The Quest For Innovation

By American Management Association

Innovation drives growth and opportunity in new markets, and breathes life into a mature industry. Executives at all levels have a responsibility to lead and stimulate innovative thinking across the entire enterprise. Stockholders, employees and customers count on executives to create a healthy, innovative work environment.

There may be an abundance of literature on the topic of innovation, and innovation may be at the top of the list among global executives, yet most organizations enjoy only moderate success in managing the innovation process. Why are so many organizations struggling to master such a critical aspect of their business strategy?" 

In today’s fast-paced business environment, innovation is a prerequisite for success— and perhaps even for survival. That’s why innovation has found its way to the top of the agenda at organizations around the world. Once considered primarily an output of R&D labs, innovation has become a corporate priority that touches every facet of, and, indeed, every employee in, an organization. External constituents, too—customers, academia, the government, vendors, even competitors—are playing a growing role in companies’ creative processes.

The AMA/HRI Innovation Survey 2006 found that more than two-thirds of the 1,356 global respondents considered innovation either “extremely important” or “highly important” to their organizations today. Yet, those impressive numbers seem modest when compared to respondents’ predictions about the future. About half of respondents think innovation will be “extremely important” to their organizations in 10 years, and 35% say it will be “highly important.”

In this Report, the AMA/HRI team takes an in-depth look at what is driving innovation and how companies view it.We also analyze the components of an innovative culture and look into the future to see what innovative organizations of the next decade might look like. Following is a quick review of some of the findings, which are based on a combination of survey data, our literature review process and a series of interviews with innovative companies:

  • Survey respondents believe innovation is going to get considerably more important over the next decade. Yet, the survey suggests that most companies are only moderately good at innovation. And the literature implies that the vast majority of innovation efforts fail to meet or exceed returnon-investment goals.
  • The biggest barriers to organizational innovation are insufficient resources and the absence of a formal strategy for innovation.
  • There is no organizational consensus on how to evaluate ideas in organizations, raising the issue of how best to select which innovations to pursue and which to let go.
  • Leaders can make or break innovation. They can help by developing the right strategies and setting up the right organizational designs, or they can hurt by failing to support innovation efforts or exerting too much management control.
  • Customer demand is viewed as the top reason for pursuing innovation, both today and in the future. In fact, throughout much of the AMA/HRI survey, respondents viewed customers as the most dominant factor of influence on innovation.
  • Creativity and innovation are inextricably linked to corporate cultures that put an emphasis on teamwork, collaboration, communication, appropriate risk-taking, freedom to innovate and other factors.
  • The U.S. is in danger of losing its innovation edge to some other regions of the world that are starting to produce more engineers, researchers and other specialists. Some warn that U.S. companies could become too focused on incremental innovations and not focused enough on the kind of long-term disruptive innovation that promises the best growth opportunities for the future.
  • In order to adapt to an uncertain future, companies need to become more resilient and agile in some areas, more disciplined in others. They need to be more innovative not only in terms of products and services but in terms of the way they manage. They must also become more forward-looking and capable of anticipating future trends. Before they can innovate for the marketplace, they must often reinvent themselves, or at least their innovation processes.  

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