In a series of stand-up surveys of more than 350 CEOs conducted January to June 2016, we asked about the importance of innovation, i.e., how important is innovation to your current and future success? Not surprisingly, almost 100% of CEOs thought innovation was important or “very” important to their success. When asked how satisfied they were with their ability to innovate, this number dropped precipitously to ~35%. Why such a big gap?
Peeling the proverbial onion to work through this issue was interesting. When we asked CEOs to describe the role of innovation in their organisations there were two overwhelmingly consistent themes: the first, and most common, answer was “to develop new products and services”; the second, was to “improve our performance.” No surprises there, these are very logical areas to focus innovation efforts. Following this thread, we wanted to better understand to what degree these innovation focal points had an impact on the performance of the business in the marketplace (i.e., relative performance as compared to peers). Confirming, in part, the gap we discovered in the stand up survey, most CEOs believed these innovations to be highly incremental, slow and steady, and largely minimal in terms of their impact.
Finally getting somewhere, we asked a broad question about the philosophy of innovation in their respective organisations to better understand how leaders thought innovation should be accomplished in their organisations. The prevailing philosophy can be described as follows:
- Create a “culture” of innovation whereby everyone at all levels of the organisation can participate and contribute to innovation
- Apply the “wisdom of the crowds” (i.e., crowd source) to innovation to get more, better ideas to innovate up to the leadership team
- Experiment with many things and “fail fast” but be smart enough to pick the winners and apply resources to these and get to market quickly
Again, no surprises. The CEOs we spoke with have clearly been reading up on innovation! The one insight that we kept coming back to was that this philosophy is microscopic, in the language of a former colleague, “let a thousand flowers bloom”. We think that this philosophy is at the heart of the satisfaction gap described above. Is this innovation approach unfocused and possibly focused on the wrong things? This same sample of CEOs reported (85%) that their environment was unstable and likely to become more so in the coming years.
We believe that organisations need to apply a different approach, a macroscopic approach, to innovation. An incremental approach will deliver incremental results. Macroscopic innovation requires leaders to understand and identify BIG constraints to performance and competitive advantage (such as supply and/or demand side constraints) and focus a high degree of resource and effort on them from the top down. The Apollo program and the Manhattan project are both examples of Macro Innovation. Macroscopic innovation is much less likely to be focused on process improvement or product lifecycle extensions and much more likely to be focused on the discovery of fundamentally new value propositions or touch points for customers, new ways to leverage technology or the development of new business models. This kind of innovation has much greater potential to move the dial.
To learn more about Macroscopic Innovation, please contact us and we will be happy to share our perspectives with you.