Innovation is risky business according to CEOs

Top CEOs have shared their tips for leading innovation as part of Melbourne Business School panel discussion moderated Assistant Professor of Strategy Brandon Lee at the recent World Business Forum in Sydney.
As the panel, and Brandon noted, businesses are under more pressure than ever to innovate in order to deliver greater value to consumers, bring products and services to market quicker and in turn drive larger profits and new income streams that will not only give them financial security in increasingly agile and unpredictable economy but a competitive advantage.

National Australia Bank Group CEO and Managing Director Andrew Thornburn challenged the notion that businesses needed to view change as a threat.

“In the world today there is amazing unprecedented change,” he said.

“Usually we think that’s something we need to defend against but actually it presents a real opportunity to shape the industries and economies in which we operate.”

Zeger Degraeve, Dean of Melbourne Business School; Jacky Fairley, CEO of Starpharma and Rob Sindel, CEO of CSR. 
For Thorburn, the big trends changing many industries and encouraging innovation are technological change, venture capital, growth opportunities, the ability to invest in ideas and have a sustainability agenda that doesn’t just focus on profit but social causes.

However, with opportunity comes opposition, particularly from people who are risk adverse and scared of failure, according to Starpharma CEO and Melbourne Business School board member Jackie Fairley.

“Often in an innovation based industry, like pharmaceuticals you don’t have specific metrics,” she said.
“You can’t look at the margins or the sales growth or lack of…which means it’s very easy for people to say you’re on the wrong strategy and that it will never work.
“We have products on the market now that I was told three or four or more times that we either wouldn’t be able to develop, or we wouldn’t be able to register, ‘you will never get there’.

“If you don’t have an organisation, that includes the board and senior management and other members of staff, who are comfortable operating in a risk tolerant environment and are personally tolerant of taking risks and failing, you will never innovate effectively.”

Equally important as taking risks is celebrating every success people and your business has, which CSR CEO Rob Sindel said doesn’t happen often enough in organisations embarking on an innovation agenda.

“Celebrate success but also don’t worry about failure. Organisations are very quick to criticise, particularly old organisations and that is a dangerous territory,” he told the Forum.

“Business is about people and if you invest in people they will do amazing things for you and they will come up with the innovative ideas.”