Culture of Innovation Is Best Medicine for Resilience

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Innovation is now the key focus for 74% of organizations in the Asia Pacific. And according to their decision-makers, a culture of innovation can help to build resilience against COVID-19 disruptions.  

These conclusions come from Microsoft’s latest study with IDC Asia/Pacific: “Culture of Innovation: Foundation for business resilience and economic recovery in the Asia Pacific.” The study sought the opinions of 3,312 business decision-makers and 3,495 workers across 15 markets in Asia Pacific within six months, before and since COVID-19.  

“As the saying goes, necessity is the mother of invention. We have witnessed first-hand how the wave of transformative change has swept across the region. This is no easy feat; organizations have challenges to overcome, and innovation is no longer a luxury — it has to form the core part of their DNA. It has become critical to adapt quickly and ensure business continuity and future relevance,” said Ahmed Mazhari, president of Microsoft Asia.

Part of the reason for this bullish attitude toward innovation is COVID-19; companies had no choice but to innovate as demand dropped off, and customers could only engage over digital channels.

“Doing so, they have learned it is not as hard as they had anticipated. Nearly half (48%) of organizations in the region now say they find it easier to drive innovation, compared to a quarter (27%) of them before COVID-19,” explained Sandra Ng, group vice president of Practice Group at IDC Asia/Pacific.

The study also introduced the culture of innovation framework, which spans the dimensions of people, process, data, and technology, to assess organizations’ approach to innovation.

Culture of Innovation Framework. Copyright: Microsoft Asia/IDC

“We first commissioned this research to gain a better understanding of the relationship between an organization’s culture of innovation and its ability to grow. We now see clearly that maturity in a culture of innovation also plays a key role in shoring it up against risks and economic headwinds and setting the path for recovery,” explained Mazhari.

Assessing organizational maturity for culture of innovation

The culture of innovation maturity framework captures organizations’ approach to innovation. Through the research, organizations’ performance was mapped against four dimensions (people, processes, data, and technology), with organizations grouped in four stages – traditionalist (stage 1), novice (stage 2), adaptor (stage 3), and leaders (stage 4). Leaders comprise of organizations that are the most mature in building a culture of innovation.

The study found that in six months, organizations in the Asia Pacific have matured in the culture of innovation by 11%, an indication that they have increased their ability to innovate.

Culture of Innovation Maturity (%) Copyright: Microsoft Asia/IDC

Since COVID-19, the study found a drop in leaders (68% to 36%) and other organizations (74% to 54%) that find innovation to be hard. The faster pace of digitization is also key to building more robust organizations. The study found that 87% of leaders will speed up digitization by launching initiatives, including digital products, payments, and e-commerce, as compared to 67% of other organizations, in response to the new reality.

Leaders are also further along in rethinking business models. Moving forward, leaders say they will focus on investing in technology infrastructure that is robust and allows scalability and flexibility, as well as upskilling and reskilling of their workforce to ensure business resilience and performance for the future.

“We see amongst leaders a constant appetite for growth and evolution. During COVID-19, 45% of them said they think their business model will lose its competitiveness in five years’ time, as compared to 30% of other organizations. This desire and urgency for continuous improvement through agility and adaptation to change will determine the success of businesses in this new normal,” said IDC’s Ng.

Focus on people and technology

Of the culture of innovation dimensions, people and technology were revealed to be the two foremost priorities for organizations in the next 12 months.

People and technology as the two focus areas for organizations in the Asia Pacific (%). Copyright: Microsoft Asia/IDC

“The current crisis has shown us how much business continuity and our future relevance depend on people being digitally ready,” said Mazhari.

“We describe it through tech intensity. Now, with every organization becoming a digital one, achieving success in transformation requires both the adoption of tools and technologies as well as own digital capabilities. A culture that encourages innovation and embraces digital opportunities is critical to prepare the workforce and organizations for current and future challenges.”

Culture of innovation best practices

Using the culture of innovation framework, the study revealed the best practices that organizations can adopt to progress across people, process, data, and technology.

Specifically, organizations are encouraged to:

1. Fortify resilience with technology

Strengthen the organization’s approach to digital transformation through resilient technologies allowing simplification, flexibility, and agility — cloud, artificial intelligence, and machine learning. At the same time, ensure that cybersecurity is infused into the organization’s digital footprint.

2. Invest in people’s capabilities and skills

Create an open and inclusive environment to attract the best and diverse talent. Integrate workplace innovation efforts that will be crucial to accelerate transformation, ensuring the right rewards and incentives to encourage innovation and upskilling to sustain the pace of innovation by unlocking people’s capabilities.

3. Leverage data to increase competitiveness

Capitalize on the value of data through developing new data-driven products and services as well as revenue streams for an organization’s competitiveness. Data-driven insights should be leveraged for enterprise-wide collaboration and decision-making to institute a knowledge-sharing culture.

4. Redesign processes to empower people to continuously drive innovation

Create a systematic approach to drive innovation – from ideation to commercialization and establish a centralized digital transformation budget, along with digital KPIs. Customer centricity should be at the heart of continuous improvements, and a feedback loop is necessary to capture learnings on an ongoing basis.

“People are the lifeblood of innovative organizations. Business leaders are recognizing the integral relationship between investing in the workforce and having a robust technological foundation and strategy – with 27% and 34% of organizations respectively prioritizing people and technology in the next 12 months,” said Mazhari.

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