Stefan Lindegaard has written an interesting piece in Business Week arguing that most CEOs just don’t understand what innovation needs and entails. As evidence he quotes research by the Center for Creative Leadership in Greensboro, N.C., which interviewed 247 executives and managers who supervised at least 500 people and had more than 15 years of management experience. When asked what they were doing to promote innovation in their organizations, the most popular strategy, adopting “overt innovation processes,” was named by only 25%. Only 17% said they were undertaking “talent/talent development,” the second most often mentioned answer, and 13% said they had rewards/recognition programs to support innovation.
The author contends that these responses show that chief executives are doing surprisingly little to build innovation cultures in their companies. He gives the following reasons why CEOs and other C-level officers often don’t support innovation, even though the business climate of our time demands it:
1. The demand for short-term gains nearly always wins the day. Top executives at public companies are under enormous pressure to produce strong financial results each and every quarter. This is the area where they are rewarded for producing results, and their job security increasingly depends on it.
2. They missed out on innovation education. Many of today’s top executives got their business education before innovation was a significant part of the curriculum at many MBA programs. They could compensate for this with experience, but many also missed on-the-job training, because innovation training usually happens from the top down, not vice versa. They were trained to be problem solvers, not innovators. Innovation education didn’t really take root until the early-to-mid-1990s, when thought leaders such as Clayton Christensen, Gary Hamel, C.K. Prahalad, and others emerged.
3. Top executives are risk-averse. Innovation, especially open innovation, is scary on many levels. People who make it to the top because of their knowledge of existing businesses aren’t that interested in considering a new business model or going after an amazing yet high-risk breakthrough when that may undermine their own expertise. And who wants to risk having a major innovation effort fail on their watch? People who truly understand innovation embrace failure as an inherent part of innovation. They realize that big lessons that lead to success often come from the biggest failures. An attitude that doesn’t allow for failure is contrary to an innovation culture, yet that’s the kind of attitude that too many company leaders possess.
4. They don’t see why a networking culture is important for open innovation. In a world of open innovation, you need to be an expert at networking and building relationships. This holds true at the corporate level as well as the personal level. So I ask leaders and managers: Where is the strategy, commitment, and structure that you need to create a networking culture? Many of them have not bothered to give this important subject any thought.
5. Top executives are too far away from the action. It is easy to preach innovation when you do not have to make it happen. The problem is that top executives reward middle managers for getting stuff done and executing flawlessly. This can be counterintuitive to innovating. But top executives are often too far away from the action to understand how this compensation structure makes it harder for innovation leaders to succeed. Most leaders are more wedded to rewarding the core business rather than pursuing something new and untested.
Paul Sloane
