In the media

Norwegian business leaders overestimate their abilities


17 July 2017

Thomas Bjørnstad, financial services expert and Sven Richard Tønnesen, innovation expert, set out their views on why Norwegian business leaders believe they are much better at innovation than their international rankings suggest. They outline how, in order to meet the demands of accelerating global competition, Norwegian businesses must get out of the bubble and understand how to get results from innovation.

Norwegian leaders are very positive about innovation, and very willing to talk about how innovative their business is. However, the truth is a little more nuanced. In a recent PA Consulting Group survey, over 800 top and middle managers across Europe responded to questions about their own business innovation and adaptability. In the survey, Norwegian businesses evaluated themselves as world leaders in terms of innovation, but that self-assessment exaggerates the reality.

International innovation ratings show that Norway is ranked the lowest in Scandinavia, and is well down the list when compared with the world's leading nations. For example, Norway is ranked 15th on Bloomberg's innovation index, while the Global Innovation Index ranks it at number 22 in the world, behind Denmark in 8th place, Finland in 5th place and Sweden in second.

This gap between Norwegian business leaders’ self-perception and the reality of how they are ranked against leaders in innovative countries, may be getting in the way of progress. We need to understand why that is the case and what we can do about it?

Out of the innovation bubble

One likely explanation is that we live in our own bubble here. We still live well from the proceeds of the oil industry, and avoided a real recession when the rest of the world went through the financial crisis. Innovation and change are, by definition, a threat to the status quo. If there is no sense that the status quo is directly threatened, it is difficult to accept the need for innovation and change.

Norwegian business leaders claim that they recognise the importance of innovation. They try to be innovative, but do not see the overall picture of what real innovation is and what is required to make it happen. Innovation is about more than organising an ideas contest, a hackathon, buying some drones, installing VR glasses or hiring some talented digital operators in hooded sweatshirts and giving them full freedom to act.

Clayton Christensen wrote about this in "Innovator's Dilemma" in 1997, and the issues are more relevant now than ever before. Shareholders' expectations of perpetual value creation and the fear of cannibalising themselves inhibit companies’ ability to drive real innovation.

Take advantage of the opportunity to create tomorrow's business

To overcome this dilemma, leaders must understand it, and the decision to invest in real innovation must be rooted in, and driven by, top management. When we look around the world it is clear that most industries are facing future turmoil. In that context, it requires bold decisions to sacrifice short-term profitability to implement long-term measures while times are still good.

In order to succeed in innovation, leaders must distinguish between how to use innovation to improve today's business and how to create tomorrow's business. Mature organisations have been developed specifically to deliver and improve today's business. But today's businesses will change, and tomorrow's businesses must be ready to take their place.

Norway has a short time window where we have profitable companies with qualified employees who can create tomorrow's businesses. They must do this using resources from today's businesses, but also look beyond the framework, values, and processes that currently exist to maintain the status quo.

But until we burst the bubble of self-deception we will continue to pat each other on our back as we fall even further behind.

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