In today’s dynamic and uncertain business climate, a company’s ability to innovate continuously and strategically is not only a business differentiator but a survival strategy. The disruption and uncertainty of the past year drew a sharp line between the businesses that innovated quickly and thrived and those that failed to adjust quickly and faltered. It’s also clear that any company aiming to excel in the post-pandemic recovery and meet the challenges of the next decade head-on will need an innovation mindset and a strong innovation culture.
A new top risks survey conducted by Protiviti and NC State University Poole College of Management’s Enterprise Risk Management (ERM) Initiative finds that many business leaders are concerned about whether their firm can keep up with innovation, let alone drive it, in the years to come. Respondents ranked this risk third on the list of top risks through 2030: “The rapid speed of disruptive innovation may outpace our ability to compete.”
On the 2021 list, that risk is not even in the top ten, overshadowed by pandemic-related and economic concerns. But looking ahead, business leaders can see disruptive change looming on the horizon, propelled by new and emerging technologies and other market forces, and they worry that their organizations will need to make significant changes to their business models to roll with that change.
Keep Disrupting the Status Quo
For some firms, the thought of undergoing more change may be tough to accept after a year of constant pivoting and changing to maintain relevance. They should not relax now. Instead, they must continue to challenge how they think and operate, and keep disrupting their status quo. That includes small but strategic “disruptions,” like redesigning a critical but cumbersome business process to make it more efficient. Every improvement, every problem solved, is another step toward building resilience and enhancing the organization’s ability to respond to change effectively — and even anticipate it. Think of it as fighting fire with fire — innovating proactively today so the business can respond better to innovation forces and demands in the future.
But how can a business stimulate innovation? How can it develop and sustain an innovation mindset and build a strong innovation culture that extends to every corner of the organization? Here’s a quick overview of key actions we encourage companies to take to begin their journey:
Promote Diversity of Thought
Diversity of thought fuels innovation. So, it’s essential for businesses to be deliberate about including different people with different experiences in the process of solving problems or optimizing solutions. That will also help keep groupthink — the enemy of innovation — at bay. A diverse workforce, led by a diverse senior management team and board who prioritize inclusion will be well-positioned to stay attuned to trends and market changes, better understand the needs of a diverse customer base, and create new products and services that will help it maintain a competitive advantage.
A business committed to diversity, inclusion and innovation is also likely to have an easier time recruiting and holding on to in-demand talent than its competitors. That can help to address another top risk appearing on both the 2021 list (8th spot) and the 2030 list (4th spot) in our current survey: “the ability to attract and retain top talent.”
Embrace Human-Centered Design Thinking and Agile Methodologies
Innovation is not a theory but a practice. The best way for a company to start with innovation is to identify a specific challenge that needs to be solved to meet a business objective – and there is no shortage of such challenges, both big and small. Once the issue is identified, human-centered design thinking can help the business arrive at the best solution.
Human-centered design thinking is an approach to solving problems using techniques to stimulate human understanding and creativity to come up with solutions that are similarly human-centric. With proper training and practice, it becomes a mindset, and a commitment to trying new things. Understanding and adopting its principles empowers everyone in the organization to innovate, fail fast and learn without fear, and it powers a continuous cycle of idea generation, feedback and iteration until a viable solution has been decided upon and prototyped.
Free Up Innovation From Inside the Organization
One mistake many companies make when they seek to build an innovation culture is to overlook the potential of the people currently in their workforce. They think fresh ideas can only come from new hires or outside innovators brought in to shake things up. But the subject-matter experts the organization already has often prove to be invaluable change agents.
These people understand the business and its processes deeply, and no doubt already have plenty of good ideas about how and where to make improvements. They just need to be invited to the innovation table and know their ideas are welcome. They may have to be trained in design thinking and agile methodologies, so they have the right tools to solve problems creatively.
Reward Innovation
Fostering an innovation culture takes place over time and many things influence it, including the potential for rewards and recognition. As explained in a recent issue of our Board Perspectives: Risk Oversight newsletter, “everyone across the organization must recognize that, if the business is to achieve sustained innovation excellence, innovating must be integral to their job. To that end, organizations need to measure and reward innovation so that it becomes a core competency that drives priority-setting, resource allocation, talent acquisition and the development of influential leaders. Essentially, the entire workforce must share a commitment to innovation.”
When people know they will be acknowledged and praised for thinking differently — and that doing so can in fact benefit them as well as the company — they will be more likely to look around them every day and ask: Is there a better way to do this? How do we test that in a way that will give us more information? How do we build that so it works exactly the way we want? That’s the mindset business leaders want to foster in their workforce. It will serve the organization in its effort to navigate top risks today, as well as those it may face over the next 10 years — and beyond.
To learn more about how companies can develop an effective innovation mindset and accelerate their innovation process from ideation to production, visit our Innovation Services page.
