The messages about innovating today are becoming thematic, yet it doesn't remove the fact that innovation is very hard to capture. Recent research at MIT talks about how our environment is forcing a different perspective on innovation where it's necessary to think broadly, master intervention, orchestrate collaboration, manage risk and have a different mindset.
These MIT experts deliver their view on how to manage those five steps.
Business leaders increasingly find themselves in unfamiliar territory marked by high levels of uncertainty and instability, a slowing global economy, and shifting political realities. Global economic policy uncertainty has tripled since 2000 and continues to accelerate. Our own research shows that this systemic uncertainty feeds into corporate decision-making. Companies are more exposed than ever to economic and political feedback, and their performance swings are increasingly due to noncompetitive effects. This phenomenon affects players across entire industries and, in the extreme, can threaten their very survival.
Take the U.S. retail industry, for example. Over the last several decades, companies like Walmart, The Gap Inc., and many others successfully played a global cost arbitrage game by taking advantage of labor cost differences, low trade barriers, and IT advances. As we know today, such sourcing strategies have unleashed economic, social, and political feedback effects, culminating in strong political backlash. Retailers now face the possibility of a border adjustment tax, which, if implemented, could wipe out a substantial proportion of the industry’s profits.
The examples are manifold and not limited to the United States. Consider utilities in Europe, where companies underestimated the social demand and resulting political support for renewable energy. The top 10 European energy utilities lost 40% of their market value since their peak in 2007 — the top 3 lost as much as 75%.
Political and macroeconomic forces are shaping the business environment as never before. The implications for corporate strategy and leadership are profound.
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