Effective leaders know that successful corporate innovation requires a culture that prioritizes learning and experimentation and supports creativity, collaboration and trust among employees, as well as focuses on the outputs and value of innovation efforts.
With thanks to WTW’s Ben Snapper, successful innovators follow several key practices:
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Numerous studies have found that people are motivated to innovate when they feel that their work is tied to a strong sense of purpose, particularly when colleagues believe their products or services have a positive impact on their company and/or the world.
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In his book, Drive: The Surprising Truth About What Motivates Us, psychologist Daniel Pink takes a similar view on motivation, arguing that people are most motivated when they have autonomy, mastery and purpose in their work. Autonomy refers to the ability to have control over one's work, while mastery refers to the ability to develop expertise in a particular area.
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Experts have connected creativity and innovation in organizations to healthy risk taking, trust, psychological safety, failing fast and experimentation. Psychologist Teresa Amabile conducted extensive research on the role of creativity and innovation in the workplace, arguing that one of the most important factors in driving creativity and innovation is a supportive work environment. This includes a culture of trust and openness as well as opportunities for collaboration and communication. A workforce with the autonomy to think “outside of the box” and ideate, collaborate and experiment is more likely to develop inventive solutions to problems.
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According to a recent BCG study, despite global economic uncertainty, innovation rose as a top corporate priority in 2023. Almost 80% of companies ranked it among their top three goals and 42% expect to significantly increase spending this year, an increase of 16% over the last economic downturn in 2009.
Innovation-challenged companies report talent and culture are the factors holding them back from realizing the full potential of their innovation efforts. Conversely, top innovation companies strive to create an innovation-focused culture and create robust talent pipelines. In these companies, effective leaders emphasize recruiting individuals with an innovation mindset to maintain skills across the talent pipeline.
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Also according to the BCG study, 90% of top innovators expect to increase spending on innovation, almost all by more than 10%. These organizations report allocating one-third of spending toward developing breakthrough innovations.
Effective leaders use a wide array of strategic tools to strengthen their innovation platforms and practices. They access capabilities and expertise both internally and externally, and they utilize systems that maximize the impact of these tools. These companies are more aggressive in their use of M&A and are more likely to involve innovation experts in acquisition target analysis and selection. They also are more likely to orchestrate or participate in sector ecosystems, engaging with external partners, and even competitors, on innovations. They regularly review the performance of innovation units or vehicles (such as venture capital funds, accelerators, incubators and R&D) and shift resources toward those that are successful.
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The study also found top innovation companies focus their investments for greatest impact and manage their innovation portfolios for improved results, often directly in response to economic uncertainty or the prospect of turmoil. They understand that innovation leads to advantage through both portfolio prioritization and management.
In terms of portfolio prioritization, top innovators emphasize breakthrough or disruptive innovations, while less successful innovators allocate resources more heavily to “near-in” or sustaining innovation. In 2023, top innovators are shifting resources away from incremental innovations that sustain current positions or advantages to breakthrough or disruptive innovations that create new markets or revenue streams. Even in the event of a downturn, effective innovation leaders expect to allocate more investment to breakthrough innovations and disruptive innovations rather than retrenching.
In terms of portfolio management, the most innovative organizations embed effective management and governance to help ensure high returns on investment. Virtually all top innovators employ end-to-end tracking to assess progress and make informed decisions about an initiative’s value. Overall revenue growth and customer satisfaction remain the top metrics for innovation success for these organizations.
While it might be tempting to retreat from innovation efforts during disruptive times, effective leaders double down on innovation culture, investment and measurement to drive growth and results.
A version of this article originally appeared on Forbes on August 31, 2023.
