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Tackling the Wicked Problems of Innovation in Large New Zealand Organisations


Insights and learnings from the CEOs of New Zealand’s biggest companies and most successful startups

A report by Previously Unavailable in association with Auckland Tourism, Events and Economic Development

 

 

 

How important (out of 10) do you consider innovation to your near-term commercial performance?

 

While 81% of New Zealand CEOs rate innovation as an 8 out of 10 or higher in terms of importance, just 7% give their organisations an 8 or higher when asked to rate their own innovation performance.

In Big I little i, innovation consultancy Previously Unavailable explores the challenges that large New Zealand organisations face when attempting what we call 'Big I' Innovation.

While we are strong at internally focused improvement efforts - 'little i' - our success creating truly new market offerings is in decline at large New Zealand organisations.

Interviews with 44 CEOs in 2016 reveal common pain points, along with learnings and success stories that suggest potential solutions to the wicked problems of innovation in large New Zealand organisations.

 
 


How satisfied (out of 10) are you with your innovation success over the last three years?

 

About the study

In 2010, McKinsey surveyed 2,240 global executives on the topic of innovation. One of the most enlightening  findings was that, while 84% said innovation was ‘extremely or very important to their companies’ growth’, just 6% said they were satisfied with their innovation efforts to date.

We started Previously Unavailable obsessed with this chasm between the importance of innovation, and large organisations’ ability to innovate successfully.

We have experienced that chasm during our two and a half years operating as New Zealand’s  first innovation consultancy.

Innovation in large organisations is hard. We work with talented clients who have a true passion for innovation, and the ability to generate powerful innovation strategies and concepts. Yet they face seemingly unending challenges transforming their vision and passion into tangible outputs and results.

In order to be a more effective partner to the New Zealand business community, we wanted to explore this issue in a more concerted and structured way.

So we set ourselves a challenge.

We’d go out and speak to every CEO of a major New Zealand organisation that would give us the time.

We would talk to them in detail about their highs and lows of innovation. We would understand their challenges. We would uncover their success stories.

And we would share the learnings among our clients and the wider New Zealand business community.

We believe that New Zealand can become the world’s most innovative nation. That being so would not only be in the interests of our clients, but in the interests of NZ Inc and indeed New Zealand as a whole.

We also believe that to accelerate that journey, we should share our challenges and learnings among each other – so that New Zealand organisations might all rise on a tide of growing innovation understanding and success.

 

Key Findings

 
I’d love to say it’s everybody’s obligation to innovate, but that’s probably more little ‘i’, like innovate to improve. But the really big, what I’d call ‘capital I’ innovation, that tends to be at the more senior levels. - Brian Roche, NZ Post 

I’d love to say it’s everybody’s obligation to innovate, but that’s probably more little ‘i’, like innovate to improve. But the really big, what I’d call ‘capital I’ innovation, that tends to be at the more senior levels.

- Brian Roche, NZ Post 

 
If you’re a big organisation like us, a big organisation is like a biological organism, and when a foreign body enters it, it will surround it and it will either make it look like itself or it will expel it. So the anti-bodies surround innovation and either absorb it and make it bureaucratised or resist it and kick it out. - David McLean, CEO, Westpac New Zealand

If you’re a big organisation like us, a big organisation is like a biological organism, and when a foreign body enters it, it will surround it and it will either make it look like itself or it will expel it. So the anti-bodies surround innovation and either absorb it and make it bureaucratised or resist it and kick it out.

- David McLean, CEO, Westpac New Zealand

 
You know, innovation always ends up being designed out or takes too long. So we’ve learnt not to necessarily get consensus. Give the opportunity for consensus, but don’t let it slow the business down. We don’t need consensus to make a decision. - Rod Drury, CEO, Xero

You know, innovation always ends up being designed out or takes too long. So we’ve learnt not to necessarily get consensus. Give the opportunity for consensus, but don’t let it slow the business down. We don’t need consensus to make a decision.

- Rod Drury, CEO, Xero

 

Two types of innovation:
Big I & Little i

There are two distinct types of innovation in large organisations – ‘little i’ innovation is about internally focused improvement – finding new and better ways to organise and operate. ‘Big I’ innovation is about launching new customer offerings to market to open up new growth. While these can both be described as ‘innovation’, they are actually very different activities with very distinct needs in terms of people and process.
 

‘Big I’ innovation is in decline in New Zealand 

Innovation inputs such R&D and strategising and ideating have never been in such abundance. But recent NZ Productivity Commission data shows that our Big I innovation output is in decline. Fewer companies are succeeding in taking innovative new products to market, and less of our sales income is being drawn from new innovations. This is worrying from an economic standpoint.
 

Consumer expectations have never been higher

On top of threatened legacy business models, our large organisations face climbing consumer expectations around product, service and customer experience quality. New Zealand consumers are increasingly forming their expectations from their use of companies like Google, Facebook, Amazon and Uber, who they often spend more time with on a weekly basis than local companies and service providers.
 

Four Wicked Problems

The challenges of innovation in large organsations centre around four key areas. Proritisation – we tend to have an abundance of ideas, but struggle to achieve buy-in around prioritising and getting on with them. Speed – we are nowhere near fast enough at developing and launching new innovations. Culture – our large organisation culture tends to slow down, inhibit and often outright kill innovation efforts. Responsibility – we are unsure about who to assign innovation responsibility and accountability to.
 

New Zealand has a genuine opportunity to out-innovate larger markets

Research in global markets shows that their own large organisations experience these same wicked problems. This presents a global opportunity for large New Zealand organisations. Though we might be big here in New Zealand, we are small, tight, nimble organisations by global standards. Framed this way, we can see that we are in a much stronger position to out-innovate the world than large organisations elsewhere.
 

Five practical ways to tackle the wicked problems:

1. Proactively counter the organisational anti-bodies

Our large organisation culture tends to reject innovation. These antibodies are sometimes loud voices of dissent, but more commonly they’re the quiet deprioritising and delaying of innovation projects. When it comes to innovation, our competition is not other companies in our category, but these antibodies. We need to acknowledge they exist, and plan for how to counter them from the outset.


2. Create a greater sense of urgency and set more ambitious deadlines

Business as usual almost always takes precedence over future innovation, and we don’t tend to notice burning platforms until we’ve caught on fire. Compounding this, innovation projects usually have open deadlines, leaving room for continual hesitation and delay. We need to get better at creating urgency around innovation, and set ambitious and hard in-market deadlines for ourselves if we are going to capitalise on our windows of opportunity.
 

3. Prototype and validate to prioritise

The old process of ‘propose – business case – discuss – reach consensus – and only then invest and move forward’ is completely unfit for today’s environment. We need to be creating early prototypes of multiple innovation ideas and getting these in front of the customer to validate which have potential. This needs to be a fast and cost-effective process which gives us an objective way of understanding where to invest.
 

4. Assign responsibility for Big I innovation to the right people

While everyone in the organisation can be involved in ‘little i’, there’s a type of person who makes an effective leader of the challenging ‘Big I’ process. Leading VCs and startup accelerator programmes place much more emphasis on the credibility of the founding team than they do on whether or not they like their idea. Like them, we should be identifying those within our organisations with a talent for leading innovation projects all the way through to commercialisation, and giving them single-point accountability.
 

5. Lessen our dependency on consensus

The long-held corporate practice of seeking broad-based consensus before moving forward removes most of the risk around collective decisions. But in an age where risk is an essential component of success, we need to become more comfortable with only some people around the table agreeing at the outset.

 
 
We’re no longer benchmarked with the other utility companies. We’re benchmarked against Air New Zealand and Uber. - Dennis Barnes, CEO, Contact Energy

We’re no longer benchmarked with the other utility companies. We’re benchmarked against Air New Zealand and Uber.

- Dennis Barnes, CEO, Contact Energy

 
You hire people who have their brains wired that way. It’s a certain type of person. The idea that everybody can be innovative, well to some extent that’s correct, but for the breakthrough product innovations, I don’t think you can really train that sort of unusual way of thinking. Innovation doesn’t happen from Monday to Friday. If you’re not Googling in the weekend about some topic you’re passionate about, then chances are being a product innovator isn’t your first calling. So the really innovative people, they come in Monday morning with all sorts of new ideas on things. That’s just the way it works. - Ian Macrae, CEO, Orion Health

You hire people who have their brains wired that way. It’s a certain type of person. The idea that everybody can be innovative, well to some extent that’s correct, but for the breakthrough product innovations, I don’t think you can really train that sort of unusual way of thinking. Innovation doesn’t happen from Monday to Friday. If you’re not Googling in the weekend about some topic you’re passionate about, then chances are being a product innovator isn’t your first calling. So the really innovative people, they come in Monday morning with all sorts of new ideas on things. That’s just the way it works.

- Ian Macrae, CEO, Orion Health

 

Participating CEOs


We are available to present the study to executive teams and boards - for more information on Big I little i, please contact Previously Unavailable at hello@previously.co


We are New Zealand's first pure-play innovation consultancy. We partner with organisations as co-founders of new product and business innovations.

We are experts in helping companies conceive, develop and commercialise Big I Innovation.

Based at Wynyard Quarter's GridAKL Innovation Precinct, we work with many of New Zealand's largest organisations and most promising startups. To learn more about us, our work and our process please visit previously.co