What is the biggest innovation challenge for leaders of large organizations?

What is the biggest innovation challenge for leaders of large organizations?

Understanding and accepting the innovation equation:

Innovation = reducing errors + increasing insights

Via Seeing What Others Don’t: The Remarkable Ways We Gain Insights (Kindle):

To improve performance, we need to do two things. The down arrow is what we have to reduce, errors. The up arrow is what we have to increase, insights. Performance improvement depends on doing both of these things.

We tend to look for ways to eliminate errors. That’s the down arrow. But if we eliminate all errors we haven’t created any insights. …

This is the innovation dilemma most organization face, manage the present while also creating the future: exploitation vs discovery.

Most organizations are good at efficiency, aka “reducing errors”, but not so good at discovering the future. Indeed, by only focusing on reducing errors, organizations hinder discovering the new. This is the type of inertia that organizations need to be overcome to innovate.

Until they develop a mindset of experimentation where failure isn’t punished, large organizations won’t innovate.