Innovation Starts at the Top

Ask any CEO whether their company is innovative, and you’ll likely get an enthusiastic “Yes!” But dig a little deeper – look at their product pipeline, their openness to new ideas, and their track record of disruptive success – and the reality often tells a different story. This is the innovation illusion.

The term Innovation Illusion was the title of a 2017 book by Fredrik Erixon and Björn Weigel. This article is not a precis of the book (with which I am not familiar) but my take on the subject. It is only right to acknowledge the previous work.

I’ve written about innovation in some of my other posts, such as Balancing Innovation and Risk in Scaling SMEs, The Power of Inclusive Leadership: Building Teams that Drive Innovation and Responsible and Inclusive Leadership: The Foundation of an Innovative Growth Culture

The truth is that many companies think they are innovative simply because they have an R&D department or because they occasionally introduce new evolutions of products. But real innovation is not just about incremental updates or following industry trends – it requires a deep-rooted culture of experimentation, long-term thinking, and, most importantly, leadership that fosters risk-taking and creativity.

Many are bogged down by short-term financial pressures, rigid hierarchies, and a lack of genuine curiosity

Leaders and managers often think about innovation as shiny new widgets, but innovation should happen everywhere in a business. Numerous types of innovation need to be nurtured and encouraged. Is the business model still working? Can we improve by innovating our operational processes? Is our organisational structure still fit for purpose? Are our sales & customer success teams embracing change?.

Throughout my career, I’ve worked for and with companies that struggle to innovate despite believing they are forward-thinking. They mostly think they are innovative, but are suffering from the innovation illusion. Too many are bogged down by short-term financial pressures, rigid hierarchies, and a lack of genuine curiosity. They see innovation as a checkbox rather than a mindset. In contrast, the companies that truly innovate are those that embed experimentation into their DNA – those that encourage failure as part of the process and empower teams to explore ideas beyond the next quarterly report.

I’ve used the phrase “Innovate or die” in other articles. In an era of ever-rapid technology and commercial change, where AI and other technologies are expanding exponentially, companies that aren’t agile and innovative face extinction. Some are already dead and don’t even know it yet.

So what’s the difference between companies that think they innovate and those that actually do? Let’s break it down.

The Comfort of the Innovation Illusion: Why Some Companies Believe They Innovate

Many organisations fall into the trap of innovation theatre – they put on a good show, using the right buzzwords, hiring innovation consultants, or launching “innovation labs” that ultimately change nothing. Here’s why:

Confusing R&D with Innovation

Having an R&D team doesn’t automatically make a company innovative. Many firms invest heavily in research but fail to translate ideas into market-changing products. They might refine existing offerings but shy away from disruptive, high-risk innovations.

Companies obsessed with quarterly results rarely have the patience for real innovation

Short-Term Thinking Kills Long-Term Vision

Companies obsessed with quarterly results rarely have the patience for real innovation. Transformational ideas take time to develop, test, and refine. If leadership prioritises immediate financial performance over future breakthroughs, innovation stalls.

Hierarchies and Bureaucracy Block Change

Innovation thrives on collaboration and open communication. Yet in many companies, ideas are stifled by rigid hierarchies where decision-making is slow and risk-averse. Employees might have great ideas, but if there’s no clear path to execution or if middle management blocks progress, nothing changes.

Risk Aversion and Fear of Failure

True innovation involves trial and error. Companies that fear failure create an environment where employees are discouraged from experimenting. Instead of learning from mistakes, they play it safe, resulting in incremental improvements rather than breakthroughs.

No Clear Innovation Strategy, Just an Innovation Illusion

Many businesses have innovation initiatives without a strategic framework. Without clear goals, alignment with company objectives, and leadership support, these initiatives become side projects that fail to make an impact.

What Real Innovation Looks Like

Leaders invest in a long-term vision, even at the expense of short-term gains.

Genuinely innovative companies operate differently. They don’t just talk about innovation – they make it a fundamental part of their operations and culture. And here’s how:

Innovation is Led from the Top

In truly innovative companies, leadership actively supports and drives innovation. They don’t just demand new ideas from employees; they create an environment where experimentation is encouraged. Leaders invest in a long-term vision, even at the expense of short-term gains.

Take Apple under Steve Jobs or Amazon under Jeff Bezos – both companies took major risks (like the iPhone and AWS) because their leaders were committed to bold innovation, not just financial optimisation.

Failure is Seen as a Step Forward

Innovative companies understand that failure is an essential part of progress. Google’s approach – where projects like Google Glass or Wave failed but led to better products – illustrates this mindset. These companies analyse failures, learn from them, and move forward with improved ideas.

A Culture of Experimentation and Adaptability

Companies that innovate well give employees the freedom to experiment. This isn’t just about brainstorming sessions; it’s about actively testing and iterating on new concepts. For example, Tesla’s approach to continuously refining its software through over-the-air updates showcases a commitment to rapid innovation.

Cross-Functional Collaboration

True innovation often comes from unexpected intersections – when people from different disciplines collaborate to solve problems. Instead of siloed departments, the best companies encourage open exchange between engineering, marketing, sales, and design.

Long-Term Investment in Future Technologies

Innovators don’t just chase trends – they invest in the future. Amazon’s early investment in cloud computing and Dyson’s decades-long work on battery technology all illustrate the importance of forward-thinking investment.

The Cost of the Innovation Illusion: Why Pretending to Innovate is Dangerous

Companies that only pretend to innovate face serious risks:

• Loss of Market Relevance: Businesses that fail to disrupt themselves will eventually be disrupted by startups or competitors who do.
• Employee Disengagement: If employees see that “innovation” is just lip service, they stop bringing new ideas forward, and the culture stagnates.
• Missed Opportunities: While a company hesitates, competitors move forward. Nokia and Kodak are classic examples of companies that had innovative potential but failed to act in time.

Actions to Escape the Innovation Illusion

If your company recognises that its innovation efforts are more show than substance, here’s how to change that:

1. Innovation Vision, not Innovation Illusion

Stop thinking in quarters and start thinking in decades. Leaders must carve out resources and strategic focus for future-shaping ideas, not just short-term wins.

2. Empower Teams to Take Risks

Encourage employees to explore new ideas without fear of failure. Create an environment where experimentation is rewarded.

3. Flatten Hierarchies and Remove Barriers

Make it easy for ideas to move up the chain. If employees believe their suggestions will die in middle management, they won’t bother innovating.

4. Measure Innovation, Not Just Financials

Make sure you’re measuring the right things. Track metrics like the percentage of revenue from new products, time-to-market for innovations, or the number of pilot projects that move to full-scale implementation.

5. Learn from Failures

Instead of punishing failures, analyse them to uncover insights. Treat every failed project as a learning experience that informs the next attempt.

Final Thoughts: Innovate or Stagnate

Innovation isn’t about words – it’s about actions. It’s about leadership that fosters a culture of risk-taking, employees who are empowered to experiment, and a company that values long-term impact over short-term convenience.

Stop thinking in quarters and start thinking in decades.

The question isn’t whether a company claims to be innovative – the real question is whether it actually takes the steps necessary to be one. If your business is only paying lip service to innovation, it’s time to make a change. The companies that thrive are the ones willing to challenge themselves, take risks, and push boundaries.

Because in the end, innovation isn’t just about survival – it’s about defining the future.

Chris Mason MBA

Advisor – Leadership, Innovation & Strategy

Chris Mason is a seasoned leader with over 40 years in the tech industry, recognized for his expertise in strategy, innovation, and team empowerment. As the former General Manager of an engineering software house, he guided the company and its teams through the peaks and troughs. And helped create some of the best vibration and acoustics analysis solutions in the world through strategic innovation and an inclusive approach to leadership.

Chris holds an Executive MBA from the University of Winchester, where his research on “Barriers to Open Innovation for Technology SMEs” reflected his passion for fostering collaboration and driving change. Beyond corporate roles, he is a trusted strategic advisor and non-executive director, helping startups and SMEs unlock potential through leadership development, digital/AI adoption and business strategy. His goal is to transform ideas into impactful realities, empowering teams and businesses to thrive in competitive landscapes.