Being more innovative is at the top of every leader’s to do list.

In a 2017 survey of 1300 global executives, KPMG found that fostering innovation and implementing disruptive technologies were among the top three strategic priorities for the second year in a row; and almost half of those surveyed consider technological innovation to be their industry’s greatest disruption.

For companies to be innovators and disruptors, they need to dismantle old systems, and acknowledge that innovative ideas don’t come with business plans and projected returns. Instead they are built on hunches, feedback, and trial and error conducted in an environment where experimentation is viewed as vital to the creative process.

These aspirations for innovation are vastly outshining actual progress. Despite believing innovation should be a priority, fully 72 percent of CEOs surveyed by PWC admit they are not out-innovating their competitors. The report also suggests that spending more money on innovation doesn’t necessarily generate better results. 

We couldn’t agree more. Returns on innovation investments are less about the size of the budget and more about the infrastructure leaders create for innovative thinking from investigation through execution. We regularly see companies investing big budgets in isolated innovation efforts then getting frustrated when they don’t see big returns. The problem is that they teach people to work differently without changing the environment that governs how they operate. Most companies have well established processes for vetting new ideas that generally require some level of data or proof that if they build X, Y will happen.

That’s a fine strategy if all of your ideas are based on past successes, but it fails miserably if you trying to do something new. Organizations can’t take the risks necessary for innovation, transformation and growth if they don’t embrace failure.

Failure is a Good Thing

For companies to move from aspirational innovators to industry disruptors, they have to create space for innovation to happen. One of the best ways to do that is through unfettered experimentation.

From the time we are children we're taught there is a right and wrong answer to every question, and the goal is always to find that right answer. This teaching philosophy may be great for third grade math, but it crushes innovative thinking. Trial and error is a quick, low-risk way to help people let go of the notion of right and wrong so that they can begin to explore what’s possible.

These experiments shouldn’t be designed to prove a certain theory. Rather they should provide an opportunity to uncover unanticipated cause and effect scenarios that challenge current assumptions about what customers need. These tests allow teams to introduce new ideas into the wild, and generate bits of evidence that indicate when an unexpected solution could deliver results. That’s when great innovation happens.

For example, ExperiencePoint recently worked with a company that wanted to increase its employee recognition efforts without expensive rewards or additional vacation days. The HR team was encouraged to experiment with different scenarios, using small gifts, announcements and letters home celebrating employee successes. During this process, one team member “had a hunch” that if they sent the letters and small gifts to spouses thanking them for supporting their partner’s hard work it would have a bigger impact. The company supported the idea, and tracked the response. The employees loved it, and they continue to tweak the program to see which gifts have the biggest impact. It would have been easy to shoot the idea down because no one had ever done it before. Instead they took a small risk, tried something new and it paid off. Other tests in the same vein revealed less promise, so fruitless hunches could be adapted or dismissed with very little investment.

Remember: when it comes to disruptive solutions, there are no right answers; there are only better options. When business leaders identify the processes that block innovative thinking they can begin to out innovate their competitors.