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Why Do Creative Thinking and Innovation Matter? — Seen Any Good Disaster Movies Lately?

  Whoa tornado While doing research for a training program I delivered last week on structures and processes needed for organizations to shift their cultures so they become conducive to creative thinking and innovation, I came across a sobering 2010 report compiled by the Boston Consulting Group (BCG).  Although 51% of the global leaders polled in the IBM CEO study said they didn't believe their organizations were prepared to succeed in the increasingly complex global environment (second blog post), this BCG report summarized below makes the IBM study look like a Hollywood romance by comparison.

As I wrote in the launch of this blog, my interest in and commitment to this topic comes from a deeply-held conviction that our imminent economic future as a nation depends on U.S. organizations getting on board the innovation train, quickly. Certainly for me, the BCG study strongly reinforces that perspective. In addition to the business case, when it comes to our myriad environmental and social problems, as Albert Einstein said, "We can't solve problems by using the same kind of thinking we used when we created them." 
(The report is cited by permission of The Boston Consulting Group.  Click on the link below to see the full report.)

"Innovation 2010: A Return to Prominence–And the Emergence of a New World Order":       

Working in partnership with BusinessWeek and its Market Advisory Board, The Boston Consulting Group (BCG) conducted a survey for the seventh year in a row, gathering input data from 1,590 executives from around the world representing a range of markets and industries. 

This most recent 2010 report postulates that as a result of the U.S. and other mature economies' general lack of commitment to and investment in innovation, "a new world order in innovation is taking hold, one in which rapidly developing economies (RDEs), led by China, India, and Brazil, will increasingly assume more prominent positions, while the United States and other mature economies continue to play major roles but gradually become less dominant."  (p4)

Apple and Google were ranked by international executive respondents as the two most innovative companies, with Apple once again as the hands-down winner (a rank it has held in this survey since 2005). Yet, more than half of those who participated in this survey expect that U.S. will lose its standing as the leader in innovation within the next five years.  

These predictions are similar to the warning flags waved by Thomas L. Friedman in his book, The World is Flat. Among the precipitous trends, Friedman points to:

  • America having recently slipped from 1st to 4th place in the number of patent applications.
  • The increasing dearth of math and science students training in U.S. universities just as our nation’s top scientists prepare to retire.
  • Tightened U.S. immigration policies that have caused a significant drop in foreign math and Tsunami Wave students attending American universities and who now have considerable job opportunities in others countries that are investing more heavily in innovation.
    • And funding cuts to the National Institutes of Science.  

If these trends remain, then it only goes to follow that American business will lose even more of their global market shares with our nation losing considerable economic strength. 

Implications for Leaders: 
BGC attributes the low level of U.S. investment in innovation to companies “hedging their bets about the economy” with incremental improvements versus “moving aggressively to discover, invent, and capitalize on new growth areas.” The report ends by offering the following recommendations to business managers in the established economies who have yet to “fully come to grips with” the consequences of not making innovation strategic priorities.

1.    Becoming better at innovation is probably the single most important thing that you can do this year.   (p20)

Why?  Although you survived the Great Recession – so did your competitors.  Like you, they too largely "mastered the cost, productivity, and operational excellence playbook." However, many of them, upon realizing they had survived, saw innovation as a top strategic priority and started investing heavily in it around the middle of 2009. If you are not one of those companies – you are about a year behind (when this report came out, mid 2010).  

 2.    If you don’t get better at innovation, your boss (or board) will eventually either stop spending money on it – or find someone who can improve things. 

“Part of the issue may be that most companies can’t even define what they really mean by innovation, let alone measure it. And while there is no right or wrong definition, you do need a definition that everyone agrees on and that aligns with your company’s strategy.” – Get a clear, shared definition.  (p21)

 3.    Top management is really going to have to get its head in the game this year. 

“In every highly innovative company we know, the CEO truly has innovation near the very center of his or her radar screen. Indeed, the difference between a company whose CEO and leadership team have an “all in” mentality regarding innovation and one whose leadership supports innovation merely at an abstract level is unmistakable – and so is it’s impact on culture and results. 

 If you think your company can win at innovation without your being truly committed, you are wrong and will be increasingly exposed.  Too many companies are being led by fully committed and engaged leadership teams that have linked innovation to the company’s business strategy, put in place the needed measurement systems, and are investing to see the results.”   (p21)

4.    Your company cannot afford to cut back on its innovation investments in the BIC countries and other RDEs. 

If you thought competition was tough in the past, just wait. …As can be seen from our list of the most innovative companies, the “BIC*-plus” world has arrived on the innovation front and is quickly moving into the mainstream.  *(BIC stands for Brazil, India, and China.)

‘To deal with this new reality, you need to increase your investments in these countries, not decrease them. …Lower your investments in these countries at your own risk.”  (p21)

 The report concludes:
“Keeping pace, let alone flourishing in this environment will demand a two-pronged attack.  Your company needs to be actively innovating both in and for the slower-growth, mature economies, which remain very large and profitable.  Simultaneously, you need to be ever more focused – no matter how focused you think you already are – on the much faster-growing developing economies, especially China, India, and Brazil, with their promise of large markets and newly innovative competitors.  Striking the right balance here will obviously be highly challenging. But the potential competitive rewards of hitting the mark are vast – as is the downside of coming up short. Indeed, skillful leadership in innovation has never been at such a premium.”   (p21)

  
Wake up call Dramatic natural disaster photos aside, I hope I've won over a few more believers that we need to rally and inspire others and send wake-up calls around our organizations that the time is upon us to do whatever is needed to engage the other half of our brains. 

 

 

 

 

 

 

 

 

 

 

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