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Saturday, June 14, 2008

Business Innovation, more Like an Oxymoron

There seems to be an endless thirst for insights into innovation, to the point where the word has joined the ranks of a cliche. But behavioral contradictions among executives hamstring this apparent strategic thrust, according to an assessment by Forrester.

Fact: top executives say one thing and do another. Executives know they want more innovation. The term seems so well understood that surveys don't bother to define it. In McKinsey's 2007 "Global Survey on Innovation," 70 percent of corporate leaders named innovation among their top three priorities for driving growth.

Yet, only one-third of top managers named it as part of their leadership team's regular agenda. And, where do they focus? In IBM's 2006 CEO study, CEOs ranked business model innovation -- a new way to interact with customers or partners -- higher than product or service innovation because it can boost profits without extensive time and physical plant costs.

Unfortunately, firms don't emphasize business model innovation -- The 2007 McKinsey responders focus primarily on product and service development within their business units.

Fact: top executives say they want their people to help but look elsewhere for ideas. Unfortunately, CxOs don't rely on internal staff for ideas -- In McKinsey's study, 75 percent of top managers picked external discussion with peers, partners, or suppliers as the primary source for new ideas.

And, perhaps they are right not to look internally -- the McKinsey study also noted that 32 percent of middle managers believe that their firm's culture inhibited innovation initiatives.

Fact: CIOs see technology as critical to innovation, but IT's focus is clearly on efficiency. IBM's 2007 survey of 170 CIOs shows that they believe "that technology is significantly or profoundly transforming their industries and enabling competitive advantage, yet only 16 percent felt their companies were taking full advantage."

And, they see technology as core to the firm's products and services but primarily deploy IT for efficiency. What's wrong with this picture?