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.
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: