No matter the industry, hurdles to innovation exist. While the digital age has offered a sense of exponential change, organizations often struggle to achieve the transformations that emerging technologies and the deeply interconnected modern world make possible.
A new report by Columbia Business School’s Center on Global Brand Leadership examines a mix of some underlying challenges all businesses face in their efforts to innovate, including those specific to three core sectors of the global economy: agriculture, construction, and transportation. It also outlines strategies to help companies break down barriers to more innovative practices.
“Innovation Growth in the Lynchpin Industries,” developed with the support of Trimble, offers ideas to help spur innovation in the industries at the heart of providing food, shelter, and mobility — vital needs in all societies. Companies in these industries represent an approximate 10 percent contribution to the US GDP: agriculture (0.7 percent), construction (4 percent), and transportation (5.6 percent).
“Through background research and interviews with industry experts, it was clear that the mindset of leaders in these lynchpin industries has shifted,” notes Matthew Quint, the report’s author and director of the Center on Global Brand Leadership. “They are eager to push past the perception that they are slow to innovate and are seeking strategies to help them push past the barriers to innovation.”
Some roadblocks are common to all industries — including a “this is how we do things” mindset, fear of risk and change, and costs — but there are ways to overcome them. Modified language around innovation initiatives, for example, can change employee perceptions. “[One] organization has replaced the word pilot with pioneer, ”says Laura Furstenthal, a leader in McKinsey & Company’s innovation service line. “The subtle point is that when something doesn’t work, we won’t call it a failure but see it as a step, backed by the full intention to keep going forward.”
Within lynchpin and other industries, business leaders face a range of issues, including an aging workforce, regulatory regimes, ecosystem complexity, project uniqueness, and siloed data and decision-making. The strategies detailed in the center’s report can help them address such issues and create pathways to innovation.
For instance, an aging workforce has been a heavy burden for companies, as older employees may resist adoption of new technologies. By stressing that digital initiatives can create more efficient uses of information and resources, however, older generations buy in to the value and support they will get from such efforts.
Companies that embrace technology advancements can also generate employment interest among younger, digitally native workers. “At Trimble, we are working to adapt some of our tools, like our 3D modeling tool, SketchUp, to create a Minecraft-like experience so that we can excite the next generation into the potential of our industry,” says Chris Keating, senior vice president of Trimble Transporeon.
Such cultural transformations are vital in lynchpin and other industries. To help employees embrace innovation initiatives, the report highlights three change management areas: digital transformation, forecasting, and habit formation.
For the lynchpin industries, which operate in specific built environments, commitment to data collaboration and modeling can have an outsized impact.
“For innovations of built environments, it is hard to test lots of low-budget functional minimal viable products,” says David Rogers, author and an academic director in Executive Education at CBS. This is another part of the power of digital twins, as it lets firms try lots of illustrative MVPs. You can do so much testing in a virtual modeling environment in terms of design, environmental impact factors, and customer feedback that you can move forward with pilots in the tens or low hundreds of thousands of dollars with much more confidence.”
Further, interest in future forecasting is increasing, but many firms still struggle to fully examine possible futures, even within innovation initiatives. Citing an example in the transportation sector, Rita McGrath, author and an academic director in Executive Education at CBS, says, “Most of the current efforts on autonomous cars are only considering swapping the driver for a computer, without any other change to the current system. [There was] no consideration of changing the design of the vehicles and no consideration of the effect on the overall transportation system if people didn’t have to drive themselves.”
It is crucial for all companies across industries to conduct thought experiments, analyze industries that overlap with their own, and undergo test-and-learn research and experimentation to break down built-in assumptions and consider the ways in which innovation will change an industry sector as well as its societal impact.
Lynchpin industry leaders are aware of the need to adopt innovative technologies and smarter management practices: A 2022 McKinsey survey among construction and building executives asked respondents to rank their top two priorities among seven future-looking choices and 70 percent ranked “get smart and invest in innovation and R&D” as one of their top two choices — more than any other option.
“The findings of this report align with Trimble’s vision and our focus on some of society’s most vital sectors,” says Pete Large, senior vice president of strategy at Trimble. “There is tremendous potential in these industries to improve operational performance through innovations that increase precision, drive efficiencies, and expand access to real-time insights across connected workflows.”
Examining innovation challenges, and embracing strategies to overcome them, is crucial for not only lynchpin industries but organizations throughout the global economy. For industry executives, “Innovation Growth in the Lynchpin Industries” offers solid starting points in efforts to successfully navigate their companies and drive innovation.
