Barriers to Innovation

Innovation is the key to high profits and long-term success but 70% of businesses still feel that they’re yet to master the elements of successful innovation. So, what is it that makes innovation so hard?

Innovation is a popular term used around the world. We hear it regularly at meetings and see it splashed across colourful marketing materials.

It conjures up images of silicon-valley companies with colourful offices and charismatic leaders, but for many of us it also produces a sceptical eye-roll in memory of past innovation projects that have failed to meet their lofty aspirations.

Innovation looks exciting, but in reality, it’s hard. By exploring the barriers to innovation, we can dispel some of the mysteries and cynicism surrounding it.

1. Innovation and business goals are not aligned

In traditional organisations, innovation may be deliberately separated from the business to protect it from internal challenges. But this isolation can result in confusion and conflict between innovation and overall strategic goals.

In fact, 55% of corporate leaders feel that internal conflict and politics are a barrier to innovation -and are a direct result of poorly aligned business and innovation goals.

When a business fails to clearly align, communicate or connect their innovation and overarching strategic goals, the organisation will struggle to gain value from their innovation efforts.

On the other hand, companies who tightly align their business and innovation strategies have 40% higher income growth.

To overcome this barrier, you could consider:

  • Developing a clear and engaging company strategy that defines and connects your innovation objectives to the overall business goals.

  • Key to the success of this strategy is charismatic and consistent leadership and communication that moves away from a reactive, chasing-the-current-trend approach.

2. Cultural issues are not addressed

Culture change is difficult to implement, and the decision to separate innovation from the rest of the business is often done so to avoid tackling ingrained cultural issues.

In fact, 45% of corporate leaders feel that cultural issues, such as staff capability and attitudes, are a significant barrier that is often overlooked during innovation projects.

Internal change-makers with experimental ideas can often have their attempts quashed by those who are uncomfortable with change. This change-avoidance often comes about due to a history of failed change attempts which leads to a culture of sticking to the status quo and risk avoidance.

On the other hand, companies who actively embrace a change-positive culture and adopt an incremental improvement approach, gain confidence and see far more successful innovation results than those which simply spend on R&D.

To overcome this barrier, you could consider:

  • Creating opportunities where your employees can collaborate on innovation projects.

  • Implementing new recognition practices to reward the behaviours you want to encourage.

  • Attacking change through incremental improvements to gain confidence and see progress.

  • Key to the success of these initiatives is regular and clear communication regarding the intention and progress of the culture change.

3. Failure to act on opportunities and ideas

Traditional businesses can feel stifled by outdated systems and processes. Their complex nature leaves organisation’s feeling “stuck” and restricts them from acting on opportunities.

In fact, 42% of corporate leaders felt it was their failure to act on opportunities that impacted their ability to innovate, compared to just 18% who felt they failed to identify opportunities.

This failure to act is common and shows that when it comes to innovation, businesses can generate ideas, but struggle to translate them into action.

Meanwhile, agile businesses are able to accelerate bringing a new-idea to market because of their integrated systems and nimble ways-of-working.

To overcome this barrier, you could consider:

  • Implementing innovation models to support your innovative ideas as they operationalise.

  • Streamlining outdated procedures to enable your swift response to emerging opportunities.

  • Key to the success of these initiatives is a shift towards an experimental culture that celebrates quick experiments where employees are encouraged to test, learn and try again.

4. Financial support is lacking

Businesses struggle to allocate funding to their innovation projects, particularly those in the retail, hospitality, and education industries.

In fact, 40% of corporate leaders had innovation budgets of less than $5 million, while 23% had less than $1 million (including both salaries and direct spend). These small budgets mean that businesses are encouraging innovation but are struggling to directly deliver it.

These limited innovation budgets are exacerbated by risk-averse financial management processes that are designed to ensure success and therefore work against a culture of experimentation.

The Australian government has recognised that limited access to finance is having a negative effect on Australia’s capacity to innovate. In 2015, the National Innovation and Science Agenda committed to providing increased funding support to encourage businesses to innovate.

To overcome this barrier, you could consider:  

  • Carefully allocating your internal innovation budgets to reduce internal competition and focus activity on directly delivering innovation (see challenge one).

  • Streamlining your internal procedures to redirect budget towards innovation (see challenge three).

  • Assigning discretionary budgets to the exploration of ideas and accepting that this may not result in an immediate financial return.

  • Preparing your organisation to take advantage of government and external incentives.

5. Proactive collaboration is not encouraged

The business world is renowned for its competitive side, and innovation exaggerates this by pressuring businesses to be “one-step-ahead” of their peers. This can make innovation a secretive process as companies attempt to deliver disruption that surprises and excites the market.

The Australian Government is calling for a more collaborative approach to innovation though, acknowledging that it increases comfort with risk taking, shares innovation skillsets and knowledge, and improves productivity.

They are facilitating collaborative innovation by allocating funding towards partnerships – this also helps to resolve some of the financial barriers mentioned in challenge four.

To overcome this barrier, you could consider:

  • Identifying potential partners for collaboration – to share your resources and skillsets.

  • Preparing your organisation to take advantage of government and external incentives.