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This content was paid for by Henkel and produced in partnership with the Financial Times Commercial department.

Cultivate the new: Innovation for the long term

The world is hungry for new ideas. As coronavirus turns the global economy on its head, it is innovation that holds the key to a more sustainable, connected and equitable future. In Henkel’s new research, the majority of businesses (56%) say that innovation is more important now than it has ever been. But most also recognize that they have room for improvement when it comes to their own activity: less than half of respondents have a track record of delivering innovative solutions, and 67% fail more often than they succeed. The good news is that while businesses struggle with some aspects of innovation, they are at least clear about what they need to do to embed a culture that encourages it. Across sectors and geographies, respondents agree that leadership, diversity and risk tolerance are the best ways to encourage innovation.

So, businesses recognize the desperate need to innovate, and they know in principle how to do it. Yet many lack confidence in their abilities, and they face challenges when bringing ideas to life. How can they improve their performance in this area?

 

Managers are holding back innovation: A new style of leadership is needed

Without leadership, innovation is unlikely to happen at all. But, sometimes, bad leadership can be just as harmful to the development process. Two in three respondents to Henkel’s survey say their innovation efforts do not get the support they need, and half say they have seen poor leadership destroy an otherwise excellent innovation.

It may be that the very concept of an ‘innovation leader’ needs to be updated for the modern world. Many executives believe that the idea of a maverick visionary is outdated: 48% say it is no longer realistic for a single-minded individual—a Steve Jobs or Bill Gates—to achieve success today.

The trend is toward a team-based approach that is nurtured by coaching, training and personal development. Half of the respondents to our study tell us that they are actively developing a more inclusive leadership team as a strategic imperative.

 

The crisis is enabling greater diversity and idea-sharing: Mixing backgrounds will take innovation to the next level

Bringing different people together and giving them a platform to share and debate ideas is a reliable way to generate magic and change the world. That is no less true in a corporate environment.

As well as flagging diversity as a core component of innovation, the majority of organizations believe that new products are more likely to fail if they are not supported by a business with a diverse culture and workforce. Businesses that often fail at innovation are also less likely to have a diverse team.

 

Businesses celebrate risk—in theory—but failure casts a long shadow

Innovation involves experimentation, tinkering and making mistakes. It is impossible, in other words, for a business to innovate without a healthy risk appetite. This is why influencers have extolled the virtues of ‘fast failure’ in recent years—to encourage risk-taking in the pursuit of value.

But the message that failure is acceptable, or even desirable, has not reached everyone. More than three-quarters (76%) of respondents tell us that they would be worried about the impact of a failed innovation on their own profile and career trajectory.

Innovation next

The Covid crisis may be driving a new wave of innovation, but its impact on business might be limited compared with the longer-term challenges posed by climate change. Businesses recognize this and believe that their innovation should align to their sustainability goals. But about half say that they are largely focused on short-term growth rather than longer-term goals, and 53% admit that they could do more to harvest the sustainability ideas of their employees.

The principal hurdle—as so often with innovation—is the willingness to break norms and drive change. But leaders should be aware that their employees and customers may not wait patiently for them to build up the courage to act. Employees are increasingly likely to demand positive change, and 50% are more open to experimental ways of working, which would support a shift to sustainable operating models. Sustainability may be coming more quickly than businesses realize.

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