Internal factors like people, processes and tools are vital to successful innovation. Even when ideas are plentiful, effective execution can be very difficult without the right environment. For growth stage companies with limited resources and budgets, creating a culture that fosters and encourages innovation is paramount to success.
To lower the risk of innovation failure, the CEO should be personally involved in leading innovation. It should be the leader of the company that communicates the innovation vision, ensures the right innovation teams are in place, and engages regularly with the organization to align both mindset and behavior. Our recent survey of private company CEOs found that the CEO or executive team drives innovation in almost 60% of companies. As evident by the survey, most private companies get this part right.
While the CEO should always drive innovation from the top, it is equally important for leaders to recognize their limits, hire the right kind of people to create continual innovation in the company, and relinquish some control, giving others the opportunity and authority to drive innovation.
“Many midsized private companies are led by a lone entrepreneurial mind who grew the company from scratch based mainly on that person’s innovative capability,” says Eric Redifer, managing director in KPMG’s Strategy & Operations practice. “But there is a limit to any one person’s ability to innovate.”
Here are three characteristics of an innovative culture:
- Bold talent that understands the customer. CEOs should seek talent who have the ability to see things from their customers’ perspectives – to get in their heads, find out what they want, and create innovations that meet their demands. Another characteristic to look for is boldness – people willing to aggressively pursue calculated risks based on their profound understanding of customers and markets.
- Processes that promote innovation. While a fully-developed, formal, company-wide process for innovation doesn’t guarantee success, it undoubtedly increases its likelihood. Each innovation project can benefit from a structured approach that includes decision points and feedback at each phase of the project. These milestones provide an opportunity to validate project hypotheses and solicit stakeholder feedback on an ongoing basis. Business leaders can respond by allocating resources more appropriately – adding resources to course correct struggling but promising projects, or eliminating resources from losing projects early in their development. Our survey of private company CEOs found most mid-size companies (88%) lack a formal process for innovation. Sometimes these companies luck into success, but more often than not, they find themselves launching innovations with limited market appeal that require costly, time consuming redesign efforts. An inclusive and structured approach to innovation can help growing companies save time, money and resources.
- Tools to collect ideas from within. Private companies should also tap into ideas from organization-wide employees. Use enterprise-wide platforms to enable everyone in the organization to share ideas—the modern version of the suggestion box. To encourage participation, offer rewards to employees for exhibiting above-and-beyond creativity. These rewards do not have to be monetary; employees are also motivated by personal praise, public recognition, or celebrations of victories. Finally, when good ideas surface, private companies could create focused working groups to develop and take them to market rapidly.
- Corporate culture plays a significant role in innovation. It is either the bottleneck that stifles innovation or the fire that sparks it. CEOs should continually assess, manage and refresh the company’s culture—and the operations that support it—to ensure it has in place the building blocks to innovate and keep innovating.