Rob is a Partner at Artisan, an innovation consultancy supporting global leaders with technology strategy and solution services.
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Most companies today say they want to innovate, but the majority struggle to produce actual results. Innovation is elusive, which makes it challenging to plan for and prioritize consistently. While we have the example of a handful of innovation honor students who have established environments where innovation flourishes, research shows that they are the exception. Even cutting-edge concepts like R&D hubs and innovation labs (like the ones Walmart, Starbucks and Facebook launched in recent years) are missing the mark. One expert said that up to 90% of innovation labs fail to deliver.
Despite the challenge, 75% of companies report that innovation was among their top three 2021 priorities. (This is up 10% from last year and is the largest year-over-year increase in the 15 years BCG has been conducting their global innovation study.) Most companies recognize the importance of innovation, but only about half are sufficiently investing to achieve results.
While companies still need to put their money where their mouth is, much of the critical investments required to spur innovation won’t hit your balance sheet. Based on my experience, organizations must prioritize three things to drive successful transformation: culture, time and cross-functional relationships.
1. Invest in creating an innovative culture.
First, successful innovators own their company’s innovation efforts. Outsourcing disruption to a savvy third party may generate a few novel ideas, but there is a greater risk of driving change that misses essential nuances of the core organizational culture. The difficult task of integrating new change across the company must be wholly owned and adopted by the organization itself. Typically, the best and most impactful ideas come from within, led by the people ingrained in the culture and well-versed in opportunities for improvement. This is one reason why the entire organization — not just a siloed SWAT team — should be invited into the innovation process.
Ultimately, fostering a culture of innovation across the entire organization is key. Leaders who hope to nurture innovation among their employees must develop a tolerance for failure. A surefire way to stifle creativity is by rejecting new ideas too quickly. The problem is that most managers are rarely penalized for saying “no,” yet they will find themselves in hot water if they approve the wrong thing. Companies that can overcome this mindset by viewing failures as learning opportunities and necessary for progress will foster a safe place for new ideas to grow.
2. Invest specific time toward innovation.
Another investment required to unlock innovation is time. Innovation rarely happens out of the blue. As leaders, we must discipline ourselves to pursue continuous progress, which means protecting time for team members to be creative.
Google famously encourages employees to dedicate 20% of their work time to side projects. Dubbed the “20% rule,” this practice is credited as a main reason why it remains one of the world’s most innovative companies. While carving out a complete 20% can feel unattainable for many organizations, many effective alternatives can help groups begin to protect time for innovation. In my experience, hack-a-thons, half-day Fridays and monthly offsite retreats focused on fostering innovation are all excellent ways to drive progress.
Regardless of what type of format you choose, be careful not to stifle innovation with rigidity. While guidelines and goals should be set around creative time, allow employees the freedom to choose what type of problems to solve. Encourage them to tackle issues that will either drive revenue, improve the customer experience or increase internal efficiencies, but don’t be overly prescriptive. While measuring the exact ROI on time allocated to open-ended creative work may be difficult, innovation simply cannot happen if you do not allow space for strategic, innovative thinking. Google has been making this investment of time since 2004, and it seems to be paying off.
3. Invest in building cross-functional relationships.
Even once a transformative idea has been identified, companies still face significant challenges in execution. One of the main reasons innovations fail is due to lack of alignment, which is why cross-functional collaboration is critical.
The GE workout developed by General Electric in the Jack Welch era is still an excellent tool for investing in cross-functional relationships. While there are various ways to conduct a “GE workout,” the way I’ve utilized the framework in the past is to recruit decision-makers from every relevant area of the business to spend a set amount of time focused on solving a specific problem. We start with a clearly defined scope and spend dedicated time (up to a few days) brainstorming and strategizing. The goal is to leave aligned around a clear road map with immediate next steps for implementing a solution. The cross-functional nature of the team is key in establishing buy-in across the organization and ensuring all critical viewpoints areas are incorporated.
In addition to one-off strategy sessions, leaders should also invest in one-on-one or team-on-team relationship building. Encourage IT and marketing teams to spend time together or set up an afternoon for the executive team to engage with employees on the field. When leaders make an effort to break down silos, they also open doors for collaboration and innovation to occur organically.
Successful innovation requires a unique dichotomy.
There is no silver bullet when it comes to innovation. Still, impactful innovation and consistent transformation are possible if organizations are willing to make thoughtful investments in culture, time and relationships. (Of course, once an innovative idea surfaces, companies will also need to be ready to invest financially.)
Ultimately, driving transformation requires the ability to view progress on both a macro and a micro level. Leaders must be able to prioritize innovation strategically, measuring results on a macro, holistic level. (This involves accepting failed projects as incremental steps toward success rather than as failures.) At the same time, they need to prioritize the daily “micro” disciplines that infuse innovation into the culture (like cross-functional collaboration and regular time for creative thought) and aim for a continuous stream of progress. The ability to hold this unique dichotomy in balance will unlock opportunities for innovation that most organizations miss.
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