Innovation fuels growth. So why does it still frighten boardrooms?

The UK’s innovation economy is the third-largest globally. It’s valued at more than $1.3tn. Let the scale of those facts sink in. Investment in innovation makes sense because government analysis shows that ‘frontier firms’ – those which are first to market with a product or service – see an average revenue growth of 9% following a launch.

These facts are all very impressive. So why does it feel like innovation frequently becomes a quarrel between business leaders, especially in established companies?

You can’t get a business to invest in innovation if you can’t get them to agree what it looks like. At company top tables across the country, innovation supporters and sceptics are often worlds apart on how it should be defined and measured.

Too often, execs feel innovation is impossible to measure. As a result, many organisations trust incremental return on investment far more than the game-changing value innovation can create. Innovation is simply investment in future growth, but without a shared language and process to evaluate that value it’s not surprising that tensions emerge in the boardroom (generally change-makers clashing with the CFO).

This conflict cannot be allowed to hold companies back. We know from research on tech companies across the world that innovation is the fuel for the high-performance that leads to rapid and sustainable growth. Unless there is a meeting of minds on this at board level firms will continue to miss out on opportunity.

Get into a business-wide innovation mindset —

The best-performing businesses treat innovation like any other core function, with clear processes and clear thresholds. Projects get greenlit or shelved based on their forecasted impact on strategic ROI. It’s that simple.

The best also share a common, quantified language around innovation – around risk, value creation, market share. Jargon of any kind – design or commercial – disrupts the system. It needs to be concepts that everyone in the room can work with. With this in place, innovation stops being a specialist pursuit happening in a corner of the building and starts becoming part of company-wide culture, driven from the top down.

But none of it sticks without leadership commitment. Shared language helps teams across the business understand how ideas create value but leadership gives people the confidence to actually work that way. And that confidence matters, because innovation doesn’t come with the same clean metrics as operations. There are no sales figures or efficiency scores at the start, just experimentation. A window into what could be, rather than what already is.

That’s why language, tools and frameworks matter. They make innovation consistent and accessible. But it’s culture – the creation of a safe space to experiment – that brings the structure to life. Only when those elements come together, can innovators demonstrate how new ideas create value and business leaders can make confident calls on where to invest.

Practice data love —

Beyond the layer of reassuring language there is reassuring data. A data-led approach to innovation derisks the process, delivers better results and ultimately creates value for the business and its customers. Here’s what that looks like in practice.

First: define success up front. Not generically, specifically, in the context of each unique problem. That sets direction, creates focus and gets teams aligned before a single idea is tested.

Second: value outcomes over activities. Activities are the mechanism, impact is the goal. Prioritise the work that will actually move the needle not the work that fills a to-do list.

Third: build on evidence. A rigorous test-and-learn process breeds confidence in results, projected or real, and delivers visible, defensible value.

How Mastercard global got innovation moving —

Mastercard wanted to make smarter, faster product decisions. However, their global leaders acknowledged a lack of visibility, siloed processes and limited collaboration. The pace of change was slow.

The brand put in a new operating system that would support the innovation they wanted to see. A governance framework brought together global and regional senior leaders. Innovation strategy sessions defined three core success metrics: materiality, velocity and quality. Product managers were equipped with the assets they needed to prepare for reviews and enable data-driven decisions at the top.

Ambition, mindset and vocabulary created a common foundation. On top of this, data was standardised to work as a further common language. This created a high interoperability environment where innovation could flourish.

The result: better alignment, more rapid approvals and innovative customer-facing products making it to market faster. Over the test period, a cumulative three years of R&D time was saved to generate the customer results. 

Without a framework that translates design ideas into business intent, organisations are left with inventions that don’t connect to central goals. R&D resources are wasted and companies quietly default to managed decline.

The fix is simpler than it sounds. Break down the language barrier in the boardroom and innovation can flourish. Build a business that’s set up at a foundational level to relentlessly innovate and resting on your laurels stops being an option. Permanently.

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