General Electric announces it is selling its biopharma division, a space that it helped pioneer. Online behemoth Amazon continues to expand its network of brick-and-mortar Amazon Go stores. AB InBev, the world’s largest brewer, announces a push into low-alcoholic drinks as sales of its Budweiser brand continue to fall flat.
These are strange economic times and the only constant, it seems, is the need for companies to continue reinventing themselves, what they sell and how they sell it. All of this underlines the necessity of innovation. So how are companies responding to this challenge?
Well, they’re creating more roles, for starters. Specifically, 43 percent of the C-level respondents to EY’s (formerly Ernst & Young) 2019 Innovation Survey say they plan to create a “chief innovation officer” type of role within their organizations. They’re also changing the way they hire, with 46 percent of the 500 U.S.-based executives who were surveyed saying their companies are refining their hiring practices to attract “talent with diverse, future-focused skill sets.”
Notably, 44 percent of respondents said the percentage of their workforce with these skill sets is the best measure of their innovation strategy’s effectiveness. However, getting these employees to feel comfortable innovating while coordinating those efforts with a chief innovation officer could prove to be a heavy lift.
“One of the major challenges with this type of flat, collaborative approach … is establishing a balance between empowering a broad spectrum of the workforce while adding an element of oversight, coordination and escalation,” says Michael Inserra, senior vice chair and deputy managing partner at EY Americas.
One approach companies appear to be taking is giving employees permission to fail. Seventy-nine percent of the C-level respondents say their organizations are tolerant of failure, which EY says is often a key element of the innovation process. There’s a generational divide, however: 42 percent of those respondents are millennials, while only 13 percent are baby boomers. There’s also a big gap between the ranks: another EY survey finds that only 25 percent of entry-level employees believe their organizations are tolerant of failure.
Making sure there’s alignment between the C-suite and everyone else within an organization around innovation is just one of the tasks facing HR leaders. Pouring more money into innovation initiatives isn’t necessarily the answer, either, says Roger Park, EY’s advisory and financial services office innovation leader.
“Leaders may feel they need to increase budgets to drive more innovation in their organizations, but unless they are also prepared to transform their businesses to fully reap the benefits of those new ideas, it will be like pouring water into a leaky bucket,” he says.