Innovation is central to business success but very few companies make it an integral part of their strategy, culture or performance metrics. Even fewer communicate its importance to their teams.
Consultancy firm BCG found 83 per cent of company leaders saw innovation as a top-three priority in 2024, but only 3 per cent were ready to translate their priorities to results. This was a marked decline from 20 per cent in 2022.
Too many organisations are just going through the motions of innovation without a clear strategy to focus their efforts. At a time when GenAI is transforming industries and geopolitical uncertainty is growing, hesitancy around innovation means some businesses may stall and die.
Paul Polman, former chief executive of Unilever, says: “The best advice I was ever given is you either make the dust, or you’ll eat it.” This week he told a cautionary tale about a dust-strewn competitor in his Becoming Net Positive newsletter.
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Following a megamerger in 2015, “Kraft Heinz continued to bet that value comes from cutting costs, not from sustainability and innovation. And when the world moved on, toward healthier products, regenerative sourcing, conscious consumerism, the company stood still. Underinvested, overstretched and out of touch.
“Many competitors adapted more successfully. Danone pivoted toward plant-based and regenerative agriculture. Nestlé retooled entire product lines around health and sustainability. The issue is not that the food industry changed, it’s that Kraft Heinz had stripped itself of the capacity to change alongside it.”
Kraft Heinz shares have fallen roughly 65 to 70 per cent since the 2015 merger, while the S&P 500 Index has more than doubled.
“The question facing every board and CEO today is not just what your company sells, but what it stands for and whether your model is built for the world that’s coming or the one that’s already gone. Because here is the truth: short-term businesses live shorter lives,” says Polman.
Focus on people
Innovation is a bet on the future but what does it even mean? It can describe the entire journey from generating an idea to making or doing something that creates impact. It doesn’t have to be brand new or even original. Innovation can include combining two or three things differently or modifying existing processes, services, or products to make them better.
Apple, for example, has a reputation for innovating by masterfully combining or tweaking existing technologies, design and services into seamless, user-centric ecosystems. The late Steve Jobs and his team were notorious for focusing on “insanely great” user experience (UX) design and reducing customer pain points rather than being the first to market with something new.
Innovation can be simple but people tend to overcomplicate it, says Tom Pullen, chief executive of Innovinco® and author of Innovator: 10 Simple Steps to Innovate with Speed, Scale and Confidence. “Innovation can be wrapped up in this idea of a visionary leader who has an innate skill but innovation is basically a process. If you execute effectively, you’re more likely to come out at the other end with a successful business result.”
Pullen spent most of his career driving growth inside major companies like Boots, Mars and Danone as global innovation director. Today he works with L’Oréal, Toyota, Unilever and the Coca-Cola Company on accelerating innovation performance.
Innovation has to be done in a really structured way, he says. It’s like trying to cook a three course meal; you need to follow the recipe and timings closely. You can’t cherry-pick the steps and just do the bits that you prefer doing.
“Imagine trying to cook dinner in this way: you defrost the chicken, then move straight to making the sauce, then prepare some bits of the dessert but expect at the end to have a beautifully cooked three course meal,” says Pullen.
Too often, businesses focus on innovation linked to technology but innovation only happens thanks to people, he insists. “Scaling those behaviours takes more effort and time so, instead of focusing on initiatives, we need to support the people who make innovation happen.”
Surprisingly, most staff members have never been trained on how to innovate. There’s very little capacity building and on the job coaching for innovation; it’s not widespread in organisations, says Pullen.
“You don’t expect an Olympic athlete to just show up – without training, practice and experimentation – and win the gold. Yet we expect people to know how to innovate, get on with it and succeed without any training or experience of innovation.”
New ideas can’t be forced but you need to create fertile ground so they can grow.
“Innovation culture doesn’t start with brainstorming or a vision statement. You need to meet the basic needs of innovators: if it’s not safe to fail, then it isn’t possible to innovate,” he said.
Be the bridge
The role of leaders in innovation needs to change, says Prof Linda Hill of Harvard University. “As innovation becomes central to strategy, leaders must move from communicating a vision to co-creating the future alongside their teams. This shift calls for a different kind of leadership, one that fosters inclusion, experimentation and collective genius.”
Great innovations fail to scale because there are so many mountains to climb. Internally, groups speak different business languages – IT, HR, the board – and are motivated by sometimes conflicting metrics and motivations.
Even when you’ve followed the innovation process and get a good result, scaling that innovation can conflict with operational excellence for example, says Pullen. “Businesses optimise for efficiency, risk reduction and speed. Innovation requires the opposite, so if you have a small innovation, it can be more readily implemented. When it starts to scale, you’re amplifying that tension so things can go wrong quickly,” he said.
New ideas can’t flourish without “bridgers”, or leaders who excel at collaborating across boundaries, according to Hill’s research in the latest edition of the Harvard Business Review. Bridgers are observers, problem solvers and influencers.
These leaders need to have both emotional intelligence and contextual intelligence. They need to ask: “How have performance metrics, values and culture – especially unspoken rules, informal social networks and power dynamics – affected the partners perspective?” And how can I bring them with me on this project?
The key role of both bridgers and top leaders is to create a culture where innovation becomes a natural collaborative process. “Innovation metrics need to be embedded in roles, KPIs and incentives. If it’s not a core part of what everyone is meant to be delivering then they won’t focus on it,” says Pullen.
The top three things Pullen suggests to get results are: connecting innovation to strategy; immersing yourself in the customer’s natural environment and enquiring about their pain points; and verifying the value of the innovation before you roll it out.
“It’s important to do short, sharp iterations of the product or service innovation with different customers so you can quickly and cheaply tweak it before launch. Do it as many times as you can in an iterative way as this allows refinement little by little. That can help the team launch more confidently and go quicker to market.”
Want more Beanz in the bottom line? Then make innovation part of every recipe.
Margaret E Ward is chief executive of Clear Eye, a leadership consultancy margaret@cleareye.ie
