22nd January 2015

Global Firms Face Innovation Bottleneck Through Lack of Communication Skills

Global firms could fail to capitalize on investments to boost innovation due to confidence issues in communication skills, according to a study by the Economist Intelligence Unit.

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Global Firms Face Innovation Bottleneck Through Lack of Communication Skills

The report shows a drop in confidence when employees share ideas outside of their departments and collaborate with colleagues in other countries, departments and hierarchies.

The study – The innovative company: How multinationals unleash their creative potential – found respondents’ confidence levels drop from 96% when communicating with colleagues in their own departments to 72% with colleagues in other countries. Some 87% of companies agreed cross-cultural collaboration produces innovative ideas, but half said cross-cultural differences make it harder to share ideas with colleagues in different countries.

“You keep hearing the phrase ‘innovate or die’,” said Peter Burman, President of EF Corporate Solutions. “CEOs know this is true and say innovation is their top priority, but clearly they face a bottleneck in innovation as employees lack confidence communicating with colleagues in other countries. Companies have to rethink the skills people need to be confident in sharing ideas across hierarchies, departments and countries.”

The study found 81% of 350 respondents said improving cross-border communication skills in staff would boost their firms’ ability to innovate. Yet nearly 30% of firms surveyed concede their spending here is inadequate or non-existent. The study found while CEOs use idea-sharing processes a lot (95%), engagement tails off outside the c-suite, with managers (78%) and department heads (77%) less likely to use them. This casts doubt on whether formal processes can involve everyone in innovation.

Innovation tops global business priorities

The study found global firms are staking their futures on their ability to innovate. Creating new products and services was a top-three priority for 54% of survey respondents, more important than cutting costs (42%) or investing in talent (33%).

Over three-quarters (76%) of firms plan to increase their investment in innovation further over the coming three years, with almost one-third (31%) set to increase it significantly. More than two-thirds (71%) have ramped up investment in innovation over the last three years, and a quarter (25%) have done so significantly (defined as increasing investment by 20% or more).

Whose responsibility is it anyway?

“Two key skills are highlighted as being central to the development of an innovative corporate culture – those of creativity and international communication,” added Burman. “Governments and business differ in who they believe is responsible for this training.”

Some 55% of executives said it was solely their responsibility to provide training to foster innovation. And more than one-third (37%) said skills provided in their countries are not adequate to improve the ability of the workforce to innovate.

Yet 75% of government officials surveyed said it is not their job to address the creativity skills gap in corporations, leaving this responsibility to the companies themselves. The public officials see the main problem as making adults more aware of the training that is already on offer.

“Governments don’t feel responsible for training the existing workforce,” said Claes Ceder, executive vice president at EF Corporate Solutions. “But they know they have to address the communication-skills gap to ensure students about to graduate are more innovation-ready for tomorrow’s job market. The good news is there is a lot that can be done in a relatively short period of time to address this, but governments have to be prepared to act now.”

Lack of innovation culture

Firms aspire to create a culture of experimentation, but often fail to follow through. In the survey, 30% of respondents said their firms lack a culture that encourages new ideas from everyone; 30% said their companies lack a culture that allows for failure; and 34% said their companies do not allow time for employees to experiment on their own projects. Many companies have formal processes to gather ideas, but these are often ineffective.

The study found that a creative culture is one in which each employee feels encouraged to suggest ideas, and in which there is a high tolerance of failure. But many companies do not take steps to ensure those conditions are present. In an interview for the study, Tammy Lowry, Global Head of Learning and Organisational Effectiveness at Roche, said: “Unfortunately, much training focuses on making ideas ‘right and wrong’ through testing, so that individuals may lose that sense of confidence even as their knowledge increases.”

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