If you pay attention, you’ll start to see them fly. They often shoot out wherever employees are gathered. Inspired e-mails can crackle with them, or they may flicker into existence during conversations with customers. They are sparks of good ideas that organizations might fan into the flames of innovation...if only they could figure out how.
Many companies are faced with a conundrum, suggests data from a new global survey of 1,396 respondents. Conducted by the Human Resource Institute (HRI) and commissioned by the American Management Association (AMA), the survey found that although most participants view innovation as highly important to their organizations, the vast majority do not think their companies are very adept at it. This fact should make innovation one of the top management priorities of the coming decade.
Most companies are well aware of the need for innovation, and its importance is only going to become more intense. Sixty-eight percent of the AMA/HRI survey respondents ranked innovation in their organizations as “extremely” or “very” important today, and 86% did so when asked to look 10 years out. The percentage of those rating innovation as “extremely important” jumped from 32.5% today to 51.3% in 10 years.
What’s worrisome is that when asked about how successful innovation is in their organizations, about 15% said “not successful at all” and 70% said “moderately successful.” To those familiar with the literature on innovation, this isn’t much of a surprise. The vast majority (96%) of all new innovation initiatives fail to achieve or exceed return-on-investment targets (“A Creative Corporation Toolbox,” 2005), and the correlation between high levels of research and development spending and various business-success metrics is weak (Jaruzelski, Dehoff and Bordia, 2005).
Innovation needs to be managed better in many companies. This often means starting with the basics. The AMA/HRI survey finds that nearly half of respondents (47%) said they “do not have a clear understanding as to how my company can become more innovative,” and 48% noted that “there is no standard policy for reviewing and evaluating ideas” in their organizations. The implication is that organizations need to do a better job of helping employees see how they might innovate and what the review and evaluation process looks like.
Too often, it appears, innovation is starved or neglected. When respondents were asked to select the most significant barriers to innovation in their organizations, the top three answers were insufficient resources, the lack of a formal business strategy and the lack of clear goals and priorities.
Good leadership can play a major role in knocking down these barriers. A previous 2005 AMA/HRI survey found that the ability to foster innovation will be—along with strategy development and communication skills—among the top three most important leadership competencies by the year 2015.
But exactly what should leaders do? The AMA/HRI Innovation Survey asked respondents to identify the top three actions their leaders take to support innovation. The number one answer was “developing an organizational strategy for innovation,” followed by “redesigning organizational structure or work flow” and “increasing employee involvement.”
Of course, leaders must also help establish or continue to foster a culture in which innovation can thrive. The most important factors for developing such a culture, according to the survey, are customer focus, teamwork/collaboration with others, appropriate resources and organizational communication. This list suggests that respondents understand the importance of sharing ideas. Sometimes these ideas come from customers, who not only share notions about what they want in a product but often use existing products in ways the designers never anticipated.
Sometimes good ideas and their development arise via internal collaboration and communication. Successful innovation is not only the result of teams of researchers and engineers but of collaboration among a host of business experts, from marketers and salespeople to financial, manufacturing and HR experts. A great new product that comes out of R&D can turn out to be a nonevent or a spectacular failure if the organization as a whole doesn’t come together to support it.
Collaboration can also mean innovating in partnership with outside entities such as university research programs or business alliances and consortia. Some sources suggest that only about 55% of today’s innovation originates within companies (Troy, 2004).
So, many organizations have their work cut out for them if they wish to improve —as they know they must—their management of innovation. Strategy, structure, work process, culture—these organizational components must operate in union in order for organizations to more consistently fan today’s sparks of good ideas into the successful new products and services of tomorrow.
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Documents used in the preparation of this article include:
“A Creative Corporation Toolbox.” BusinessWeek, August 1, 2005.
Jaruzelski, Barry, Kevin Dehoff and Rakesh Bordia. “Money Isn’t Everything.” strategy+business, Winter 2005, pp. 54–67.
Troy , K. L. Making Innovation Work: From Strategy to Practice. The Conference Board, 2004.