In a rapidly changing business environment, organizations face a variety of new competitive forces:
- Changing customer and employee demographics, behaviors, and expectations are accelerating the impacts of technology change;
- Rapid technology innovation is challenging existing business models, enabling new operating models, and driving rapid change in customer behavior and expectations;
- Big technology companies and Labs—including Apple, Amazon, Google, Microsoft, IBM, and MIT Labs—have become important players beyond their traditional markets and are making significant investments to develop game changers;
- Start-ups and scale-ups, together with the organizations who are funding them, are intent on reinventing business models.
The most recent KPMG Global CEO Survey also revealed the following:
- 65% of CEOs believe that the next three years will be more critical for their industry than the previous 50 years;
- 39% of CEOs feel they will be running significantly transformed companies in the next three years.
Regardless of size, a persistent challenge for all kinds of organizations is how to define, practice and experience innovation. It requires deep strategic thinking about your organization’s positioning and innovation values: Do you want to be a frontrunner? To innovate yourself or partner with another organization? To follow innovation in other sectors and apply solutions to similar problems within your own sector?
A lot can depend on the size and structure of the company. The organizations with the biggest challenges when it comes to making innovation work tend to be those at opposite ends of the spectrum: large organizations and small or family-owned businesses. Mid-sized companies are more likely to rest in a sweet spot: being small enough to be agile and responsive when it comes to implementing ideas and getting buy-in from collaborators across the organization, whilst being large enough to have sufficient resources and human capital to invest in change.
In the case of large organizations, implementing a cultural shift can be slow if for no other reason than the sheer number of people who need to be aligned and feel engaged with the innovation cycle. Among other things, this includes instilling a common understanding and acceptance across the workforce that failure and setbacks are a necessary part of that cycle – an ethos that can be tricky to foster in some competitive environments.
For small and family-owned businesses, challenges can range from limited resources to tunnel vision at management level at the expense of more open-minded thinking; in terms of creating an ‘innovation culture’ the latter can be more difficult to overcome. After all, the intersection of broader perspectives and ‘out-of-the-box’ thinking are key to allowing innovation to flourish, which can be stifled if management aren’t open to incorporating new ideas into their vision. It’s not easy to admit when this is the case and takes a good deal of self-reflection and honesty to do so, but if real innovation is the ultimate objective, identifying where your organization might be facing these kinds of limitations is a crucial first step.