This is a guest post by Vistage Speaker Jatin DeSai.
In our experience working with other CEOs and senior executives, they have realized that the markets are very unforgiving and will always continue to be unfriendly, and that embracing innovation is not an option, the next logical question they generally pose may be obvious.
What must CEOs do to embrace innovation while managing the associated risk and overcoming the barriers?
Before I share with you the four barriers, let me say that the answer lies in developing a clear Innovation Mandate – a strategic statement that describes innovation in the context of your business, the value it promises to generate for growth and disciplined process by which to get there.
Innovation Mandate must be vividly clear for everyone in your organization; it must be concise to help drive alignment to business unit initiatives, and it must help articulate specific employee behaviors necessary at all levels for innovation climate to take root. When designed correctly, it is clearly linked and driven by the business strategy.
Additionally, keys to become innovative are highly dependent on your ability to address four critical barriers that are incumbent in most organizations. When not addressed together, the journey towards sustainability and value creation invites a higher risk of failure, potentially minimizing the results of innovation investments.
The first barrier is that most organizations do not have the mindset to harvest ideas and manage those ideas as Venture Capitalists do. This requires demonstrated confidence to consciously fail, experiment often, and win occasionally. Goal is to do more of it, so you can out-compete the markets.
The sole role of Silicon Valley was to quickly take the best ideas and apply entrepreneurship and agility to turn those ideas into commercial ventures. Silicon Valley did this because they recognized that large corporations are unwilling to abandon the tightly-knit safety net of resource allocation.
It is clear that the amount of “innovation opportunities” available to large companies dwarfs the potential available to small companies. So the myth that only small, nimble businesses can be most agile and innovative is completely false. In fact, here’s case in point (not to mention hundreds of other such examples): Medtronic, a Fortune 500 Minneapolis based global leader in medical technology, on average used to earn 70% of its sales from products introduced in the previous two years alone. This resulted in long term sustainable growth of 20% and created a high barrier for its competition to enter into Medtronic’s markets.
The bottom line: new ideas are easy to find in every corporation; it’s the distinctive capability of turning them into commercial ventures that most companies fall short on. This requires leaders to role-model what innovation means to them and the company. First step to address this barrier would be to develop an appropriate funding strategy and structure that will quickly demonstrate your commitment to innovation.
Stay tuned to Part-2,3,4.
CEO, The DeSai Group