CEO Innovation Talk Is Cheap

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Do your company's executives give rah-rah speeches about innovation and how they're ready for digital disruption? How often? At the annual company offsite? At monthly state-of-the-business meetings?

C-level leaders could talk about innovation every day, but do you believe them? Do you feel confident that your company has the agility, energy, skills and organizational structure to turn the digital forces that threaten your business into breakthrough, high-growth opportunities that could transform your business?

Chances are, you don't. According to research from Forrester cited in principal analyst James McQuivey's new book Digital Disruption, there's a big disconnect between the views on innovation from those in positions VP or above and those below. That disconnect is summed up in two data points from a June 2012 Forrester survey of 285 global executives:

-- 70% of VPs and above said they agree that: "My company will be more innovative than other firms in our industry or category over the next five years." But only 39% of employees below VP agree with that statement.

[ Looking to shake up your company? Read 4 Ways CIOs Can Unleash Digital Disruption. ]

-- 60% of VPs and above agree that: "Our company will put the right resources -- people, budget, time -- in place to adapt to the changes that digital will bring to our company." But only 27% of those below VP agree.

The same Forrester survey breaks down the responses by company size. The bigger the company, the smaller the optimism about the company's innovation potential.

In response to the "right resources" statement, 52% of survey respondents at companies with fewer than 1,000 employees agree, but just 27% at companies with more than 1,000 employees agree.

"The larger the ship, the harder it is to turn in the face of an iceberg," writes McQuivey. "But changes can't begin with nothing more than executive speeches at company meetings that talk optimistically about the future. Those executives must identify and dismantle the policies and practices that stand in the way."

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IT consultant Douglas Stone explored this same theme in a recent InformationWeek column. Attempts to innovate usually fail at businesses large and small, Stone writes, because companies focus either on the past or the future when they need to consider both.

Enterprises tend to exist in "reliability mode," making decisions based on the revenue potential of existing resources. Before receiving funding for bold initiatives, the innovators must first prove the return on investment. In contrast, startups operate in "eventuality mode," analyzing forward-looking trends and anticipating customer needs. The whole company commits to a vision, but not necessarily an ironclad business model.

Innovation succeeds, Stone writes, when a company can integrate the two modes and not rely too heavily on either: "As a leader you have to put the time and effort in to provide a level of certainty about future events that can balance the natural focus on the reliable past. So before you claim that symptoms such as risk aversion, lack of ideas and data paralysis are the problem, evaluate how effectively you integrate concepts of eventuality into your business decisions."

Don’t live in the past. Don't daydream about the future. But harness the power of both for the present. Solid advice for the C-suite -- and the rest of us.