Lake Wobegon Innovation

The latest BCG survey on innovation across major industries and geographies has just been published, and it reads like a Dr. Jekyll and Mr. Hyde novel. On one hand, the senior executives surveyed felt that speed to market, innovation capability within their firms and the ability to focus on innovation were sorely lacking. However, 57% of the respondents said their firm was above average or excellent at fostering a culture of innovation, and almost 75% of respondents considered their company above average or excellent at service or product innovation.

This is Lake Wobegon thinking, where everyone is above average. This also reflects a divergence between what senior managers and executives BELIEVE about their business, and what middle level managers, directors and other professional staff KNOW about their business.

CEOs are paid to be cheerleaders for their organizations, to be optimistic about the capabilities of the firm and moving ever onwards in a strategic direction. CFOs and COOs, on the other hand, have more operational oversight and understand the practical, day to day issues many firms face. The authors of the study note towards the end that leadership and culture will make or break a firm where innovation is concerned, and they are correct. It seems odd that so many executives felt that a risk-adverse culture made it difficult for firms to innovate, yet so many executives felt their firms were above average.

There are three key barriers or hurdles identified in the survey, and they are consistent with what we find in our clients as well:

1. Risk averse culture
2. Long product/service development times
3. Inconsistent management commitment

What's odd about these barriers is that virtually every firm we've talked to, and most that participated in the surveys as well, recognize that these are the key barriers, yet there seems to be a lack of discipline and dedication to changing these barriers. In firms where innovation has really taken off, the first and third barriers (culture and management commitment) get changed quickly, because senior managers and executives can influence these rapidly through their actions, words and emphasis. Long product/service development times are a vestige of the fear of failure, recognition of the existing product and service portfolio, and the difficulty of making tradeoffs amidst scarce resources. These development times can be reduced, but that's a longer term effort.

Recognize, however, that the culture and management commitment are the most important, and the most difficult to change over the longer term. A half-hearted effort to change the culture will bring some initial innovation success, but after a period of time, as the management team drifts away to other topics and strategies, the culture will return to its comfort zone and resist innovation. The only effective long term strategy for innovation is consistent management focus, emphasis and involvement in innovation over a long period of time.

Many of the survey respondents in the senior ranks want to believe their firms are better than the others they compete with, but I doubt that's the case. There are simply too few real standouts where innovation is concerned, and too many firms in head to head "red ocean" competition that aren't really innovating at all. This realization won't sink home until the senior executives get down in the trenches and understand what the barriers are to real systemic innovation and decide to do more than simply issue innovation oriented edicts.