vision.
Innovation and the future of work
Technological changes push new skills to the fore. “Social media analysts and data analysts are just two of the new and scarce skill sets that are required,” says Jennifer Cable (pictured right), people and talent expert at PA Consulting Group. “We are also seeing reductions in some roles with AI robots such as Amelia starting to take on customer facing duties.”
Cable believes that companies that examine the future to identify the skills that will become of greater importance are at an advantage. “They have time to invest in those employees that can adapt and develop. Rather than re-creating the leaders of today, they focus on creating the leaders of tomorrow.”
We are familiar with how innovations in technology impact the location and time of day in which we work. “Working from home and the traditional office hours is no longer unusual; instead it is the norm,” points out Cable. As wearable and communication technologies develop further, she anticipates further changes in working patterns and behaviours.
Cable emphasises that the companies that are more successful at innovation have teams with a greater and more diverse skill-set. “Our research shows that 78% of innovation leaders have leadership teams with diverse skills compared with 66% of their less successful peers”. This requires refocusing attraction, hiring, development and recognition systems away from a single model of leadership and more towards an approach that values different strengths and styles.
Creating a culture of innovation
A culture of innovation is crucial. Cable says that companies need to allow employees time to spend on innovation, create the conditions in which it can flourish, and ensure it connects to their customers. “How an organisation is structured, led, and offers reward and recognition makes all the difference in seeing organisations flourish in this area.”
To sum up, the Innovation Matters research provides the following advice to create a culture of innovation:
- Companies should possess executive and leadership teams with a diverse range of skills and professional backgrounds
- Businesses need to recognise which rapidly emerging technology and business models are valuable for their organisation now and in the future
- Innovation should be designed around the customer, should inspire the workforce, and encourage all to innovate
- Innovation needs to be embedded into all parts of the business and those who are good should take the time to measure the value that innovation adds, compared to their less successful peers
- Align innovation goals with the organisation’s core purpose and design innovation frameworks that rapidly convert ideas to action
- Create a culture that protects and celebrates innovators, rewards and learns from innovation failures, and invests in attracting and retaining new talent