by Sarah K. White

7 big threats to innovation and how to overcome them

Oct 22, 2015
CareersCollaboration SoftwareInnovation

Innovation isn't easy, but it's fundamental to a successful business in today's fast-paced, technology-driven economy. These seven threats to corporate innovation that are hampering your business' agility. Here's how to conquer them.

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Credit: Roz Woodward / Getty Images / Target

Innovation is the cornerstone of a successful business, so why is it so elusive to many companies? To determine the biggest roadblocks, consulting firm Imaginatik conducted a study of 200 professionals in its “State of Global Innovation” report. 35 percent of those surveyed were senior management, board members or C-Suite executives, and 76 percent of respondent’s organizations had 1,000 employees or more. The results offer insight into what makes innovation stall at large companies.

There’s little doubt that business leaders see the value of innovation — 95 percent of respondents say it’s important enough to be a priority for C-level executives. However, while nearly every professional agreed that innovation was key, 44 percent reported that their business invested less than 2 percent of its annual operating budgets in innovation and 63 percent said their company didn’t have a formal innovation-management structure in place.

“”Many companies use proximate indicators of innovation success, derived from their existing business and management systems. Unfortunately, these measures only work well when applied to mature steady-state markets, rather than innovation and what’s next,” says Chris Townsend, CMO of Imaginatik. According to Townsend, companies tend to view innovation as something they can “fix,” when, in reality, innovation is about overcoming obstacles and reimagining processes — and sometimes the entire organization — from the ground up, while incorporating assets the business already has.

What’s stopping companies from creating an environment that encourages innovation? Imaginatik’s study reveals seven threats that corporations need to overcome.

Related Story: Progressive Insurance revs up IT-enabled innovation

The wrong culture

The phrase “corporate culture” is thrown around a lot, but what does it mean? It might mean free sodas and snacks, casual Fridays, or monthly team-building exercises. Corporate culture can point to anything that makes your company feel like more than just a place where you work 40 or more hours a week.

While corporate culture can be a positive aspect of innovation for some companies, it can also be a hindrance. For example, if your company’s culture is more about politics and bureaucracy, it’s probably going to stifle innovation. Of the 200 professionals surveyed, 55 percent cited issues with organizational culture and mindset as the number 1 reason innovation fails. Imaginatik’s study states that “respondents lamented how the invisible forces of conservatism and complacency conspire to thwart well-intended efforts to advance the innovation cause.”

An employee or team might come up with an innovative idea, but if the systems aren’t in place for them to act on that idea, or the company has a history of letting the ball drop, they might not make the effort. Company culture can say a lot about the potential for innovation. If innovation feels out of place to people, or seems too difficult, it will be hard to make that shift.

“Most innovation activities feel foreign at first within a large corporation, because they tend to cut laterally across normal workplace habits and practices,” according to the study. Imaginatik acknowledges that it can difficult be for a company to instill a successful innovation program, but with the right focus and efforts, it’s possible.

Lack of follow-through

One of the biggest threats to innovation within a company is a lack of follow-through. Coming up with innovative ideas is sometimes the easy part. Seeing them through is harder. In the study, 34 percent of respondents reported a lack of follow-through as one of the biggest issues they encounter.

Respondents said that they feel innovation efforts are often “applied scattershot,” and that “they fail to create synergies and scaled practices throughout the innovation lifecycle.” Or, employees feel the company had good ideas, but go about applying the ideas in an “inconsistent or undisciplined manner.” The bottom line is that if it isn’t easy for employees to use a new process or for them to enact innovative ideas, they will fizzle out before they can gain any traction.

Companies that are successful in driving innovation oftentimes have a team or person dedicated to innovation. Whether it’s hiring a CIO or vice president of global innovation, Townsend says that this person is generally “separate from your main line business unit that has core incentives of pushing market share and winning against competition.”

Limited funding and resources

Innovation doesn’t just happen because people want it. Your company needs to apply funding and resources. Of the professionals polled, only 16 percent reported “aggressive investments” in a dedicated innovation staff and 13 percent reported a similar level of investment behind innovation tools and technologies. Twenty-seven to 53 percent, depending on the category, reported only “moderate” investment behind innovation spending.

“Investment was needed in a better tool and some people. This was where it stopped. The business wants to continue the ‘prototype’ approach, with no investment or staff,” said one senior executive at a multi-billion dollar logistics services and financial corporation.

“Regardless of who leads innovation, resourcing is a topic of central concern,” Imaginatik states in the study. Given the low proportion of companies reporting aggressive investments in any major spending category, it appears that innovation is being systematically under-funded in most of today’s companies.”

Related Story: Why companies opt to insource for IT innovation

Lack of time

Employees already feel pressure to get more done in less time, so adding innovative ideas can quickly overwhelm workers. And in a large company, where everyone has a specific job to do, the communication might not exist to figure out how to work across departments to make innovation successful within a 40-hour week.

Twenty-seven percent of respondents listed a lack of time and focus as a major hindrance to innovation. And, unfortunately, instigating major changes on a large scale takes just that: time and focus. When it comes to investing time in innovation, don’t skimp just because you aren’t sure how it will make the company money, Imaginatik says.

On the bright side, according to the study, leaders are aware of the need to invest time if they want to see their company become more innovative. For executives, there needs to be a general acceptance that innovation won’t result in instant gratification. Rather, changes and progress will be seen over time, and it might take years, not months.

Low adoption rate

The Imaginatik study unveiled another common trend at companies: low adoption rates. People come up with new ideas, figure out how to enact them but find that they fizzle out quickly as employees struggle to integrate the changes into their day-to-day processes. The study points to a “lack of belief in the approach itself,” while some respondents reported seeing innovative programs get off to a great start, only to be abandoned soon after. Some simply felt skeptical or weary of adopting new programs because of past failures or poor performance.

Other businesses reported some teams or business unit teams adopting innovative processes that they didn’t extend to the rest of the company. This inconsistency across the business unit can cause innovation to die quickly, with only some teams using new tools or adopting new process and others sticking with the old way of doing things.

“Several other respondents noted that because innovation methods are often applied scattershot and in localized settings, they fail to create synergies and scaled practices throughout the innovation lifecycle,” the study reports.

Keeping up with fast-paced changes

For large, process-driven companies, it can be hard to keep up with the fast pace of technology. And larger companies have more risks when instigating change within the organization.

“Larger, more-established companies have lots of legacy tech, they have brand equity, shareholders, usually a large base of existing customers, a company culture, very highly scaled leveraged process and so on,” says Townsend. “All of these things are assets, but for innovation they can also be liabilities.”

When compared to a startup, bigger companies might find it more difficult to innovate like startups do. Startups may not have the same assets as larger businesses, but they also don’t have the liabilities, so it’s easier for them to be agile.

Townsend says some companies should consider reshaping departments to run more like a startup. It’s unreasonable to think a company with more than 1,000 employees could function like a business with 100 employees, but by targeting certain departments, larger companies can reap the benefits of a startup culture.

Too focused on the bottom line

Oftentimes, the easiest way to get things done is to demonstrate the ROI. But when it comes to fostering innovation, ROI can be hard to prove. Therefore, innovation often never gets off the ground, because it is seen as too risky if the person behind the idea can’t demonstrate how the company will profit. The study reports that 7 percent of respondents see an “inability to justify ROI” as the biggest challenge to innovation. “Even very senior executives had no real way of accounting for what they’re spending on innovation. They didn’t have that calculation. It didn’t exist as a line item and they had to try and fudge or guess from different parts of the actual corporate ledger,” Townsend says.

For executives, the idea of embarking on a new plan without a clear idea of the ROI might be nerve-wracking, but it’s the only way to see if an idea will actually work. If a business is hung up on proving the financial benefit of an innovative idea before it launches, it’ll probably never get off the ground. Townsend says it goes back to the idea of properly funding innovation and ensuring there are resources behind it, because that’s the only way innovation won’t wind up being an abandoned afterthought.