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PA OPINION

What does it take to innovate?

The Innovation Round Table Summit is an annual gathering of more than 700 innovators from 250 big businesses around the world. It includes people in everything from consumer products to chemical processing and from financial services to freight shipping. And at the 2019 Summit in Copenhagen, this diverse group came together to share their innovation challenges and explore the latest academic and applied thinking around how to innovate better.

Over three days of speeches, workshops, roundtables and networking breakfasts, it became clear that a fundamental shift was occurring in the driving forces and ambitions of these companies. And where this was most obvious was in the language used. The perennial themes of objectives, metrics, process and leadership were still there, but a new lexicon resounded through the sessions, including words like care, trust, belief, passion, meaning and purpose.

We need leaders who create the environment to unlock ingenuity

In her key note speech, Tamara Erickson, Adjunct Professor at the London Business School, spoke of how the eras of industrialisation, professional management and financial engineering are ending. The future belongs to those companies that mobilise intelligence effectively – companies that can organise themselves around innovation, sense market changes, curate knowledge, build trust, customise offerings, collaborate with others, experiment continuously and adapt fast. Most companies, however, are still organised industrially, with centrally-dominated command and control structures. They’re great for managing scale and cost, but terrible for innovation.

To change this, Tamara proposed, businesses must recruit leaders who can create an environment where talented people can choose to join in, care and think. This demands leaders with vision and passion, who disrupt continually with new ideas and perspectives, who challenge constantly and foster open, trusting collaborations towards a meaningful, authentic purpose.

In our own publication, Positive Human Future – The New Leadership Agenda, we argue that the age of Taylorism and Fordism is waning, and that fostering innovation is essential to the future of organisations. Leaders who see opportunity in challenge and create an environment conducive to diversity and exploration are crucial to this.

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Unless we change our perception of failure, we can’t innovate

Mark Coopersmith, Executive Faculty Director at Berkley, University of California, took a different approach in his presentation titled The other F word. He talked about our attitudes to failure and posed the question, how come 80 per cent of all start-ups fail and yet so much amazing value and innovation is generated by energetic, enthusiastic, purposeful new companies?

If you want more innovation in your own organisations, he suggested, you need to accept more failure. He said: “You don’t have to love it, or even like it, but you do have to deal with it.” And along with proposing a strategic framework for managing failure, his advice was to change the language of failure to encourage exploration and experimentation. Instead of error and failure, talk of drafts, first cuts, initial attempts and development approaches. Change the language and you change the perception.

In 75 years of helping organisations innovate, we’ve learned this is true. In fact, our Innovation Matters research found that 75 per cent of successful innovation leaders have a creative and open-minded culture. They encourage experimentation over risk aversion.

Focussing on sustainability can drive innovative ideas

When it came to purpose, one of the big themes making it onto the Innovation Round Table Summit agenda was sustainability. Many speakers, including our own sustainability and circular economy expert Mark Lancelott, spoke of the commercial and environmental potential of using sustainability as a major driver for innovation.

Marcus Remmers, the Chief Technology Officer at DSM, shared his experiences of purpose-led innovation in his mission to develop disruptive business models for sustainability. He suggested that only visionary, understanding, courageous and adaptable companies will survive, and that to do so, leaders will need purpose in their hearts not just their heads. He challenged the audience to consider how many of their day to day decisions aligned to sustainability goals. He then explained how their purpose means DSM no longer approves any new initiative if it increases net CO2 emissions.

Marcus spoke of the need to ensure your ideation is strong, not allowing trade-offs between innovation and sustainability but testing every idea to deliver both innovation and sustainability. He shared examples of a woodchip-based powerplant DSM was bringing on line, soft carpets made of only one substance so they’re recyclable and a dietary supplement for cattle that reduces methane emissions. He mentioned how, in his team at least, they had renamed Dutch State Mines to Do Something Meaningful.

His final pieces of advice to those seeking innovation and sustainability were to resist the temptation to go it alone and that timing is everything. He echoed Tamara Erickson in urging people to recognise where they’re special and where others are better, and then collaborate. And he spoke of the need to act now, to try new things, to challenge the business so there’s time to prepare for the sustainability wave rather than watch it wash over you.

We’re seeing organisations gain vast value from sustainable thinking

Marcus’ comments resonated strongly with those of Mark Lancelott, our Global Lead for Sustainability and the Circular Economy. Mark presented findings from our work with the United Nations Global Compact on the eve of the publication of a joint report on putting sustainability at the heart of innovation. Mark spoke of the huge commercial and environmental opportunities for those companies willing to lead on sustainability, with customers, investors and employees preferring, and increasingly demanding, more sustainable products, services and organisational behaviours.

But, Mark recognised, capturing this value isn’t easy. It will need new products, supply chains and manufacturing capabilities that don’t exist yet. And value isn’t where it used to be, with returns, recycling, subscription, rental, product-as-a-service and buy-back all offering new revenue streams.

Yet the prize is there for those prepared to make the effort. Based on our work with the UN Global Compact, the common traits in those companies already winning competitive advantage through sustainability include:

  • putting purpose first
    Purpose simplifies choices and energises and empowers staff and customers. Think of the incredible disruptive achievements of new businesses that set out with one core goal the whole organisation aligns to.
  • organising to innovate and operate at scale
    Innovation is no good if it stays in the lab, or in pilots. There’s huge pressure to scale innovations and organisations need to handle this. To deliver impact and grab the addressable market, they must organise to innovate and operate at scale.
  • innovating with others
    You’re probably doing a pretty good job innovating within your organisation and existing supply chain. But the value opportunities don’t fit easily into existing supply chains and industry structures – otherwise you’d have already found them and capitalised on them.
  • being bold
    This is an area where the order book for the future demands disruption, not incremental innovation. Breakthrough innovation is hard – you can’t get there through incremental changes to BAU.

Innovation is a challenge loaded with opportunity

True innovation will never be easy, but it’s necessary for long-term success. The Innovation Roundtable Summit in Copenhagen highlighted the opportunities that face all organisations. It also shows that to capitalise on them, we need to embrace a new way to lead, change how we think about failure and put sustainability at the heart of new ideas.

Central to all this is having a clear purpose. So, we’ll give the last word to Marcus Remmers, who challenged the audience to ask themselves: What do you stand for? Where is your heart? Where can you make a difference?

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