Is innovation important to senior executives?
As Mark Twain said, there's lies, damn lies and statistics. Or in this case he may have said, perspectives, question wording and intent. The BCG survey looks primarily at the importance of innovation as a key component of corporate strategy. The Conference Board survey looks at top CEO challenges overall, with innovation as one possible challenge or opportunity.
In the BCG survey, two thirds of the CEOs surveyed said innovation was one of their top three priorities for their firms. However, in the Conference Board survey, innovation ranked 9th of 10 key opportunities or challenges. In that survey, excellence in execution ranked first. Well, on the surface this appears to be quite a head scratcher, since we know that process execution and process excellence usually detracts from or inhibits innovation. Are the CEOs simply dysfunctional?
I think there are a few problems with the Conference Board methodology to examine first. In the Conference Board survey, there is a question about sustained top line growth. In fact this opportunity or challenge was ranked second in almost a dead heat with execution excellence. Then, there is a separate question about innovation, which ranked ninth. The error here is that innovation is one of the best ways to drive top line growth, so separating these two divides the vote, in much the same way that Ralph Nader and Al Gore divided the democratic vote in the presidential election. Or, asked another way, what's the purpose of innovation if not to drive top line growth?
Note that in the BCG survey, innovation is simply one of the top three opportunities or challenges for CEOs. It is not unusual to find out that execution excellence is important, because these firms must drive profits to invest in new innovations. CEOs are not dysfunctional at all - they want a well oiled machine creating existing products at the right cost structure, generating profits so they can invest in identifying and developing new products and services to grow the top line. These individuals obviously walk a very fine line - too much emphasis on execution excellence can create cultural barriers to innovation. However, a lack of focus on execution excellence makes it harder to generate the cash and resources necessary to innovate.
I find these two survey are actually in violent agreement. Execution excellence is necessary in a very competitive global economy, but no firm can rest on its ability to execute alone. To continually differentiate and grow profits, these firms must generate new products and services as well. These two surveys confirm the need for both execution excellence and a continuous focus on innovation.