When it comes to executive buy-in for innovation, or a lack thereof, it comes down to overcoming one or more of the following factors.
Decision-makers are motivated to act in their own best interests. instead of the long-term interests of the organization they represent.
Favoring the immediate over the long-term.
‘Fight the last war’: decision-makers are motivated to follow the thinking and strategies that got them to where they are today, rathan the strategies that will get them to where they need to be tomorrow.
A misconception that investing in innovation is risky and costly. It doesn’t have to be. The risk of not experimenting with new ideas is paradoxically much greater than doing nothing.
Modern management literature advocates for ‘radical transparency’ and ‘extreme ownership’. However, a ‘culture of blame’ is still pervasive across many large organizations today. As a result, decision-makers are afraid to deviate from the tried and true path for fear of failure. This fear of failure is manifest in steering committees, work groups and the hiring of expensive top-tier consultants.
- Psychological: social factors such as identity, belonging and wanting to be liked. Think conventional reasoning such as “what will people think?”.
- Biological: senior executives at large organizations might shy away from novelty and uncertainty because of hyperactive risk receptors in the brain - such as the amygdala and frontal lobes.
When everything you do is subject to stock-market scrutiny and sentiment, it’s difficult to justify investing in the long-term. Just ask former GE CEO Jeff Immelt, who ‘resigned’ from the firm amidst a down-turn in share price, despite investing heavily in the long-term.
Performance reviews are usually devoid of any metrics that incentivize innovation.
“The way things have always been done around here” - we stick to what’s familiar because it requires little work and doesn’t threaten our identity or self-esteem.
Competition within the firm, as well as slow communication lines.
“They’re my customer and you’re not allowed to speak with them!”
If expenses are shared between business units then individual business units are less incentivized to invest in improving their numbers in these areas.
In this ebook, we provide an overview of how customer expectations are changing, what technology and business models are disrupting insurance, and how incumbents can drive internal and external innovation to best prepare for the disruption.