New Zealand could soon be in trouble. A new study of innovation at our biggest businesses and public sector organisations reveals that, while most CEOs give innovation a “10 out of 10” in terms of importance, most also score their recent innovation performance as a “6” or under. Too few women and ethnic minorities are CEOs of large organisations, and our overall innovation output is actually decreasing.
Those were some of the key takeaways of the “Big I, little i: Tackling the Wicked Problems of Innovation at Large New Zealand Organisations” report, which was released on Wednesday evening at an event at GridAKL in Auckland’s Wynyard Quarter. The study, carried out by innovation consultancy Previously Unavailable, in association with Auckland Tourism, Events and Economic Development (ATEED), was conducted with 44 CEOs of major New Zealand organisations including Spark, Fonterra, ASB, NZ Post, Auckland Council, Contact Energy and TVNZ, among others.
And it raised a lot of questions about where Aotearoa’s economy may be headed. “We’re actually going backward in terms of innovation output,” said Previously Unavailable partner Chris Paykel at the event.
Previously Unavailable founder and principal James Hurman said the study revealed some serious concerns. “Innovation output is in decline. That spells trouble.”
Four challenges in innovation: Culture, Prioritisation, Speed, Responsibility. Obstacles aren't often external... #BigIlittlei— NZ InnovationCouncil (@innovation_nz) November 2, 2016
Hurman said there were four main areas that were proving problematic for large New Zealand businesses and organisations that were holding them back from innovating: culture, prioritisation, speed and responsibility. He said these were “wicked” problems for innovation in the Land of the Long White Cloud. “It’s important that we are realistic with ourselves as a business community,” he said. “Innovation is not without risk. We have to be less consensus-driven.”
Another serious issue evident in the study was the lack of diversity at the executive level of companies and organisations. Of the 44 CEOs interviewed for the study, just five were women (the Auckland District Health Board’s Alisa Claire, ASB’s Barbara Chapman, My Food Bag’s Cecilia Robinson, NZME’s Jane Hastings and the Ministry for Vulnerable Children’s Gráinne Moss). There was also a noticeable lack of Māori representation and representation from other racial groups apart from pakeha.
“This is a very male, pakeha community,” Hurman admitted at the release. “We could use more women.”
He claimed attempts were made to increase representation of the views shared in the study, but were limited by the types of organisations they spoke to. “We really wanted to speak to CEOs of large organisations,” he said. “We were slaves to the makeup of that group.”
But, he said, more diversity in large organisational leadership, was critical – and was a problem rooted in the cultures of many big companies and organisations. “It’s a pipeline issue really. It’s a bigger issue than just hiring people into jobs.”
He also added more diversity in leadership was essential for innovation. “If you have a better representation of your leadership team, you’re more likely to have products that meet customers’ needs.”
Aside from the diversity issue, Hurman said there was also a more pressing need for companies that were losing money to innovate.
ATEED CEO Brett O’Riley kicked the evening off with his own warnings. “We work some of the longest hours in the world, but we’re not as productive as other countries,” he said. “Innovation and productivity are really tied together.”
He also said large businesses and organisations needed to change their mindset about what they thought qualified as innovation. “Innovation isn’t just R & D or some scientific discovery.”
Hurman, who spoke after O’Riley, said something similar. “Business leaders have a habit of saying that innovation doesn’t always have to be about launching major new offerings to market – that it can be about doing things differently in many areas of business,” he said. “That’s certainly true – but when we rarely succeed at taking genuinely new offerings to market, that’s a big problem in a business world that is increasingly subject to disruption and reliant on innovation.”
But it was not all doom and gloom, he said. “We have many successes to draw from, and we feel it important to start a conversation around how we learn from these successes to grow capability toward New Zealand being a true innovation leader.”
One of those successes, he said, was ASB’s Clever Kash. He said the company had found the “secret sauce” for success by first prototyping the digital moneybox and trailing it with select consumers before releasing it to the wider market. He also said there were five things large companies and organisations could do to improve: 1) proactively counter the organisational anti-bodies, 2) create a greater sense of urgency and set more ambitious deadlines, 3) prototype and validate to prioritise, 4) assign responsibility for “Big I” innovation to the right people, and 5) lessen our dependency on consensus.
But if we did those things, New Zealand could become the most innovative country in the world, Hurman said. There’s data to back him up, too: according to the 2016 Global Innovation Index from the World Intellectual Property Organisation, New Zealand is currently ranked as the 17th most innovative nation on earth, ahead of countries like France, Israel, Norway, Australia and China; however, this is a decline of two places from 2015.
ATEED’s O’Riley agreed with Hurman about Aotearoa’s potential. “I share Previously Unavailable’s belief that New Zealand can become the world’s most innovative nation,” he said. “If we’re able to harness our innovative potential, our businesses will grow faster, and employ more skilled people in higher paid jobs. As a nation, New Zealand is good at innovating. The challenge is to be great at it. That isn’t easy, and initiating a conversation about how to overcome the difficulties of innovating, as this report does, is an important part of this journey.”