Businesses are not doing enough to foster innovation

Barry Salzberg on the role business can play in fostering new ideas to drive economic growth

American economist and Harvard Business School professor Theodore Levitt wrote, “Just as energy is the basis of life itself, and ideas the source of innovation,so is innovation the vital spark of all human change, improvement, and progress.”

And it’s this intersection of innovation, society, and business that’s the focus of the Deloitte Touche Tohmatsu Limited 2012 Millennial Survey, the results of which were launched last week at the World Economic Forum in Davos, Switzerland.

I believe that innovation at the institutional level is needed to sufficiently shift an organization’s mindset to allow new ideas to truly emerge and thrive. While our current business leaders can debate how and where to innovate, it’s clear from the survey how much importance our future leaders place on innovation—not just as a driver of business growth but also as a catalyst for solving society’s most pressing problems.

Seventy-eight percent of Millennials believe innovation is essential for business growth. However, as the global economic crisis enters its sixth year, just 26 percent feel that organizations are currently doing enough to encourage practices that foster innovation. Furthermore, 71 percent of this next generation of business leaders believe that innovation by business directly helps improve society, and 65 percent feel their own employer’s activities benefit society in some way. Interestingly, 95 percent of respondents said it is acceptable for business to make a profit from an innovation that benefits society.

Deloitte surveyed almost 5,000 Millennials from 18 countries, and almost half of the respondents (45 percent) said the responsibility to drive innovation falls to the business community, compared to 18 percent and 17 percent who feel that the role is best filled by government and academic bodies, respectively.

The big question faced by businesses today is how to foster entrepreneurial innovation despite the low-growth environment many countries are still experiencing. (And this is also the subject of a panel discussion I participated in last week, as part of the World Economic Forum’s public program.) On this topic, Apple co-founder and former CEO Steve Jobs said, “Innovation has nothing to do with how many R&D (research and development) dollars you have…. It’s about the people you have, how you’re led, and how much you get it.”

Innovation is not only a driver for business growth and improvement of society but also for talent recruitment and retention, according to the results of the survey. Two-thirds of Millennials said innovation is a key factor when choosing an employer. Unsurprisingly, Millennials want to work for dynamic organizations, where they will have the opportunity to be part of something important, and be encouraged to contribute new ideas. This is particularly relevant, considering that Millennials are forecast to make up 75 percent of the world’s workforce by 2025.

Real opportunity exists for organizations to step up and create the conditions and commitment needed to encourage and foster innovation in their work environments. And there’s a tremendous upside if we get this right: we can better retain talent, remain more competitive into the future, and more positively affect society.

Author: Is the Global CEO of Deloitte Touche Tohmatsu Limited

Image: The Deloitte InnovationLive wall onsite at Davos captured inputs via social media from people all over the world, on the topic of innovation and its impact on business and society.