4 Innovation Challenges Every Company Will Face in 2021 (And Why Now is the Time to Solve Them)

Especially among the turmoil of 2020, the desire for something new and fresh in exchange of something old is everywhere you look; disruption is the buzzword on the minds of any business leader. It’s on the syllabi of every MBA program. It’s in the headlines of many business articles. And, if you ask most any leader if they’re innovative or innovating, you’ll get an enthusiastic “of course”. 

Typically, innovation isn’t curtailed by a lack of good ideas. Instead, it is stifled by a variety of factors. That’s why clearly defining the biggest challenges and building buy-in to overcome them is the first step to driving game changing innovation—without it becoming another buzzword in your organization.

To navigate the route to innovation, this is the first part of a three section series in which we’ll explore:

  1. Common challenges in innovation management—and why you must overcome them
  2. Why you need to develop an effective engagement strategy—and how to do it
  3. The best practices and blueprints for corporate innovation success

By the end of the series, you’ll have the buy-in, engagement and plan for corporate innovation, the kind of actionable tips that create strategies and teams known for creativity and results, if you overcome these roadblocks.

Challenge 1: Misalignment Between Culture and Strategy

If you’ve spent more than a week within an organization—from a small, family-run shop to a Fortune 100 corporation—you know there’s always a chance of politics, disagreements and misalignment. When it comes to innovation, these issues intensify.

For example, perhaps sales views innovation as part of marketing, so they don’t think about changes. Marketing wishes it was their jurisdiction—but the CTO is micromanaging innovation. There’s disagreement. When an opportunity for innovation arrives, there isn’t an innovation-friendly culture or a leader who will collaborate on the innovation or build buy-in. 

Eventually, internal disagreements like this one lead the entire advancement to be shelved where it’ll metaphorically sit, unused, until a competitor brings the same idea to market.

Ultimately, solving the political problem comes down to making every team member feel invested and involved in innovation; the tasks cannot be siloed, especially as organizations have more connection between disciplines. From the intern to the CIO, ideas and suggestions for new products, plans, strategies and ways of doing things have to be celebrated and encouraged. And, while everyone should be part of innovation, it’s helpful to identify collaborative leaders who are empowered to encourage innovation and risk taking, keeping timelines, results and teams on track, which helps avoid Challenge #2.

Challenge 2: Failure Fear & Innovation Fatigue

Startups may have a reputation for celebrating out-of-the-box thinking and bucking conventional wisdom while many large organizations are perceived to have quite opposite cultures. After all, it’s hard to imagine someone at a large company suggesting strangers might ride in cars with other strangers (Uber) or rent out their home to random travelers (Airbnb) while keeping their job.

But innovation culture issues plague organizations large and small. Worried about reputation, perception and their own financial stability, team members may hold back that risky, innovative idea for fear of failure or not being able to pay rent. 

For organizations where innovation is pursued excitedly, there is another risk. When new ideas and plans are frequently dropped due to a lack of follow through, eyes will roll at the CMO’s latest, greatest idea no matter how brilliant it is. 

Creating a culture where risk is acceptable and failure is understood is key. So is avoiding burning out your team on wild goose chases where time, resources and enthusiasm is spent in pursuit of endless innovations. Few people will want to work overtime if they feel their livelihood is at risk should an idea fail or that this is just another idea that will fizzle out.

(The second installment of this series will cover engagement more extensively!)

For added innovation potential, look at who is on your team—and consider bringing in fresh talent when ideas become stale, whether that means a team member from another group, a new hire or even an outside consultant.

Challenge 3: Innovation Hesitation & Missing Signs

Thinking about the 80% of executives that McKinsey discovered expect to be disrupted soon, it’s clear that many see the signs that their business is threatened. 

And yet many businesses miss the signs of change and react when it’s too late. From Blockbuster’s failure to buy Netflix (and see the future of streaming) to Nokia’s sluggish roll out of touch-screen phones when the iPhone debuted to mass interest, it’s often missing the market signals and hesitating to innovate that drives profitable businesses into losses or worse.

There are plenty of case studies that show why this challenge is deadly and being aware of it is a good first step—but what’s being done about it in your organization?

Creating communication and collaboration where early threats or signals are shared with appropriate people is a great start, whether this takes the form of a designated Slack channel or a task force made up of multifunctional team members. Spotting the signs of opportunity or risk and taking action is helpful, however, it has to be backed up by supporting employees who expose uncomfortable truths, even at the executive level.

One way to recognize signs of change or a need for innovation? Using data, another innovation challenge and opportunity.

Challenge 4: Unclear KPIs & Mysterious Results

Ultimately, most innovation comes down to a few factors: to hold or gain market share, drive profitability, retain or acquire customers or drive efficiency, among others.

All of these goals have quantifiable, measurable actions and outcomes. But add “innovation” to the mix and things may become vague, which means the true impact of a new approach, product or team may not get the support or recognition it deserves.

The lack of measurement threatens an innovative culture and makes it more likely new ideas are looked at with skepticism, so using real data is key.

According to Erik Roth, a senior partner at McKinsey, one obstacle for measuring innovation is the “quantification of the number of ideas and the size of the portfolio.” Organizations measure the 564 ideas generated or the 28 new patent filings, but they don’t track what comes from these ideas in the language business leaders speak: money.

Instead, McKinsey associate partner Guttorm Aase recommends measuring two metrics: the ratio of research and development spending to actual product sales and the gross-margin of these new product sales to R&D spending.

By quantifying what successful innovation looks like (or doesn’t look like), organizations can better decide how much they invest in innovation, assess their track record and make alterations.

While there are plenty more challenges to innovation, these 4 obstacles are, much to the would-be disappointment of Mr. Drucker, the most common ones that prevent teams from ceasing their old methods at the cost of something new. 

For the next part of this series, discover why you need to develop an innovation engagement strategy—and how to do it successfully. In the meantime, subscribe and comment below with your innovation success (and disaster) stories and what you’ve learned about driving change.

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