Executives now firmly believe that innovation is central to a company’s strategy and performance, but getting it right is as hard as ever, according to a recent McKinsey Global Survey.1 Some 70 percent of corporate leaders say innovation is among their top three priorities for driving growth.
But the way companies manage and govern innovation doesn’t reflect that importance. For instance, although executives say corporate performance is most likely to be affected by breakthrough innovations, they also say their companies generally focus on innovation in areas such as product or service development. Only 36 percent of top managers—and just over a quarter of other executives—say innovation is part of everything the organization does. Further, although more than a third of top managers (those at the senior vice president level and above) say innovation is part of the leadership team’s agenda, an equal number say their companies govern innovation in an ad hoc way.
Top managers and other executives agree that the most important drivers of innovation are culture and people—and that companies face significant challenges with both—yet the two groups have different views of those challenges. Areas of disagreement include whether the company has the right people to innovate...