The (absurd) paradox of innovation in 2024 and five ideas to deconstruct it

At a time when the speed of change is unprecedented in human history, disruption is no longer an eventuality but an inevitability - and when everyone treats Artificial Intelligence as the savior, you'd expect innovation to be considered a critical priority by companies.  

However, a report by the Boston Consulting Group, published in June 2024, warns of an alarming paradox: although 83% of executives rank innovation as one of the top three priorities for their organizations, readiness to innovate has fallen dramatically, with only 3% of companies saying they are "prepared" to innovate effectively.

Innovation systems, which should be the engines of growth and transformation, have been severely affected by a series of global crises, from the pandemic to growing geopolitical tensions and economic changes. This instability, coupled with increasingly consistent predictions of economic stagnation, has forced many leaders to focus on short-term agility, neglecting the investments and systems needed to sustain medium- and long-term innovation. The impact is clear: there is a widespread "budget winter" in innovation and many innovation systems in companies have become "zombies" (the report's expression), maintaining innovation activities without clear direction, which results in inefficient processes and a lack of real value creation (or what we have long called "innovation theater"). The report is clear: the innovation strategy is not aligned with the business strategy, according to 52% of respondents.

Let's go back to the beginning: do we really think that disinvesting in innovation is the best way to protect ourselves from the uncertainty of the future? This paradox is as worrying as it is absurd. And it needs to be deconstructed. Here are five key ideas to that end:

1. Strengthen the link between strategy and innovation

Many companies fail because they treat innovation as a separate entity from their overall strategy: they innovate out of FOMO (FearOf Missing Out), without considering what concrete challenges they must address. The first (and most urgent) action is to integrate or connect innovation directly with strategy. To break the cycle of innovation without impact, we need to start by clearly defining the role of innovation in the company's long-term success and aligning its investments with strategic objectives. Innovation needs to be a means, not an end.

2. Balancing long-term innovation with short-term agility

The second idea addresses the obsession with the short term. Many companies, pressured by economic uncertainty and the need for immediate results, opt for incremental, short-range innovation initiatives that offer quick but limited returns. Nothing against that. But in doing so they are undermining the company's long-term capacity to innovate strategically, systematically and continuously. The future belongs to companies capable of balancing efficiency and optimization with transformation and disruption. Without a clear vision of the future and the need to challenge the status quo, innovation becomes a maintenance exercise rather than a guarantee of business longevity.

3. Building an execution-oriented innovation culture

Culture is often cited as a barrier to innovation. Wrong: culture is a critical success factor for innovation. A culture of innovation presupposes strong leadership and intelligent processes, capable of stimulating the disciplined execution of a strategy that balances efficiency with experimentation.  

4. Recalibrating innovation management systems

Many of the problems companies face when it comes to innovation stem from inadequate management. Without a clear management structure that aligns people, resources and opportunities with the right innovation domains, innovation efforts are unlikely to produce significant results.

Successful innovation requires a robust portfolio management system, in which investments are carefully aligned with the areas with the greatest potential for transformation.  

It is also important that innovation management models involve the entire organization in the project portfolio.  

5. Use emerging technologies to speed up the innovation cycle

The BCG report highlights the transformative potential of Generative Artificial Intelligence(Gen AI). This adoption must be promoted in a structured and thoughtful way. Once the "AI fever" has passed, it is important to get down to earth and understand the processes and stages of innovation that can be profoundly improved and accelerated by AI.  

In short, this innovation paradox is not inevitable, but breaking it requires strategic action and determined leadership. Companies wishing to survive and thrive in a constantly changing world must understand the strategic nature of innovation and its role in building new cycles of competitiveness and longevity.  

Strategy without innovation is like sailing without a compass: it may keep you afloat for a while, but it will never take you to the right destination.

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This text is a republication of an article published in Exame.