Jan 06, 2015

Why enterprises cannot get innovation going

In research1 commissioned by Genpact, the majority of seasoned operations executives cited ensuring compliance with regulations, customer satisfaction and cost reduction as top challenges in their company. Only a lower proportion rated agility, adaptability, and innovation as important. An Economist Intelligence Unit research2 report confirmed that adaptive and agile firms grow revenue 37% faster and generate 30% higher profits than non-agile companies. These findings suggest that operating leaders are disproportionately focused on using their operations to defend from today’s challenges, rather than aiming at conquering tomorrow’s. While this prioritization may be just be due to trying fixing important AND urgent things first, it clearly doesn’t do justice to the full power of operations as a strategic lever for agility and innovation.

This said, a second aspect may be at play, especially with regard to innovation which typically requires, on top of domain expertise, diversity of perspectives. The Genpact Research Institute profiled the careers of over 480 senior executives across a defined spectrum of industry sectors, and compiled the following heat map, which clearly shows most senior executives with operational responsibilities don’t have direct experience outside their own industry. And that's a very real problem.

Harvard Business Review also corroborated the hypothesis that innovation thrives when teams draw on diverse pools of knowledge, and are not constrained by “known” solutions to problems. Plenty of other literature, including Steven Johnson's book Where Good Ideas Come From: The Natural History Of Innovation points in the same direction.

In such an environment, cross pollination of front-and back-office practices across industries can lead to accelerated gains as many industries have greater experience and maturity in certain practices compared to others. For example,

  • Front office practices of ecommerce companies might benefit insurers;
  • Life sciences adverse-events response might benefit from the experience of financial service companies in handling customer grievances;
  • Healthcare could gain from banking’s straight-through processing experience

A possible solution: leverage partners to complement talent. In the absence of talent with diverse industry experience, partners can and should be leveraged for cross pollination of best practices as they do tend to work across a number of different industries.

  1. Independent research commissioned by Genpact to assess the potential for new operating models across a wide spectrum of industry sectors and functions. More than 900 senior-level executives screened based on their ability to materially influence functional decisions completed the survey
  2. Organizational agility: How businesses thrive and survive in turbulent times: A report from the Economist Intelligence Unit

About the author

Gianni Giacomelli

Gianni Giacomelli

Chief Innovation Leader

Gianni serves as Chief Innovation Leader where he drives and sponsors Genpact’s strategic initiatives aimed at sustaining clients’ transformation into digitally-enabled companies. He also co-leads the Massachusetts Institute of Technology (MIT) efforts to set up a Collective Intelligence Design Lab.