The Case for Innovation at the Workplace
The need for organizations to evolve and develop more purposeful approaches to drive innovation has never been greater, especially since the COVID-19 pandemic.
A McKinsey report shows that prioritizing innovation is the key to unlocking post crisis growth. Research also shows that the average lifespan of an S&P company has gone down from 61 years in 1958 to less than 18 years in 2018. Simply put, the risk of not innovating is to become extinct.
Innovation has for long been recognized as a core driver of growth, performance, and valuation.
In fact, on average, innovative companies generate 3.6 percentage points greater total annual shareholder returns than their peers. Further, in the years following the 2008-2009 financial crisis, the publicly traded members of Boston Consulting Group’s 2007 ranking of “50 Most Innovative Companies” outperformed the larger market on shareholder returns by 5.6 percent every year till the end of 2019.
Studies even show that a well-constructed team that brings together the abilities and skills of a world-class innovator can end up compensating for a lack of “founders”.
Sources: Deloitte, McKinsey, and Boston Consulting Group
While 80 percent of innovation executives report that innovation is a top-three priority for them, only 30 percent believe their organization is good at it.
86 percent of senior executives believe that innovation is critical. And yet, only 6 percent report feeling confident about their organization’s ability to innovate.
61 percent of U.S. employees say that their employer expects them to be creative and innovative at work. But only 18 percent of them say they can take the kinds of risks at work that would allow innovation to happen.
Another survey shows that only 1 in 5 employees say that their job currently allows them to work on — or even share — their most innovative ideas.
A whopping 94 percent of executives are dissatisfied with their firms’ innovation performance.
Sources: McKinsey, Gallup Insights, Boston Consulting Group
Mentora’s approach to Disciplined Innovation applies principles of Venture Capital to maximize innovation success for clients:
- Invest a little, upfront: You’ll only fully learn by doing — but you don’t need to bet the farm.
- Invest in a staged manner: Identify key risks and focus on resolving these in stages. Invest only from one stage to the next.
- Fast fail: Align incentives so that a project can be terminated if some critical assumption(s) on which its success hinges is disproved.
- Do fast iterations: Create cycles where you test, learn and adapt, and stay open to pivoting in new directions as new learnings accrue.
- Investigate multiple paths to success: Don’t get stuck with a single path that has high risk — investigate alternative paths to success.