I recently participated in a survey for APQC that was looking to identify the hot topics within product development and innovation. One or two hot spots surprised me, others less so.

In the round-up of results almost two-thirds of survey respondents have placed refining the identification of customer needs and remaining competitive in terms of profit at the top of their product development agendas. I like the increasing emphasis on identifying customer needs

Among the potential research areas respondents were asked about, they felt that developing talent to drive innovation was the most important. The second one was around rapid product development: How to Move Products to Market Faster.

The one that really caught my eye was organizations have allocated the most funds to improvement in developing talent to drive innovation. This is heartening but also a worry.

We need to really stop and think about this before spending further funds

I think before we jump into spending more funds on developing talent to drive innovation are our organizations that clear on what they want innovation to achieve? Growth is one but how? What type of innovation is needed, what are the implications? Have we created the right conditions? I could go on but spending to develop your talent to drive innovation you do need a good understanding of the what for and where this needs directing.

A second voice of concern also caught my attention

Also this week a conversation caught my attention that confirms this growing concern I have had that innovation is becoming a major strategic issue. It does seem Strategy and Innovation concerns have converged.

Recently Rita Gunter McGrath a Professor at Columbia Business School and certainly globally recognized expert on strategy in uncertain and volatile environments was discussing the three top hot button concerns at the leadership level of large organizations. She discusses this here with Booz & Co.

So what are hot button issues keeping our leaders up at night according to Rita McGrath?

The three hot buttons she is constantly hearing across organizations are firstly leaders feel their organizations have not got the right talent or skills in the right place to lead projects.

The second is around the struggle of innovation and growth, and they are simply struggling in how to do innovation. In Rita McGrath’s view the organizations do not have systematic systems in place, when organizations do innovation it tends to be ‘one offs’.

The third and final hot button at present at the strategic level is a lack of line of sight and worrying about what is actually going on. These are leaving leaders not comfortable to make clear, confident decisions.

So are we seeing the effects of how our organizations have been managed over the last few years?  Is it all coming home to roost? The leadership may worry over innovation and poor growth but it is in really in their hands to do something about it. Spending funds on developing talent to drive innovation is part of the equation but it is only part.

So how are we going to develop our talent for innovation?

Does the leadership of organizations ever listen or read about innovation in enough detail to understand all the implications, constraints and pieces to put into place? Have they recognized their role within developing innovation as a core discipline within their organizations?

To care about developing a clear, strong innovation set of capabilities you need to observe and reflect on what is causing poor innovation results. A significant portion of the blame is because the leadership, for whatever reason, simply does not get fully involved. They need to determine and build the innovation capabilities into the core of their organizations day-to-day operations. It needs to be recognized as a core competence alongside all others.

How often do we hear about the constant time spent on validating innovation, arguing the innovations corner, the pleading for more resources, the layering on of unnecessary structure, demanding impossible ROI’s and the intense focus on the short-term. Innovation is often just failing to connect into the mainstream of organizations, yet we are told our leaders are worried about growth, not having enough developed talent to manage innovation and the projects yet innovation is in their top priorities.

 Yet they worry over ‘line of sight’. Their third hot button

Of course they do, innovation is constantly being driven into the dark corners of the organization, it is being treated as opportunistic, like a light bulb you can turn on or off when it suits the whims and fickleness that our organizations leaders often seeking to respond to a crisis expecting innovation to dig them out of it. Innovation needs to become systematic.

Innovation needs far more serious attention at the top of our organizations, it needs strategic innovation leadership. Until leadership leads by focusing back on the longer-term, innovation is going to deliver continued disappointments. Also leadership in organizations requires stability to sustain and deliver on their initial promise.

Aligning leadership, the strategy needs with innovation activity.

Leadership needs to recognize their role in making innovation a more sustaining discipline. They need to give this a focus where they initiate and provide the essential strategic inputs into a well-designed innovation framework and ensure this is put in place.

To develop the talent to drive innovation you have to put into place all the conditions, structures and guidance this needs. I’ve written consistently about the need for this by suggesting the value of the Executive Innovation Work Mat approach.

Setting the strategic innovation framework through this work mat approach allows for the structure to be put into place that will develop the talent to drive innovation. It provides the conditions and strategic innovation guidance.

Resolution for innovation starts at the top.

If our business leaders want to resolve the present hot buttons of poor growth, sporadic innovation and achieve a clear line of sight as Rita McGrath is suggesting, then I’d suggest you take the time to read what I have written about this, here on this site by entering ‘work mat’ into the search box for starters.

Gaining better understanding of structuring and building innovation capabilities

Building innovation capabilities to drive innovation takes time. I would suggest you find the opportunity to read the ‘White paper’ or the foundation document on this innovation work mat. Also some of the supporting articles over at my Issuu dedicated page here, where you can find different papers that can be visually picked out by the one to six billiard balls to understand the thinking behind this framework further.

Try to answer the seven parts to the innovation leader’s litmus test or exploring the ten great intractables for innovation resolution.  Each prompts the thinking. Innovation needs to challenge prevailing organizational thinking. Innovation surprisingly enough does needs to be justified so as to build its sustaining business case . it is through this structuring you gain the serious attention of senior management for them to address the role they play within this innovation framing.

I would argue you need to make the innovation value proposition afresh

Then, and I am being deadly serious here, you need to go and actually sell what systematic innovation really means as a real value proposition to the leadership.

This VP needs to focus on what needs to be done to turn innovation into the engine of growth and through its strategic design, put in place the vehicle to attract and develop this innovation talent. You are tackling the leaderships hot buttons of concern.

Any development of talent needs a well-structured approach but you need to put in place an awful lot to really give the type of returns these ‘driving innovation’ needs. If leaders are worried about poor growth, disappointed with innovation and worry over ‘line of sight’ then innovation capability needs radically redesigning. Much of the present innovation is caught in a legacy trap, this needs overhauling. How will you think about addressing this?

Do you want to really develop the talent to drive innovation? If so then talk to me, I believe I can deliver a clear return on your investment of allocated funds.

The post Developing talent to drive innovation first appeared on Building Your Innovation & Ecosystem Intelligence.

I recently provided a post on a very upbeat PwC report on innovation and its growing importance to growth in the coming years. The PwC report “Breakthrough innovation and growth” was a survey of 1,757 C-suite and executive respondents, on their thoughts on innovation and where the new growth was coming from in approach.

The top line was companies are seeing innovation transforming their businesses and their need to take a more sophisticated approach to innovation, so as to achieve the growth plans they are setting for the next five years.

There was a strong indication that the innovation that was going to be pursued was going to follow a far more radical set of innovation practices that have the potential for offering a real impact on companies future growth ambitions.

Yet I have also been reading another report issued by Corporate Executive Board (CEB), a leading members-based advisory company called “Growth Readiness- prioritizing investments to drive executive commitment” discussing the secret to effective investment prioritization is demonstrating your organization’s readiness to pursue growth. (N.B You need to fill out the form to obtain the report)

Both correlate on the strong need for growth. CEB suggests as the global growth has stalled that in response, companies have planned to boost non-incremental growth investments by almost two-thirds.

The CEB defines non-incremental investment as a large growth opportunity that requires some change to the business.

The PwC report enthuses about innovation and reports

“Growth is a top priority for most (80%) of the companies we interviewed and their plans are ambitious. Executives are planning for 35.4% growth, on average, over the next five years, the equivalent of 6.2% per year. Over a quarter of executives (26%) say that they are aiming for ‘aggressive growth’ over the next five years”

Yet there are dark clouds of concern in the Strategic Office

Yet in a associate blog from CEB written by Marc Austin, who has primary responsibility for research and product research at CEB, he discusses one big if not huge issue that will hold any investment decisions back, and this lies clearly in the board room.

“When I talk with heads of strategy – mostly, they talk about their frustration with the C-suite. Strategists describe the senior executives in their organizations as analytical, tenacious, and gifted in the art of getting things done. Yet the growing trend across boardrooms is indecision, especially when it comes to deciding on big, higher-risk growth bets.

As one strategist explained, “I only had head-nods, not real commitment.” This isn’t just a problem. It’s a big problem… At the end of the day, it’s getting executives to follow through, to defend their decision, to ensure funding and resourcing for the big bets happen and don’t get derailed. Without commitment, there is really no point to strategy.”

There are some serious issues seemingly raised around strategy according to the CEB report..

One of the critical points within the CEB report is suggesting that the lack of commitments to non-incremental investment can cost a company 3.25% less return (above hurdle rate), or a 34% lower profit than they might

So do we sense we might be having a real problem here?

It seems a real tension is occurring between desire and reality? Between strategic intent and follow through? Certainly this will be between how innovation is intended to lead growth through the strategic intent? The CEB report discusses the important changes taking place around risk and talks about risk readiness.

Is innovation riding in to offset risk?

Yet in a further PWC recent study: Unleashing the power of innovation, three quarters(74%) of CEOs regard innovation as equally important to the success of their company as operational effectiveness, if not more. This is the first time in recent history that innovation has been in parity with operations in the C-suite.

The latest PwC report  on breakthrough innovation and growth goes on to mention that “the push to create new value is not so surprising in itself. What is most surprising is that in this challenging economic climate, where many companies still face enormous pressures to reduce costs and become more efficient, many executives are telling us they see innovation on a par with operational effectiveness”.

If these ambitious rates of growth are to be achieved, companies recognise that they will need to look beyond the more traditional options for growth, such as mergers and acquisitions and traditional R&D.

It does seem broader types of innovation might have finally arrived in the boardroom. There seems in CEO’s minds a clear correlation between innovation and growth.

PwC point out “The widespread rejuvenation of innovation should have a profound impact on the way businesses plan for the future”. The leading innovators in their study are targeting a higher proportion of breakthrough and radical innovations, particularly around products, services, technology and business models

PwC does caution companies, “they need to determine whether they should adopt a ‘Play to Win’ or a ‘Play Not to Lose’ innovation strategy. ‘Play Not to Lose’ is a defensive posture appropriate for groups that are risk-averse or unable to be leaders that generate winning innovations. In some competitive environments this makes sense: it is better to play conservatively and avoid taking large risks” (pg24).

Companies are looking across the innovation cycle to get into the right shape to implement this shift in strategy towards a very high organic growth one and be able to execute on innovation.

With acceptance that growth gaps need resolving it seems risk will raise its head.

Will business leaders overcome their current higher concerns for taking risk and will that come from more radical innovation? It seems this is a very open question. There seems a desire to ‘talk up’ innovation, to leverage it more but the reality of managing the risk seems the issue that needs managing.

Yet recent market changes have altered how executives make decisions and develop commitment.Prior to the recession, commitment could be captured on the basis of the opportunity’s inherent attractiveness.Today the basis of commitment to major growth bets has fundamentally changed.

There also seems a shift in strategic approaches.

To prioritize investments based on growth readiness, strategists must consider the three enablers of growth readiness, Risk Readiness, Capability Readiness and Stakeholder Readiness.

Equating the two reports

Although the interview ‘universe’ is different, one  is global (PwC), one more contained in the USA (CEB) I think they justify this need to be brought together as risk readiness and growth through innovation need this equating.

I think reading both the PwC report “Breakthrough innovation and growth” alongside the CEB one on “Growth readiness” needs some narrowing of the dealing with risk, innovation and readiness, if companies  actually determined to really work towards radical or breakthrough innovation.

I think the present mind set of risk mitigation might need some thoughtful thinking through and the discussion about risk readiness needs to take place within boardrooms if they are about to deploy innovation in greater ways.

Otherwise risk will impede innovation and then frustration then grows with innovation failing to deliver the expected results.  The real frustration has actually as its real source the inabilities to quantify ‘acceptable’ risk and not having guidelines.

Innovation is inherently risky from often its inadequate data and market quantification. Clarification at board room level needs to be made on how to treat innovation when it is pursuing more radical, new business model or breakthrough approaches.

Strategic planning for innovation will need different thinking and tools to manage it adequately.

An early board room discussion should be about achieving a consensus over the growing recognition that innovation, at its most powerful, is a driver for rapid and profitable revenue growth but what will be the acceptable risks.

If companies are targeting a higher proportion of breakthrough and radical innovations, particularly around products, services, technology and business models, it can dramatically deliver improved competitive positioning, higher customer satisfaction, and decreased costs with the right innovation solutions, but it has risk.

Risk mitigation needs to equate as much of the uncertainties you find in exploring a breakthrough or radical approach to business. These discussions will have some high tension points, that need clearer guidelines otherwise we continue with growing strategic and innovation frustrations. The board needs to lead here.

Many of the challenges arise from the way innovation is managed and handled. Another early strategic boardroom discussion should be around the operating models and metrics for ‘business as usual’. These will conflict with those needed to drive innovation for ‘new growth business’.

Risk readiness needs to be well thought through, otherwise more radical or breakthrough innovation will struggle to get out of the door, let alone into the board room, if risk is not equated differently going forward. Risk versus opportunity needs to be constantly evaluated.

It will be the ones that can articulate the value, create the right narratives for this innovation growth, by taking these bolder approach decisions to innovation will less than perfect data.

They will succeed in gaining organic growth through innovation by understanding its parts in detail. It is those who can equally manage uncertainty by advocating a new risk readiness pathway to growth will be in better shape to pursue a broader innovation approach.

We will need to ‘marry’ risk and opportunity through our innovation activities far better and prompt some very important board room discussions to enable innovation to take this centre stage for growth.

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