The processes are there, and the stakeholders have been designated. Still too seldom does innovation bring concrete measurable results. I claim the problems lie in the top management.

I started my career as an innovation consultant about 15 years ago. At that time innovation was still something quite new in the organizations. Nowadays the processes are there, and companies have allocated people for innovation tasks. Especially forerunner companies have taken an active and devoted approach to innovation development. Still the anticipated results are not there. Why is that?

Figuratively speaking, it feels like a gym card has been purchased as a new year’s resolution, the gym has been visited and some programs have been executed. What to train specifically and why, what kind of results really can be expected, is still not clear. The problem does not lie in the processes or within people who execute them, but rather in the way the company is led and managed to enhance innovation.

Defining the value of innovation is part of the strategy

When it comes to innovation, it is not a special department separated from the rest of the company. Too often innovation is seen as “propeller heads” innovating in spectacular product, service or business trajectories, unparallel with the “real business” as defined by the management. While factually innovation is the core of every company’s growth.

When defining a company strategy, you analyze the current state and describe the goal in a defined timeline. As far as innovation is concerned, the most important question is how much growth is desired.  The questions that need to be answered are simple, but clearly the responsibility of senior management:

  • What are the company’s growth targets?
  • How much of that needs to come from innovation?
  • Do you know how much growth is expected from the innovations in your pipeline?
  • Is there a gap between the objectives and the default value of the innovation pipeline?
  • If there is a gap, what are you thinking of doing to remedy the situation?

These questions should be easy to answer. However, management often faces three problems. The first is that the value of the current innovation pipeline cannot be determined. The second is that senior management does not set sufficiently ambitious targets. The third, and the main problem is that no one is responsible for the delivery and neither success nor failure will have any consequences.

It is easy for management to justify their passivity, for example, in the haste of “real work”. However, for the owners of the company, this is inexcusable, as it is innovation that is the single most important factor in increasing the value of the company.

Change leadership is required from the CXO level and board

Traditionally, sales or other business-managers expect new products and services from the innovation pipeline. The ideas are presented by product development and management, in their great wisdom, judge which projects go on and which are killed. Too often the decision is mainly based on politics rather than real business. In these cases, when innovation projects or development are completed, the products or services don’t sell sufficiently. The revenue streams for growth are not there!  Those who should be responsible can always escape behind excuses like “we do not get enough good innovations to sell”. We’re going to have to turn this around!

Developing innovation in a way that genuinely stimulates growth requires management to be able to lead change. At the same time, the internal political playing field and the archaic basic perceptions on innovation will need to be rebuilt.

Innovation is not lottery, but risk management

What if it were the task of the business managers to find new products and services to enable reaching the growth targets? This can only be done through development of a process and an in-house dialogue. The process requires culture that emphasizes respect, reciprocity, responsibility and reflection as the main values and principles for behavior.  Why, then, have these things not been put into practice? Because they haven’t been required. Innovation is still considered to be something vague, the value of which is difficult to quantify.

At the heart of the dialogue related to the innovation process must be the development of the value of the business and the correctness of the figures that affect its assessment. It’s about the company’s capability to implement change. The organization needs to be taken to the “gym of innovation” and it needs to be trained with the best programs available. This requires the right objectives and an understanding of what the true possibilities for achievement are. This has been, is, and will always be the responsibility of senior management.

Images source: Innotiimi-ICG; your123/