PWC’s 22nd Annual Global CEO Survey reported that 55% of CEOs believe that the “inability to innovate effectively” is one of their top skill gaps. It is not the first time we have heard this tidbit. Company leaders are constantly saying that creating an innovative culture or becoming more innovative is one of their top priorities. However, something stands in their way, but what? Innovation is hard, and not everyone understands how to incorporate innovation in their organizations. Below are five more specific challenges companies face when dealing with innovation.

Rapid Technology Changes

“It’s very difficult to recognize which technologies will create a breakthrough,” said a General Manager at an Industrial Products company in the Netherlands. Technology changes very rapidly, and the pace of change is accelerating. Not innovating in such an environment puts a company at risk of being overtaken by a new rival. As a result, organizations need to put a system in place to integrate new technologies into their product development, operations, and customer service. However, it is not just a matter of paying money for new technology; organizations must be agile with their technology. Company leaders need to listen to the feedback from their employees and customers and adjust how they implement technology when necessary.

Disruptive Innovation vs. Incremental Innovation

Without an innovation strategy, organizations cannot be proactive and continuously innovate. An innovation strategy sets a direction for all of the company’s innovation efforts and defines how the company can experiment with new and emerging technologies, revenue and business models, and various other concepts and ideas. An innovation strategy helps companies act on signals of change and pursue disruptive innovation instead of focusing on merely making incremental changes. Innovative companies make long-term investments in innovation, courageously looking past the quarter-to-quarter performance. Finally, organizations that are considered disruptors value agility and experimentation, accepting that failure is a prerequisite for success.

Innovative Culture

Creating an innovative culture at an organization is critical to the company’s growth and success. When people think of innovation, they often only consider technology, such as iPhones, self-driving cars, or smart appliances. As a result, people tend to believe that the functional groups responsible for innovation reside only in engineering or research and development. That mindset is a very limiting belief. Innovation can come from anywhere: marketing, sales, finance, any part of an organization. Every department has its own unique perspective on problems the organization is attempting to solve. That diversity of thought prevents groupthink and provides an organization with a range of insights and opinions, enabling it to be more innovative in how it approaches problems.

Developing Next Generation Innovators

In order to be innovative over the long-term, companies have to modernize and improve their employees’ skills. In an environment where many of today’s roles will not exist in the future, and many new roles will emerge, continuous learning is a must. Investing in employee development through classes, training programs, and off-site experiences empowers employees and sends them a message that the organization cares about their personal growth. It is also exceedingly critical for leaders to provide support to their staff. Employees need the freedom to take risks, innovate, and be creative, and not be afraid to fail when they try something new.

Uncertain Future

Evolving customer and market trends, shifting consumer expectations, and a changing economic environment make it exceedingly difficult for organizations to know how to allocate their resources. In challenging financial cycles, like the one we are experiencing right now, it can be easy to cut the R&D budget and stop investing in innovation. However, that is often a short-sighted strategy that hurts organizations in the long-term and hinders their growth once the economy recovers.

Conclusion

“We need to institutionalize innovation” is an insightful quote by Chris Hilger, President and CEO of Securian Financial Group. Despite its challenges, if organizations want to transform and succeed in the future, they have to be agile, willing to change, embrace innovation, empower and develop their employees, and continuously invest in product and services development, both in good economic conditions and in bad.