What’s Driving the Lack of Innovation in Companies Today?

1. Dominant “What’s now?” agendas

Many companies and brands focus their leadership attention, organizational capacity and resources on producing short-term results and managing the business day-to-day. I call this the “What’s now?” agenda. Given that intense pressure from capital markets essentially forces companies into a short-term, quarter-over-quarter focus, one can certainly be empathic.

However, as observed in Company A, with an almost exclusive focus on the “what’s now?” agenda, companies and brands can quickly lose sight of important outside signals that reflect long-term shifts in market forces, competitive dynamics, customer behavior and brand preferences. 

Affirming the significance of this, a recent Nielsen study shows that 63 percent of surveyed customers want and expect their preferred brands to innovate for the future. With a lack of emphasis on the evolving and future business landscape –  the “what’s next?” agenda –  new market entrants, disruptive business models and emerging technologies (internet of things, advanced robotics, artificial intelligence, etc.) can quickly be converted from high-potential acquisition, innovation and growth opportunities into existential threats. Is the “what’s next?” agenda in your company being overwhelmed by a dominant “what’s now?” agenda?  

Other questions to consider:

  • Do we have enough focus on the “what’s next?” agenda?
  • Are we aligned around a collective vision of our future?
  • Are we formulating a competitively divergent view of the future?
  • Are we applying intellectual curiosity to identify areas for innovation within that future?
  • What type of innovation (strategic, customer, service, business model, value, product, etc.) do we need to capture the opportunities of the future?

2. Bunker mentalities

With many companies now offering flexible work schedules, remote work arrangements, on-site gyms and free snacks, the new workplace is increasingly built to optimize employee work-life balance. However, as an unintended consequence of these newly found “comfortable” work environments, the organizational temptation to maintain and defend the status quo becomes a force to reckon with.

Specifically, as communicated by a senior leader in Company B, the relative comfort, contentment and convenience found in the new work setting can inadvertently lead to powerful “bunker mentalities” that are highly resistant to change, and a culture that favors risk elimination over the critical risk-reward calculus needed in today’s complex business environment.  

Simply put, companies can lose their animal spirit, potentially suppressing the collective organizational hunger to compete, lead and win in the marketplace. Contrary to the original intent, these types of culture and work environment can lead to missed opportunities, underperformance and organizational stasis that can ultimately fuel employee disengagement, limited collaboration on “what’s next?” and an insidious lack of passion for the business, which only fuels the status quo further.

This is serious stuff – Gallup estimates that 70 percent of American employees aren’t working to their full potential and cost companies roughly $550 billion in lost productivity per year. Is your company inadvertently operating with a bunker mentality that favors the status quo over innovation?

Other questions to consider:

  • Is leadership providing the commitment and permission to innovate, fail, pivot and learn?
  • Do we have the right organizational systems and structures (incentives, collaboration, knowledge diffusion, training, experimentation) in place to compete and win the future?
  • Do we have a common language around innovation and growth that is institutionalized?
  • Is creating, promoting and executing new ideas a crucial part of everyone’s job description?
  • Are we comfortable with balanced risk-taking and creative disruption?

3. Alternative realities

With new corporate design labs, innovation challenges, open workspaces and the curious emergence of hoodie-clad hipsters, Company C has mastered the appearance of “doing innovation.” With all due respect to skinny jeans, this type of corporate psychological warfare – I call it “faux innovation” – can create a virtual Stockholm Syndrome where employees are held captive in an alternative reality where innovation pretense replaces creativity, customer-centricity, experimentation and reasonable expectations of real commercial outcomes.

Beyond the hype and surface optics, in the words of a senior leader, the innovation programs in Company C have struggled to consistently generate real commercial outcomes, demonstrate adequate returns on capital or contribute meaningfully to value creation. Particularly acute in the rapid-fire digital and service-driven economy, if the tyranny of faux innovation takes hold, companies and brands can quickly become vulnerable to the threat of rapid commoditization and marketplace irrelevance that lead to real questions about customer acquisition, retention and long-term corporate viability.

As Marc Sniukas, co-author of “The Art of Opportunity,” points out: “Innovative ideas for new products, service and businesses need to be aligned with business requirements in terms of financials, (e.g., ROI, margin), operational realities (e.g., can we actually do it), technology available and the overall strategic direction of the company.”

While this might sound obvious, evidence shows that making this happen isn’t easy. In fact, while the 2016 Global Innovation spend is still at an all-time high of ~$680 billion, a recent McKinsey poll states that 94 percent of the managers surveyed were dissatisfied with their company’s innovation performance. Is your company suffering under the tyranny of faux innovation? Is the appearance, rather than the substance, of innovation more important?

Other questions to consider:

  • Are we (really) doing innovation or doing a good job faking it?
  • What was the most meaningful outcome from our innovation programs?
  • Are we linking innovation investments to real business objectives and emerging opportunities?
  • How effectively are we experimenting, learning and aligning our innovation portfolio to unmet, unsatisfied or undervalued customer needs or market gaps?
  • Is commercialization part of our daily innovation conversations or an afterthought?

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