Why does innovation in organizations fail?

This is how companies develop a culture of innovation

A good culture of innovation creates competitive advantages. However, a study shows that this is missing in most German companies. How the change to an innovative corporate culture succeeds.
 

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The economic slowdown as a result of the trade war and other geopolitical risks could hit German companies harder than they'd like. The companies in this country must by no means rest on the radiance of Made in Germany in their export business. According to the Bertelsmann Stiftung's innovation atlas, for which more than 1,000 companies from the fields of industry and industry-related services were surveyed, the competitiveness of many small and medium-sized companies is threatened.

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Courage to innovate

Impulses from practice, research, advice and training

Surveys in over 100 companies have shown that innovations are being developed and started more and more often, but in most cases these projects are unsuccessful.

According to the analysis, they would have to invest more in innovations in order not to slip into economic sidelines. The Bertelsmann Stiftung experts see small and medium-sized enterprises as endangered, especially when the competitive conditions change as a result of advancing digitization and new competitors. "Made in Germany could transform itself from a bestseller into a slow seller. Too many companies stumble into the future instead of going ahead with an open innovation culture," warns study director Armando Garcia Schmidt against this background.

There is a lack of willingness to take risks and a culture of innovation

The economic expert is alarmed because, according to the innovation atlas, around 50 percent of companies in this country do not actively tackle innovation management. There is a lack of the necessary willingness to take risks and a culture of innovation that encourages employees to go creative ways. The atlas identifies seven different types of companies, so-called "innovative milieus", which differ in their degree of innovation. The most important are:

  • "Technology leaders" and "disruptive innovators": They are particularly inventive. 25 percent of German companies belong to this group. They are mainly to be found in the pharmaceutical, chemical and metal and electrical industries. Here, the share of profit in sales is 33 percent higher than the average for all milieus. The number of employees is also developing above average. Between 2016 and 2017, they rose more than twice as much as in non-innovation companies.
  • "Passive implementers" or "companies without innovation focus: 46 percent of companies can be assigned to this group. These companies do not approach new developments in a targeted manner.
  • "Cooperative innovators": They form the largest group. Her focus is on employee development, but not on networking with science and other companies.
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Measures to develop a culture of innovation

Strong sales figures, satisfied employees and constantly a new, outstanding product idea are the dream of every manager, write Joshua Kilb and Florian Schönberger about the culture of innovation as a sustainable corporate culture. But in day-to-day business, the establishment of a culture of innovation mostly fails in day-to-day business, the Springer authors emphasize. They define the following core elements that are decisive for an innovation culture:

  • If you want performance, you have to sense Offer. Sinn gives employees orientation and security. And sense motivates.
  • Growth mindset promotes corporate success. Because the mindset is the basis of performance. For a culture of innovation in the company, employees are required who have an open and forward-looking attitude. In order to cultivate such a mindset, executives have to give performance-oriented feedback and promote a healthy error culture.
  • An agile mindset at company level:When developing an agile mindset, executives in particular are required. Through their attitude they have a role model function and the greatest influence on the attitudes of the employees.
  • Agile innovation methods consolidate the culture of innovation and support the development of innovative products. The agile innovation method par excellence does not exist, however. Every company has to find a practicable method that is based on the company's individual needs.
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The innovation culture model

There is no single right model for developing a culture of innovation. Many roads lead to Rome. Hartmuth Gieldanowski presents another design approach in the book chapter "Digital Business Innovation Culture - Focus on People". The so-calledInnovation Culture Model was developed at Swisscom by Christina Taylor. She has identified factors that can help companies achieve the highest possible performance. These dimensions can be used as an analytical tool to identify grievances or deviations from the goals.

Dimensions

description

Sense & purpose

What is the purpose of the company? What does it stand for not only in the context of the customer, but of the people themselves? What purpose does it serve for society?

Strategy & offer

What is the strategy with regard to market cultivation? What are offers, products and services? Why are these relevant from the point of view of sense and purpose?

Processes & craft

How are the offers created? What kind of craft is necessary? Which values, principles does this have to follow?

Measure & learn from it

How does the company know if it's doing the right thing? What measuring instruments are there and how is the feedback loop closed?

People & collaboration

What role do people play and how should the collaboration be designed so that the right results are generated?

Senses & environment

In which environments do people work together? How are the senses stimulated or not?

Source: "Digital Business Innovation Culture - Focus on people", page 83.