MIT Sloan Management Review, Forthcoming Winter 2019
Introduction: Managers have no shortage of advice on how to achieve organic sales growth through innovation. Prescriptions range from emulating the best practices of innovative companies like Amazon, Starbucks, and 3M to adopting popular concepts such as design thinking, lean startup principles, innovation boot camps, and co-creation with customers. While this well-meant advice has merit, following it without first understanding your company’s innovation narrative is tantamount to going from symptoms to surgery without a diagnosis.
An innovation narrative is an oft-overlooked facet of organizational culture that encapsulates employees’ beliefs about a company’s ability to innovate. It serves as a powerful motivator of action or inaction. We find innovation narratives in two basic flavors: growth-affirming and growth-denying, or some combination thereof.
Companies that lead — or aspire to lead — their industries in organic growth need to have a coherent, growth-affirming innovation narrative in place, and we will discuss why that’s important and what it can look like. But what actions support the development and maintenance of such a narrative? To answer that question, we tested 18 possible innovation levers and identified the four that are most relied upon by organic growth leaders to stay ahead of their competitors: (1) invest in innovation talent, (2) encourage prudent risk-taking, (3) adopt a customer-centric innovation process, and (4) align metrics and incentives with innovation activity. We will look at each one in turn.