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Photo by Jackson Simmer on Unsplash
Mon Jun 3, 2024
If simply instructing employees to "be innovative," "learn from mistakes," and "fail fast, fail-safe" were sufficient, companies would effortlessly disrupt markets. However, the reality is far from that. Despite innovation being a top strategic priority for businesses, its support in daily work-life often falls short. What distinguishes truly innovative organizations from others? It's not the presence of inspirational posters or recreational amenities like ping pong tables amidst workstations. Consistently innovative companies are defined by their culture.
While numerous factors contribute to culture, a fundamental element crucial for enabling innovation systemically is an organization's leadership. The significance of leadership in driving innovation may appear self-evident, yet one key revelation from our extensive work with various companies is the significant disparity between senior leadership and staff regarding the level of support for innovation within their organizations.
The first disconnect is that executives are more likely to believe their organizations incentivize risk-taking; however, the majority of employees don’t report being empowered to venture into new territories or take chances with new ideas or initiatives.
Executives often believe their companies encourage risk-taking, yet many employees feel they lack the freedom to explore new ideas. This revelation has hit home for leaders across various organizations. For instance, in the software industry, one company conducting IMT’s Culture of Innovation Diagnostic was astonished to learn that despite their leadership's vocal support for experimentation, employees didn't perceive the company as encouraging risk-taking.
The diagnostic uncovered a stark contrast between leadership rhetoric and organizational reality. The company's practices didn't align with its stated values; insufficient resources were allocated to innovation efforts, and performance evaluations and rewards penalized failure rather than encouraging experimentation. Consequently, employees were hesitant to pursue innovative ventures.
When there's a disconnect between leadership's promises and the organization's actual practices, innovation suffers. When fear of failure dictates decisions, innovation is stifled, and risk-aversion becomes the norm.
Our research reveals a significant gap in the involvement of non-managerial staff in the innovation process. While a substantial portion of executives and managers report having the opportunity to dedicate time to developing new ideas beyond their core responsibilities, this privilege is less prevalent among professional/technical and support staff.
This discrepancy hampers the creation of value beyond routine tasks, limiting innovation to incremental gains and potentially jeopardizing a company's competitiveness in the market. Furthermore, the ability to engage in innovation correlates with higher levels of employee engagement.
Investing time in new initiatives benefits both business growth and the retention of talent. Excluding a diverse range of stakeholders from the process of generating and refining new ideas leads to decreased engagement and hinders innovation progression.
Non-managerial employees often feel disempowered to make decisions within their organizations. While directors and managers believe decision-making authority is shared rather than strictly top-down, less than 50% professional and technical staff share this perspective.
One client in the financial services sector struggled to encourage innovation within their organization, unaware of how bureaucratic decision-making processes were hindering innovation. Through IMT’s Culture of Innovation Diagnostic, they discovered that only 20% of directors and department heads perceived decision-making authority as distributed. With a significant 80% reporting top-down decision-making, lack of autonomy and empowerment emerged as critical barriers to innovation. This insight empowered leadership teams to overhaul their processes and better facilitate innovation systematically.
When decision-making remains strictly top-down, leadership teams risk creating echo chambers and succumbing to biases that hinder progress. Decentralizing decision-making not only frees up leadership for strategic pursuits but also empowers staff to innovate and fosters diverse perspectives, reducing decision-making blind spots.
To cultivate innovation within an organization, leaders must enact strategies that translate vision into action. Intentionality is paramount in shaping a culture of innovation; without it, culture is left to chance, impacting not just innovation but also employee satisfaction and financial performance. Leaders who institutionalize innovation practices throughout their organizations create an environment primed for breakthroughs.
Dr. Vidya Priya Rao
Her purpose is to equip 1 million people with adaptive skills and toolkit to ride the waves of change for breakthrough results. She is the Founder of Innovatus Marketers Touchpoint LLP and author of the book Master Agile and Resilient Strategy. She can usually be found facilitating a strategy / innovation workshop, designing actionable visual tools, teaching design principles at business and design schools, or raising awareness of design to solve complex problems. When not absorbed in writing her second book, Vidya loves cooking, trekking, and travelling. She lives in Mumbai, India.