Arguably the most important component of growth, Innovation contains the decisions executives are least prepared for
84 percent of executives say innovation is extremely or very important to their companies’ growth strategy. — McKinsey[i]
In 2020, 65% of organizations ranked innovation a Top 3 priority. In 2021, Top 3 priority increased to 75% — the largest year-over-year increase in our 15 years of research. And that growth was entirely driven by an increase in the proportion naming it their #1 priority — Boston Consulting Group[ii]
Out of more that 100 elective courses available to Harvard Business School MBA Students, only 2 are on innovation[iii]
There is a false mystique around innovation. Designers, engineers and consultants espouse that it must be experienced first-hand, requires talent and cannot be taught. They claim that CEOs don’t understand innovation, don’t appreciate how difficult it is and have unrealistic expectations of risk, time and costs. This, and other, innovation myths have resulted in innovation being reduced to war stories and hero worship in business schools. The boring subject managing the innovation business function has been usurped by the exciting legends of geniuses, unmet consumer needs and unexpected inspirations.
Make no mistake, innovation is a business function with the same inputs, KPIs and outputs as any other. The success of a company’s innovation efforts can be linked directly to the quality of innovation management decisions. Regardless of the industry or company, the job of every CEO is to be the ultimate authority in making final decisions. This puts innovation management clearly in the purview of the CEO. It makes innovation management a subject that every CEOs should, and can, be expert at long before they take the reins at any company.
You’ll notice an important subtlety in my argument. I don’t believe that CEOs need to be expert innovators. I believe they need to be expert at managing innovation, they need to be expert innovation decision makers. The decisions needed for successful innovation are exactly the same as those need for operations, marketing, finance or legal. The unknowns, risks, costs and potential rewards are relatively the same too.
Just like the better-known business functions, innovation success or failure comes down to few key CEO decision. For innovation there are five inflection points that CEOs lack the know-how to consistently make good decision; Approving Innovation, Deciding What to Innovate, Approving Budget and Timeline, Identifying Success, or Failure and Choosing What to Bring to Market.
[iii] Taken from analyzing https://www.hbs.edu/mba/academic-experience/curriculum/Pages/elective-curriculum.aspx on June 30, 2021