There is a battle of innovation going on in many companies.
At one side of this battle, we find a visionary innovation leader and a strong innovation team. This leader and his team have a vision and the ideas that can bring long-term prosperity to the company if they are executed well – and given 3-7 years time.
On the other side, we have a CFO, who has been given the mandate to cut down on costs. This is fair enough in tough times, but the problem is that the CFO and his alliance do not really know much about innovation. They cut too deep. They lose their patience. No wonder. You get immediate results by cutting costs and – if successful – you have to wait 3-7 years to see the results of innovation. If you don’t know how innovation works, this becomes a no-brainer.
The judge is the CEO. Or is it? Not really, because the owners (the board) judges the CEO and in times like this what matters are short-term results. Heck, in many companies you even have a short-term focus when the economy is doing well. The key problem is that no one really judges the board. You could argue that market does so, but in such cases the blame hits the CEO, not the board. You are stuck with the board.
No one wins this battle. The employees are taken as hostages, the customers or end-users lose out on the benefits of innovation and in the long term the shareholders will suffer. The latter is true because there is actually one winner. That is the competitor that decides to become competitively unpredictable through innovation and gets this right.
You might also want to read this blog post, Five Reasons Why CEO’s Don’t Get Innovation. It is an older piece and I wonder how to update this and include some ideas on how to “educate” executives as well as a board to become better at innovation.