Innovation agility part of wider agility efforts faced by business

31 May 2018 Consultancy.uk

Changes to the business landscape mean that long term market incumbents face disruption from new innovative competitors, as well as cross-sector and cross-border entry. Adopting agile working is seen by many as a way to combat this, although where and how to be agile remain key uncertainties; something which can cost businesses dearly in terms of operational efficiency.

Disruptive technologies, climate change and political shifts are among a number of forces presently changing the business environment. While agility is being treated by many businesses as a holy grail to address these challenges, it comes with costs if companies place the wrong bets. Now a new analysis from Oliver Wyman has explored the possible failings companies can experience if they miscalculate their agile transformations. The study into agility and the kinds of practices used by large organisations to bolster agile practices, involved executives at 29 large companies in 11 industries in 4 countries.

Efficiency tradeoffs against agility

The firm’s analysis shows that companies are increasingly fragile, with the S&P500 increasing churn significantly; the firm notes that since 2000 around half of companies then on the S&P500 are either no longer there, or were transformed in ways that makes them unrecognisable – often now business units in bigger organisations. The near future is likely to see turnover decrease in speed, the firm projecting that by 2027 around a third of companies that were on the S&P500 index 50 years ago, will still be there.

The current environment is deemed particularly uncertain, as global forces face some of their biggest challenges ever, yet, as the analysis highlights, agility tends to trade against efficiencies, particularly of scale. Old models require long-term commitments to goals and strategy, and require considerable resources to operate, while more agile models demand flexibility, with models focused on iterative improvement. However, companies can be better at being agile and efficient, with a trade off in part dependent on their dynamism.

Achieving agility in organisations remains difficult, according to the study. Around 4% of respondents said that their organisation is extremely high in agility, while 22% of respondents said their level of agility is high. Around 41% said that their organisation operated at a low-level of agility.

Capital and developmental opportunities from innovation investment types

Becoming agile is no easy feat, the study notes that implementing Agile processes, is only one part of a wider shift to becoming more agile as a company. Innovation units too play a key role, one that is understood as part of a dynamic approach to agile practices. The vast majority of organisations have such units (90%), although the organisations that say that such units are critical to the overall organisation achieving greater agility differs considerably, 26% say extremely high, 44% say high, while 15% say not at all.

One problem is that the term ‘innovation unit’ can be vacuous, with a broad array of activities falling within the category – scouting teams, incubators, accelerators, excubators, venture funds, among others – not all of which are as good at driving innovation and agility than others. The firm noting that some techniques are short-term high-capital fixes to add innovation, such as acquisitions, while others are low bar capital wise, but offer longer-term opportunities, such as hackathons, etc.

In terms of reasons why innovation units fail to deliver agile results, a broad array of issues could be at fault – although in many instances a lack of acceptance of failure as a possibility, is itself an issue. However, when asked what the top three reasons innovation units fail in getting their initiatives adopted into the wider company, external factors to the unit, such as ‘mindset: survival mentality, unwilling to change and risk-avoidance’, ranked in the number one spot at 16% of respondents. Internal politics and bureaucracy followed, cited by 14% of respondents. While innovation units finding themselves on an island, unable to communicate or involve other business units, came in third.

Failing innovation units key issues

Overall the reasons cited for failure are relatively broad, reflecting that there is no one easy fix to create successful innovation units. A number of factors are, according to the authors, noted to improve outcomes, including adopting a start-up ethos; experimenting with purpose; adopt a flexible organisational structure; encouraging explorer mindsets and behaviours; empowering and encouraging leadership agility; and developing an entrepreneurial mindset.

Related: Seven best practices for Agile working according to BCG Platinion.

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Two thirds of UK employees not empowered enough to innovate

18 March 2019 Consultancy.uk

A culture of equality can drive innovation at work, but only a third of UK employees feel empowered to innovate at present. This demonstrates a significant disconnect between workers and their bosses in the UK, with 76% of business leaders also claiming they empower employees to be innovative.

Despite innovation increasingly being seen as integral to the survival of businesses, innovation remains relatively difficult to achieve. A lagging disconnect between management and staff remains the driving force behind this. One study by PA Consulting previously confirmed that while 66% of companies believe they will not survive without innovation, only 24% said they had the skills needed for that, and only half thought they had the right leadership in place to change that in time.

In order to find a way around this problem, global consultancy Accenture has completed its own study into innovation, polling around 700 bosses and workers across the UK to do so. The key finding of the research is that companies with a culture of equality can see an individual’s willingness and ability to innovate improved by seven times that of the least equitable workplace cultures. At the same time, an innovation mindset is almost twice as high in the most-equal companies as in typical ones.

91% of employees want to innovate but just 34% in typical United Kingdom companies feel empowered to

What remains clear, however, is that most companies are failing to adequately create an equal culture, where staff of all ranks feel comfortable contributing new ideas. 91% of employees want to innovate but just 34% in typical UK companies feel empowered to. That is higher in the most equal companies, where 75% of staff feel confident making suggestions, compared to just 5% of the least equal, and 34% of typical companies. Since those equal companies are comparatively fewer, when averaged out, only a third of UK staff feel they are empowered to innovate.

That figure stands in stark contrast to the perceptions of UK executives, however.  76% of business leaders in Britain believe that they do indeed regularly empower their employees to innovate. As a result, it seems that leaders mistakenly believe that some circumstances encourage innovation more than they actually do. For instance, they overestimate financial rewards and underestimate purpose.

The opportunity which is presented by addressing this divorce is enormous. Accenture calculates that global gross domestic product would increase by up to £6 trillion over 10 years if the innovation mindset in all countries were raised by 10%.Top 10 workplace culture factors - by strength of impact on innovation mindsetAccording to Accenture, the best way to impact positively on a company’s innovation mindset is through the provision of relevant training – associated with a 10.5% uplift to staff’s confidence innovating. Allowing the freedom for employees to be creative followed, contributing an 8.1% boost, while ensuring that training times are flexible and the firm allows a healthy work-life balance both see a more than 7% improvement. Similarly, remote working being available and being common practice will buoy creativity by 6.9% – further demonstrating the importance of flexible working to improve innovation culture at a firm.

Commenting on the report, Rebecca Tully, executive sponsor for Human Capital and Diversity for Accenture in the UK and Ireland, said, “Our research reveals that a workplace culture of equality is an overlooked driver of innovation within companies. By understanding what motivates their employees and fostering an environment where people feel empowered, business leaders have the opportunity to unleash the innovation required to compete effectively in an era of disruption.”

The research came as part of a global survey by Accenture, which queried more than 18,000 professionals in 27 countries and 150 C-suite executives in eight countries. The overall research determined that an empowering environment is by far the most important of the three culture-of-equality categories in increasing an innovation mindset, which consists of six elements: purpose, autonomy, resources, inspiration, collaboration and experimentation. The more empowering the workplace environment, the higher the innovation mindset score.