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Part-2: For CEOs, what are the FOUR critical innovation barriers that must be addressed?(Part 2 of 4)

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In my last post, I mentioned that every CEO and business executives who intends to lead innovation as a strategic agenda will need to address four critical barriers to innovation. 

The second barrier is not recognizing and then not aligning the abundance of resources available to large organizations for investment in innovation. Even when overwhelming evidence shows that the companies who invest in innovation consistently outperform their peer groups, why haven’t most organizations taken innovation seriously? 

The challenge is not that an organization does not have resources to invest in innovation; rather it’s where to most effectively funnel those resources, and how to do it.

Innovation in most organizations should be a mandate that cuts across functional areas. Problem with that in most organizations is the current organizational structures makes effective resource allocation decisions very difficult - which no one has time to deal with. It requires tremendous top-down courage and political savvy. 

The few common themes that arise are: prioritizing effectively for the same competing resources across business units, designing solutions that may be ideal for a single business unit but not for the corporation as a whole, and balancing between the need to build markets while servicing existing customers. 

The bottom line: resources are available, but the allocation and ownership for innovation is fragmented responsibility across most companies. There are three options to quickly overcome this barrier:

1)    Develop a central innovation structure – including funding to help internal businesses quickly welcome innovation in their areas. Once initial ideas

2)    Develop a hybrid innovation structure – which centralize core capabilities, but shares accountability and risks between corporate and lines of business.

3)    Develop a Center of Excellence structure – centralizes core innovation capabilities and resources for business areas based on their respective needs.

For complete details, please download full 23 page whitepaper on “Mastering Innovation – Roadmap to Sustainable Value Creation by Mr. Jatin DeSai”  

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Part-1: For CEOs, what are the FOUR critical innovation barriers that must be addressed? (Part 1 of 4)

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In our experience working with other CEOs and senior executives, they have realized that the markets are very unforgiving and will always continue to be unfriendly, and that embracing innovation is not an option, the next logical question they generally pose may be obvious. 

What must CEOs do to embrace innovation while managing the associated risk and overcoming the barriers? 

Before I share with you the four barriers, let me say that the answer lies in developing a clear Innovation Mandate - a strategic statement that describes innovation in the context of your business, the value it promises to generate for growth and disciplined process by which to get there. 

Innovation Mandate must be vividly clear for everyone in your organization; it must be concise to help drive alignment to business unit initiatives, and it must help articulate specific employee behaviors necessary at all levels for innovation climate to take root.  When designed correctly, it is clearly linked and driven by the business strategy. 

Additionally, keys to become innovative are highly dependent on your ability to address four critical barriers that are incumbent in most organizations.  When not addressed together, the journey towards sustainability and value creation invites a higher risk of failure, potentially minimizing the results of innovation investments. 

The first barrier is that most organizations do not have the mindset to harvest ideas and manage those ideas as Venture Capitalists do. This requires demonstrated confidence to consciously fail, experiment often, and win occasionally. Goal is to do more of it, so you can out-compete the markets. 

The sole role of Silicon Valley was to quickly take the best ideas and apply entrepreneurship and agility to turn those ideas into commercial ventures.  Silicon Valley did this because they recognized that large corporations are unwilling to abandon the tightly-knit safety net of resource allocation. 

It is clear that the amount of “innovation opportunities” available to large companies dwarfs the potential available to small companies.  So the myth that only small, nimble businesses can be most agile and innovative is completely false.  In fact, here’s case in point (not to mention hundreds of other such examples): Medtronic, a Fortune 500 Minneapolis based global leader in medical technology, on average used to earn 70% of its sales from products introduced in the previous two years alone.  This resulted in long term sustainable growth of 20% and created a high barrier for its competition to enter into Medtronic’s markets. 

The bottom line: new ideas are easy to find in every corporation; it’s the distinctive capability of turning them into commercial ventures that most companies fall short on. This requires leaders to role-model what innovation means to them and the company.  First step to address this barrier would be to develop an appropriate funding strategy and structure that will quickly demonstrate your commitment to innovation.

For complete details, please download full 23 page whitepaper on “Mastering Innovation – Roadmap to Sustainable Value Creation by Mr. Jatin DeSai”.


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