Even in the normal times of the 2010s, before the pandemic, the business world was disruptive and innovation was difficult. We had many vice presidents of research and development, digital transformation, innovation, and marketing come to us asking, “Can you get our CEO to focus more on innovation?”
“What prevents such a focus?” I always asked.
At an innovation conference in Boston, one VP said his CEO was afraid it would take the focus off of this quarter’s goals to achieve sales, build product or services, and meet Wall Street’s expectations on revenue, profit and market share. “The CEO thinks it leads to too much chaos and uncertainty, but we need new products and services,” he concluded.
Another answer from a mining firm was that they were highly dependent on productivity projects that used lean sigma tools to cut costs and save time. While lean sigma is an effective tool to save time and reduce costs, it is looking inside the box of the known products and processes and will miss the early signs of disruptors and innovative solutions.
Several government agencies told us that a hesitancy to innovate goes back to the county leadership or national leadership of the country that controls the purse strings. If the political leaders do not believe there is public support for innovation, they are unwilling to take a risk and fund innovation, even when the innovation solution has been vetted.
The risk that CEOS and government leaders feel can be hard to fathom. It is much like the story of the frog in the pot of boiling water. The frog feels the water getting warmer but does not sense danger and is complacent to the threat around him. After all, the warmer water feels good at first, until it is too late, and the frog is engulfed in boiling water.
Change is inevitable, no matter your risk tolerance. Even before the pandemic, countless business articles highlight the nearly unmanageable pace of change with technology, new social and economic trends, the world of work transformations and economic realities. There are many examples of leading companies that have become defunct or lost a major product line. For example, Blockbuster lost to Netflix and Honeywell lost its thermostat business to Nest.
There are many models for the inevitable change companies face. Over the past decade, one enduring framework is the VUCA world, which stands for volatility, uncertainty, complexity, and ambiguity. We know for sure that in the VUCA world, the riskiest strategy is the status quo.
Many clients have come to us to ignite their innovation after seeing the disruption to revenues from new entrants to the market place. Worse, their new product and service pipeline does not have competitive offerings. Their revenues and profits are tanking, and they do not know how to compete with the disrupter.
One client was a financial services firm that saw their products disrupted by digital technologies from new firms that their strategic planning never detected. Another was a cabinet maker who realized Millennial mothers thought their cabinets looked dull and old fashioned We spoke with the management of professional sports teams who saw a pre-pandemic falling trend in arena attendance and wondered how to use digital technology to regain young fans who preferred video game apps over live-action. We have spoken with high tech software firms who were once the disruptor and now realized that their success and organization’s focus on execution had stymied their innovation.
The pandemic has shown that necessity is the mother of invention and an antidote to complacency. Beer breweries across the country suffering from lost customers at the outset of the pandemic switched operations to make and distribute hand sanitizers to alleviate the shortage and gain goodwill or subsidize revenue. Medtronic retooled its coronary stent manufacturing factories in Ireland to make ventilators. Some companies we have have spoken with used crowdsourcing with their customers or supply chain to identify how they could best help their customers during the pandemic.
But after the necessity of the pandemic fades, how will companies fight complacency? Sound like a familiar problem?
CEOs need to understand that companies can be excellent at doing two things at once: achieving current goals and being innovative. They do not have to choose one or the other.
Second, they need to commit to innovation as a strategic imperative. Innovation is as essential to the organization as is meeting this quarter’s financial obligations, sales and marketing objectives, research and development goals, and operations improvements. As with each of these other organizational imperatives, innovation needs thorough external and internal information and analysis about its circumstances, threats, and opportunities (the change management people call this a burning platform). Innovation requires a shared and compelling vision, a focus, deployed strategies and goals, measures and metrics, and feedback loops for improvement.
The strategic imperative for innovation begins with an intimate understanding of the customer’s experience and emerging trends that may disrupt the company or present the company with new opportunities to disrupt others. Innovation does not happen in a vacuum or only through employee input. If companies do not have an intimate understanding of the customer experience, this is the first place to start.
Due to the pandemic, the world of work itself has changed and affects a company’s ability to innovate. Executives also need a new intimate understanding of their workforce. Eight percent of office workers and their managers learned how to successfully work from home during the pandemic, and now more than 50 percent of them want to continue to work from home two to four days a week. The use of digital technology, such as big data analytics, crowdsourcing, chatbots, and digital whiteboards, may have jumped by five years due to the recent necessity of working from home. Our research with The Conference Board, shows that digital technology can have a positive impact on innovation. CEOs need to think: How does this affect my company’s innovation.
The old paradigm that innovation requires everyone in the office 24/7 at elbows length has been debunked by the pandemic. Research now reveals that even innovation teams innovate and develop new products faster when they collaborate and work with lab equipment up to three days in the office and spend one or two days doing analysis and writing up reports working from home.
From there, CEOs needs to be transparent about the company’s problems and enthusiastically and repeatedly communicate their vision and strategies to be innovative. Then it is time for executives to get out of the way and to invite the involvement of their employees and external partners.
Our understanding of how successful innovation leaders become and remain innovative is based on years of empirical research and the publishing of more than 25 peer-reviewed academic papers on business strategy and innovation. This research’s outcome is the InnovationOne Health Index (pictured at right), which not only assesses an organization’s innovative health, but also evaluates its culture and ability to be innovative. As well, it benchmarks its health against industry or country indexes, and provides recommendations to reignite a company’s innovation.
Now that the pandemic is beginning to abate, is your organization struggling with the inevitable change it knows must be taken to innovate and change? Are you struggling with how to get started?
We can help by using the InnovationOne Health Index to provide you an empirically developed assessment to map out your journey to reignite your organization’s innovation for next quarter, next year, and beyond.
Please visit our website to learn more and contact us.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting, managing partner of InnovationOne, and Sales Advisor to MeBeBot. He works with companies to transform HR, implement remote work, recruit executives, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.