Fostering innovation is vital-ChCh Press 26/01/2014

Tony Mortensen, director of executive development programmes at the University of Canterbury discusses some of the key issues to creating and fostering innovation within organisations.


The results from the 2013 Global Innovation Index, published by Cornell University, INSEAD and the World Intellectual Property Organisation ranked New Zealand 17th.

To many this would represent a great result, especially given that Australia ranked 19th (up from 23rd in 2012). However, given New Zealand ranked 13th in 2012, the results may indicate a more disturbing trend.

A further cause for concern is the fact that New Zealand is now seen as one of the hardest-working countries in the OECD yet our productivity is falling short of international averages. This gap is ever-widening, which means we are effectively working harder at being less productive.

Therefore, increasing our GDP per employee-hour-worked is critical to changing this trend, and as noted by the late Sir Paul Callaghan, we as a nation need to be developing more hi-tech, high-value, high-margin and high- revenue per employee organisations if we are to increase our overall international positioning and standard of living.

There is no doubt that one key solution is to become more innovative in what we produce and how we produce it – work smarter not harder. However, innovation is often confused with invention. In fact, innovation can often be as simple as the application of someone else’s invention in a new or different way.

However, the challenge for New Zealand organisations is how to create and foster an environment where innovation is possible.

New Zealanders have been at the forefront of introducing the world to new and exciting goods and services which have created global companies such as AJ Hackett International, Xero, Tait Electronics, Fonterra and Rakon (to name but a few).

A presentation by Doug Hastie, founder and chief executive of Chanui Tea and now chief executive of Syft Technology, identified a key factor in the innovation equation. Hastie feels we have to stop thinking about innovation as only that thing that happens with people in white coats working in labs and workshops – but in many cases can simply be about taking something that already exists and improving it, widening its applications or simply using different marketing and distribution methods to get better market penetration. Hastie believes that innovation is as much a part of a change in mindset as it is an actual change in the goods or services themselves. Innovation can be as simple as looking at the way something is sold, not what is being sold.

One of the growing concerns in today’s business environment is that the focus on risk and compliance management often dominates senior management and boardroom thinking.

Companies want to achieve growth but are constantly concerned about taking any risks to achieve organisational goals.

It is as if the accounting department is now driving the strategic direction of the organisation. As an accountant myself, I believe that accounting, and the information it produces, should support decision-making but should not be the reason for it.

Organisations need human resource policies that allow for a balance of both risk-takers and risk-averse employees. In other words, when the numbers are crunched and the sensitivity analysis points to a remote possibility of project failure, the decision should not necessarily always be “no!”.

Risk is a reality of success, a key ingredient if you like and provided the risk is assessed and sits within the organisation’s overall risk appetite then it may be worth pursuing.

Another complaint I often hear from managers is the fact that they feel highly constrained by systems and controls that are supposedly designed to help the organisation advance. In their opinions, these systems and controls are too often designed to prevent the lowest-common denominator doing something wrong.

The issue is that organisations spend significant resources on recruiting the best people for specific roles – they sell the Position Description to potential candidates based on all of the exciting opportunities they will have to engage and grow as a professional, only to then impose almost crippling controls that impact on their time and creativity.

Nothing stifles innovation more than an over-designed and poorly directed system. If you want to create a truly innovative organisation then you need to push the current systems to breaking point.

With any luck the system will do just that – break – and then can be rebuilt to better serve the customers and staff they are intended to support.

It is critical to remember that controls don’t drive organisations forward; people do, so let’s let them do just that.

Engagement is a critical ingredient to fostering innovation because employees need to feel that their ideas are supported and rewarded. All too often employees are reminded of the failures of the past or the things that the organisation as a whole is not doing well or right and there is no time left to praise successes. Unfortunately it does not take long for a person to feel disengaged and, in the worst cases, disenfranchised with the organisation.

This will almost definitely ensure that new and innovative ideas are closed out, with people often not even bothering to raise them.

Feeling supported is a critical component for engagement in that it allows people to be open and honest in their role, think outside the square and produce new and innovative ideas that can often lead to growth and success. This will then help them feel connected to the organisation, which in turn will lead to a greater feeling of success, achievement and wellbeing – all critical components of long term performance. This was highlighted by the Forbes Insight Survey which identified “the corporate environment” as the number one key factor to creating innovative organisations. It is described as a stealth factor that can make or break the potential of even the most innovative individual. With this in mind a poor corporate environment will simply drive good people away.

A true innovator is often someone who can see an opportunity that others cannot.