Executive summary:

Innovation is essential for the survival of the modern organisation, but that doesn’t mean it’s easy for everybody. Some organisations have entrenched practices, while others lack the necessary capital or in-house talent to invest in business transformation. In this article, we’re going to take a closer look at some of the biggest reasons why companies don’t innovate – and what they can do to turn things around.

• Some organisations simply pay lip service to the idea of innovation, when they should be giving their employees dedicated time for pet projects.
• 3M and Google allow their employees to spend 15% and 20% of their week dedicated to innovation.
• Failure is often penalised when it comes to innovation, creating fear among employees and increasing the likelihood they will stick to what is tried and true.
• A recent McKinsey survey revealed that 85% of innovators think fear holds back innovation. 90% worry their organisation isn’t doing anything to address it.
• Lack of capital is not a hard barrier to innovation like some may think – partnerships and ecosystems can also help an organisation expand their horizons.
• Some organisations can allocate huge resources on innovations, but do not work to ensure their innovations projects clearly align with customer needs.
• The silo mentality is a huge barrier to effective innovation – when teams do not clearly communicate, projects may stop aligning with strategic goals.
• A lack of talent can impede innovation efforts, but with such intense competition in the jobs market, organisations must focus on upskilling their existing workforce.
• The talent shortage is felt most acutely around AI skills: a survey by SoftwareOne found 53% of companies lack the AI skills they need to leverage innovations. 

Innovation is not a passive process – it’s something that requires deliberate and structured efforts to execute successfully. This means systemic evolution of a company’s innovation strategies to ensure they align with business goals. While innovation may mean different things to different companies, the common thread is progress. Failure to move forwards could cost companies their relevance, and possibly their right to exist.

Innovation is the lifeblood of every successful business. It’s what lets companies stay ahead of the curve, stand out from the pack, and meet the ever-evolving needs of their customers. But despite how crucial innovation is, many companies today just can’t seem to get it right. They’re stuck in their old ways, afraid to take risks, and just keep doing the same thing over and over again – even as the world changes around them. Over time, stagnation sets in, their market share dwindles, and they may even face their demise. NTT Data’s Innovation Index reveals that, while 96% of executives consider innovation a primary source of growth for their enterprise, only 11% actually manage to bring breakthrough innovations to market.

So why is this happening? Why are so many organisations struggling to innovate, even when they know how important it is? Well, that’s exactly what we’re going to dive into in this article. We’ll explore some of the biggest roadblocks that are holding companies back from being the powerhouses of transformation they need to be, including a fear of failure, lack of resources, talent shortages, and resistance to change. More importantly, we will offer practical solutions to overcome these barriers, providing a roadmap for organisations seeking to revitalise their innovation capabilities and secure their position in an increasingly competitive business landscape.

“When an organisation experiences success by adhering to certain ways of working, those approaches firm up and become difficult to change. But what once led to success may be exactly what is now getting in the way of innovation.”

Erik Roth, founder and leader of McKinsey’s growth & innovation practice

1. Resistance to change

The longer you spend in the game, the more difficult it can sometimes be to adapt to new ideas and approaches.

One of the biggest hurdles companies face when trying to innovate is a deep-rooted resistance to change. This phenomenon is especially pronounced in established and long-running companies, where organisational culture can sometimes actively work against embracing novel ideas and transformative initiatives. Many organisations find comfort in their established routines, demonstrating a clear preference for maintaining existing systems rather than embracing new possibilities. Fresh ideas often struggle to gain a foothold or fizzle out before reaching their full potential. Changes – if there are any at all – tend to be modest, incremental tweaks designed to maintain the status quo rather than upend it.

Often, the problem is perpetuated by the mindsets of those at the very top. A 2024 survey conducted by software company Orgvue found that 38% of leaders would sooner outright quit their jobs than head up another change programme. However, it’s not just leaders who are opposed to change. PwC’s Global Workforce Hopes and Fears Survey 2024 reveals that as many as 53% of workers feel like there is too much change happening at once, while 44% don’t understand why things need to change at all and believe that the former approach was working just fine.

Of course, it’s understandable to prefer stability – the trouble is, it doesn’t always make good business sense. Frankly, caution can become a liability when confronted with major disruptions like the arrival of generative AI. Companies adhering too rigidly to familiar patterns find themselves increasingly unable to adapt to rapidly evolving market conditions. “When an organisation experiences success by adhering to certain ways of working, those approaches firm up and become difficult to change,” explains Erik Roth, the founder and leader of McKinsey’s growth & innovation practice. “But what once led to success may be exactly what is now getting in the way of innovation.”

So what drives this pervasive resistance to change? Well, a portion of the answer can be found in current corporate leadership demographics. In 2024, the CEO roster of the Fortune 500 was dominated by middle-aged (or older) white men, with women helming a mere 52 companies. Strikingly, only eight were led by black people. Many of these seasoned leaders, while accomplished, are intrinsically tied to legacy mindsets. They gravitate toward the business models and strategies that powered their rise, viewing a hasty pivot as an existential gamble. Loath to jeopardise the enterprise, they postpone decisive action, often until the opportunity to adapt has passed them by.

Further complicating matters is the substantial investment that established companies typically make in their infrastructure and methodologies over decades of operation. For many CEOs, acknowledging that these systems have become outdated is tantamount to admitting personal failure or inviting scrutiny of their leadership capabilities. You could say: it isn’t just business, it’s personal. Thus, they perceive change as a threat to their professional standing, which makes for a powerful disincentive against transformative change.

The power of reverse mentoring

To tackle resistance to change endemic in many organisations, leaders must first take a hard look in the mirror. By conducting an honest assessment of their own attitudes and behaviours, they can identify blind spots clouding their judgement and lay the foundation for change. A recent study featured in the Journal of Creative Behavior found that employees led by emotionally intelligent supervisors demonstrated higher levels of creativity and innovation. Attuned to the shifting demands of today’s workplace, self-aware leaders deliberately move away from practices that once dominated corporate culture. They recognise that top-down decision making, micromanagement, and inflexible thinking are innovation killers that drain teams of trust and motivation. Instead, they prioritise lifelong learning, authenticity, and fostering a sense of purpose and integrity.

One of the most effective ways for leaders to strengthen their leadership skills is through reverse mentoring. This fresh take on the classic mentorship model flips the script by pairing a senior executive with a junior colleague who acts as their mentor. These unconventional partnerships facilitate a two-way transfer of knowledge, with the younger partner schooling the elder on emerging trends and technologies while gaining valuable leadership insights in return. This enables seasoned leaders to stay current and become more attuned to the challenges faced by their younger subordinates. Reverse mentoring also serves as a powerful antidote to the generational gap afflicting many organisations. By promoting knowledge transfer and mutual understanding across age divides, it can help cultivate a more inclusive culture that keeps diverse talent in the fold.

Of course, some old-school leaders may bristle at the notion of being mentored by a subordinate. Bruised egos, generational biases, and divergent communication styles can all throw up roadblocks to reverse mentoring success. But with training in multigenerational collaboration, active listening, and constructive feedback, these hurdles can be overcome. The key is to focus on the strengths each generation brings to the table. Ultimately, for companies to break free from the inertia of “business as usual” and drive meaningful innovation, their leaders must model the change they wish to see. Engaging in reverse mentoring sends a powerful message that the status quo is no longer sacred. It signals a commitment to bridging generational divides and leveraging the unique talents of every employee – regardless of age or tenure.

2. The innovation illusion

You can’t just pay lip service to the idea of innovation – it takes time, effort, and a structured approach to make it a reality.

Let’s take a step back for a second and address the elephant in the room: innovation has become a bit of a buzzword in the corporate world lately. Executives often passionately rally their teams to think outside the box, push boundaries, and strive for groundbreaking ideas that will disrupt industries and transform their businesses. Yet, despite this rhetoric, the reality in many workplaces is a far cry from this idealised vision. “Our research shows that leadership wants innovation, but they often don’t create the conditions for its successful execution,” says Alex Morris, a partner in McKinsey’s Toronto office. “That produces employee frustration and, eventually, apathy. People are not energised to work on innovation projects because they see new ideas smothered regularly.”

Employees often find themselves trapped in back-to-back meetings that consume entire days, leaving little room for meaningful thought or creativity. They’re expected to deliver results quickly against established metrics, with timelines that prioritise speed over exploration. While experimentation is theoretically encouraged, it’s practically impossible when every hour must be accounted for and justified. Meanwhile, existing organisational structures are set up such that new ideas are actively resisted. Multi-layered approval processes, risk-averse middle management, and outdated policies create significant friction for anyone attempting to challenge the status quo.

Organisations often express concern about disrupting their core customer base, fearing that innovation may alienate their loyal clientele. However, this prevalent mindset fails to recognise that it really can be pursued in parallel with the core business. “Not everybody has to be innovating every day,” argues Laura Furstenthal, a leader within McKinsey’s global healthcare practice. “Some employees can focus on the core business while those focused on innovation can perhaps try new things with abbreviated approval processes with a subset of customers.”

The cost of failing to make room for innovation can be far greater than most leaders realise. When employees with brilliant ideas keep them to themselves because sharing them seems futile, organisations lose opportunities for growth and competitive advantage. Teams naturally gravitate toward safe, proven approaches rather than exploring potentially superior alternatives. New solutions that could dramatically improve efficiency or customer experience remain undiscovered while established processes persist simply because “that’s how we’ve always done it.” The long-term consequences are equally predictable: declining employee engagement as creative thinkers grow frustrated, missed business opportunities as competitors move more quickly, and eventual irrelevance as markets evolve while the organisation stands still.

Dedicated innovation time

To truly demonstrate their commitment to innovation, companies must stop treating it as something to squeeze in between “real work” and instead recognise it as an essential ingredient deserving of its own time, space, and resources. To achieve this, companies need to fundamentally rethink how they organise work and possibly even their own definition of success. Rather than expecting employees to constantly churn out deliverables and meet tight deadlines, organisations should carve out dedicated time for creative thinking and experimentation. This could take the form of regular “innovation days” where employees are encouraged to step away from their day-to-day tasks and focus solely on generating and developing new ideas.

Another key aspect of fostering innovation is recognising that great ideas can come from anywhere within the organisation – not just from traditional R&D teams or senior leadership. When people with different disciplinary backgrounds, market experiences, or technical specialties interact around complex problems, they often generate insights that wouldn’t have emerged within homogeneous groups. Forward-thinking organisations deliberately engineer these collisions. They create cross-functional project teams, rotate employees through different departments, and establish physical and virtual spaces where people can share observations and build on each other’s expertise. These exchanges allow technical specialists to gain customer insights they might otherwise miss and customer-facing teams to understand technological possibilities they wouldn’t normally encounter.

“Leadership wants innovation, but they often don’t create the conditions for its successful execution. That produces employee frustration and, eventually, apathy.”

Alex Morris, a partner in McKinsey’s Toronto office

The companies most successful at sustained innovation build these principles into their operational DNA rather than treating them as special initiatives. At 3M, the company best known as the maker of Post-It Notes and disposable N95 masks, employees are encouraged to dedicate 15% of their time at work to experimentation and pet projects. A similar rule is also implemented at Google, where employees can spend up to 20% of their time working on projects that interest them. Software company Atlassian, on the other hand, holds a so-called ShipIt Day once every quarter, which allows employees to put all of their regular responsibilities on hold and work on anything that they like for 24 hours. At the end of the day, the employees need to present the products of their work to their colleagues, and the ideas that receive the strongest response are taken to the next stage of development.

3. The fear factor

Don’t let perfect be the enemy of good, or stand in the way of your innovation ambitions – failure is a normal part of the journey towards change.

At its core, innovation is a journey of trial and error. Every breakthrough we celebrate today stands upon a foundation of experiments, adjustments, and yes – failures that taught valuable lessons. Yet herein lies a pervasive disconnect in modern organisations: while innovation features prominently in mission statements and corporate values, the operational reality often tells a different story. Employees quickly learn to read between the lines. When a colleague’s unsuccessful initiative leads to diminished standing or when management’s enthusiasm cools after a project falls short, the message becomes clear without a word being spoken: failure carries consequences. This unspoken understanding creates a potent undercurrent that shapes behaviour far more than any rhetoric about innovation.

Creative thinking requires vulnerability – the willingness to propose ideas that might not work. When self-preservation instincts activate, this vulnerability becomes too costly. Team members begin calculating risk differently, gravitating toward safer approaches that won’t threaten their standing. This safety-first mentality directly contradicts the iterative nature of innovation. After all, true progress almost never emerges fully-formed on the first attempt. Instead, it develops through cycles of implementation, assessment, and refinement.

When perfection becomes the implicit expectation, teams lose the freedom to move through these necessary stages. The predictable result is a preference for established methods – regardless of their limitations – over unproven alternatives that might ultimately prove superior. A 2022 poll conducted by McKinsey revealed that 85% of innovation practitioners agree that fear holds back innovation efforts. However, only about 25% of organisations actually understand this fear, and 90% aren’t doing anything to address it.

Perhaps most damaging is how fear reshapes communication patterns. In environments where failure is penalised, employees often hesitate to raise concerns, question assumptions, or acknowledge obstacles. This breakdown in honest dialogue prevents early course correction and allows problems to worsen unchecked. The organisation loses access to its most valuable resources – the collective intelligence and perspectives of its people – precisely when it needs them most. The cumulative effect creates a self-reinforcing cycle. Caution leads to missed opportunities, which reinforces the perception that staying the course is safest, which in turn further discourages risk-taking. Breaking free requires acknowledging that meaningful innovation and zero tolerance for setbacks cannot coexist in the same organisational culture.

How to conquer fear

So, what can companies do to help employees overcome their fear of failure? First, leaders must actively foster a culture of psychological safety, where employees feel empowered to speak up, challenge the status quo, and propose unconventional solutions without fear of repercussions. This requires a shift in mindset from leaders themselves, who must model the behaviour they wish to see by openly seeking out diverse perspectives, asking probing questions, and rewarding those who bring fresh thinking to the table. Successful innovators intrinsically understand that failure is an entirely normal part of the creative process, and that it can take multiple swings at a breakthrough idea to get it right. Rather than punishing or stigmatising failure, they reframe it as a valuable learning opportunity and encourage employees to view setbacks as stepping stones on the path to progress.

Of course, this doesn’t mean abandoning standards or celebrating failure for its own sake. Rather, it means distinguishing between failures of execution (which may indeed reflect performance issues) and failures of exploration (which represent valuable data points in the innovation journey). When a promising experiment doesn’t yield the expected results, the focus should shift to what was learned rather than who was responsible. “How do you reward effort and risk-taking and good execution, and not always outcomes?”, asks Alphabet’s chief executive Sundar Pichai. “It’s easy to think you should reward outcomes. But then people start gaming it, right? People take conservative things in which you will [easily] get a good outcome.”

X, Alphabet’s semi-secret research facility focused on developing breakthrough technologies, has taken a rather unique approach to this issue. Contrary to conventional practice, the company has instituted a formal reward system for teams who recognise when their projects have reached dead ends. Rather than clinging to failing initiatives, team members receive actual bonuses for acknowledging when a project has failed and needs to be terminated. But the process doesn’t end with acknowledging failure. Teams are expected to conduct thorough postmortems, extracting and documenting valuable insights gained through their unsuccessful ventures. These lessons become intellectual assets that inform future projects, ensuring that even failed experiments contribute meaningfully to the organisation’s knowledge base.

4. Innovation without direction

You can’t just do ‘innovation theatre’ – you need to ensure what you do actually contributes meaningfully towards business strategies.

To be sure, the mere act of generating creative ideas is only the first step in the innovation journey – and usually the easiest one, too. The more significant challenge lies in ensuring innovations are grounded in reality, implementable, and address actual needs. This reality is why establishing a clear direction is essential for identifying valuable innovations that can genuinely drive organisational success. Companies operating without well-articulated goals or a coherent vision frequently discover their innovation efforts become unfocused and ineffective. This strategic vacuum typically results in scattered initiatives that consume significant resources while failing to deliver meaningful impact on market position or business growth.

The popular notion that innovation thrives in completely unstructured environments – where companies support numerous unrelated initiatives simultaneously hoping some will succeed – frequently leads to disappointing outcomes. This undisciplined approach to innovation, where quantity is prioritised over strategic fit, seldom generates substantial returns. Rather than investing in disconnected projects, successful innovation requires deliberate alignment with strategic objectives. In other words, the company’s innovation strategy must be clearly linked to its overall business strategy.

Many organisations have fallen into the trap of simply copying trending innovation methodologies that worked for others. Following the latest business fashion, they establish innovation labs, incubators, or crowdsourcing platforms – you know the type – that frequently amount to glorified suggestion boxes rather than genuine engines of transformation. By prioritising innovation theater over strategic substance, these organisations achieve predictably inconsistent results, discovering that borrowed frameworks rarely deliver without thoughtful integration into company-specific contexts.

Know what you want

To overcome this hurdle and pave the way for meaningful progress, it’s crucial for leaders to set concrete, coherent, and communicative goals. They must take the time to carefully craft a comprehensive plan that aligns seamlessly with their organisation’s overarching objectives. By ensuring that innovation initiatives are in lockstep with the company’s broader strategic goals, leaders can steer their teams towards outcomes that not only drive growth but also deliver tangible value to customers. “As a leader, have a clear understanding of what you are trying to accomplish,” says Francisco Ramirez, chief executive of logistics fulfillment company The Ace Group. “If your goal is to boost productivity and efficiency, focus on the tools that will assist in harnessing this transformation. Explain in detail to your team members what is the objective so they are not afraid to come on board.”

Leaders should also broaden their definition of what constitutes valuable innovation. While disruptive breakthroughs certainly represent one form of innovation, they aren’t the only path forward. Innovation can also manifest as a process of steady improvement, and by reframing it as a series of incremental steps that build upon existing offerings, leaders can make it much easier for their teams to reach their goals. Instead of trying to come up with “the next big thing”, they should encourage their teams to collaborate on identifying practical, customer-driven enhancements, no matter how small they may seem. This not only increases the likelihood of developing solutions that resonate with the market but also helps to build a strong foundation for long-term success.

5. Lack of capital

No money? Not a problem. There are no shortage of ways to access the world’s top innovators, ranging from strategic partnerships to ecosystems.

Many companies, particularly those in traditional sectors, often find themselves constrained by limited financial resources in their pursuit of innovation. This is especially true when it concerns radical innovation, which involves the development of entirely new technologies, products, or business models. Due to its transformative nature, it requires substantial investments in research and development, infrastructure, and specialised expertise. Without adequate funding, companies often struggle to bring their most innovative ideas to fruition, leaving potentially game-changing concepts on the drawing board.

The challenge is compounded by the fact that the returns on investment for radical innovation can be difficult to predict and may take years to materialise. This uncertainty can make it challenging for companies to justify the upfront costs, especially when faced with pressure from stakeholders to prioritise short-term profitability over long-term, high-risk endeavors. This can also have a ripple effect on a company’s ability to attract and retain top talent. Innovative thinkers and skilled professionals may be drawn to better-resourced competitors or startups that can offer more opportunities for groundbreaking work and personal growth.

Find the right partner

In the face of limited funding for innovation, companies must be clever in their approach to achieving their goals. One effective solution is to look beyond the confines of their own organisation and tap into the wealth of talent and expertise that exists in the broader ecosystem. Partnering with leaders and early movers in relevant fields can be a powerful way to accelerate innovation and gain a competitive edge. By collaborating with research institutes, universities, and startups, companies can access cutting-edge knowledge, skills, and resources that may not be available in-house – and often at a fraction of the cost too.

In addition to finding partners within their own industry, forward-thinking companies are also increasingly looking beyond the boundaries of their respective fields to find innovation opportunities. By partnering with organisations possessing complementary expertise from entirely different sectors, companies can leverage highly refined capabilities without shouldering the full development costs or giving their direct competitors an unwanted advantage. These unexpected alliances frequently reveal overlooked opportunities and provide crucial support during the implementation phase – often the most challenging aspect of innovation initiatives.

This trend of cross-industry collaboration is gaining momentum across the business landscape. For instance, a life science company might partner with a tech firm to develop a groundbreaking digital health platform that leverages AI and big data analytics to improve patient outcomes. Similarly, an automotive manufacturer could collaborate with a software company to create a wholly differentiated infotainment system. These partnerships go beyond mere knowledge-sharing; they enable companies to unlock new value for customers and together reach breakthroughs that neither industry could achieve on its own.

6. Disconnection from customer needs

You might find you’ve wasted a lot of time if your innovators are out of sync with the actual needs of your customer base.

It’s easy to get caught up in the excitement of a new concept, believing that its sheer brilliance will be enough to propel it to success. But the reality is that even the most ingenious ideas can fall flat if they fail to resonate with the target audience – for example, Nintendo’s infamous successor to the Wii, the Wii U. To truly transform an idea into a profitable product and deliver a stellar customer experience, businesses must have a deep understanding of their customers’ needs, preferences, and pain points.

Gathering customer feedback is often seen as a daunting and expensive task, causing many companies to shy away from it. It requires significant investments of time and money, and the prospect of inviting criticism can be unnerving. After all, the more you ask for opinions, the more you open yourself up to criticism. Your inbox quickly fills with complaints, some from perpetually dissatisfied individuals who criticise everything. However, amidst the noise, there are often valuable nuggets of wisdom – insights into where your customer service missed the mark or how you can improve your product.

Some executives fall into the trap of believing they know their customers better than they know themselves. They assume that their expertise and vision negate the need for external input. However, this is a dangerous illusion. When you’ve spent countless hours immersed in every aspect of development, your perspective narrows dramatically. You lose the ability to see your creation in the same way an outsider will. Customers provide the essential wide-angle view. Their unfiltered reactions often reveal blind spots that could determine whether your business thrives or collapses. 

At the end of the day, it’s the customers who hold the power. They are the ones who will decide whether your product is worth their hard-earned money. Ignoring their opinions is a surefire way to create something that misses the mark. You can have the most technically advanced, beautifully designed product in the world, but if it doesn’t solve a real problem or meet a genuine need, it’s unlikely to gain traction.

Tapping into the pulse of the consumer

By analysing consumer feedback and taking decisive action based on their input, companies can fuel innovation, deliver unparalleled value, and cultivate a loyal customer base that will stand the test of time. In today’s digital age, there are myriad sources from which businesses can glean valuable information about their target audience. Online reviews offer a candid glimpse into the customer experience, highlighting both the strengths and weaknesses of a product. However, these tend to offer retroactive insights. Analytics and data science, derived from websites and customer purchase activity, can uncover hidden patterns and trends that might otherwise go unnoticed. 

Surveys, though often met with skepticism due to low response rates, have the potential to surface game-changing testimonials that could reshape a brand’s trajectory. Social media can also serve as a powerful listening tool, allowing companies to engage in real-time conversations and gather unfiltered opinions. Case studies and focus groups – while having a small sample size – can offer a deep dive into the nuances of customer needs and preferences, offering a level of detail that can’t be captured through quantitative data alone.

But gathering feedback is only the beginning. To truly harness the power of customer insight, companies must be willing to take bold, decisive action. This means being nimble and responsive, ready to pivot and iterate at a moment’s notice. It requires a willingness to challenge long-held assumptions, to experiment with new ideas, and to embrace change as an opportunity rather than a threat. Implementing customer insights may involve adding new features or functionality to a product based on user requests, streamlining the user experience to eliminate friction points, or rethinking pricing strategies to better align with customer expectations. The key is to approach each piece of feedback as a springboard for innovation, a chance to create something truly exceptional that sets the brand apart from the competition.

Ultimately, customer insight is not a one-and-done proposition. It is an ongoing, iterative process that requires a commitment to continuous learning and improvement. It means being attuned to the ever-shifting landscape of customer needs and preferences, and being ready to adapt to them. It demands a customer-centric mindset that places the user at the heart of every decision, from product design to marketing to customer service.

“It’s critically important to have an end-to-end model, from idea through to full-scale. Employees from the entire value chain should be present throughout the innovation process, whether on the working teams or in advisory roles.”

Lauren Furstenthal, senior partner at McKinsey

7. Silo mentality

It may not matter how many resources you are dedicating to innovation if your teams aren’t communicating properly with each other.

One of the biggest barriers to innovation – particularly at bigger or older companies – is the silo mentality. This term denotes when individual departments develop tunnel vision, causing them to over-focus on their own projects and lose track of the wider organisation’s strategic goals. When the silo mentality becomes entrenched at an organisation, teams tend to work in isolation, causing a major unnecessary drag on the company’s bottom line and squandering its innovative potential. 

When the blinders go up, teams can easily lose sight of how their work interrelates with the broader goals of the company. A software developer could spend entire months plugging away at a new feature only to learn upon completion that it doesn’t fit within the company’s monetisation strategy. A member of senior leadership, faced with the reality of restructuring, may choose to lay off staff with little awareness of how their absence will affect the core business. If these various organisational components do not communicate regularly, then misalignment is inevitable. This leads to delayed projects, missed opportunities, and a palpable disconnect with the needs of the customers.

Picture it like this: you’re an energy company, and you have several individual innovation hubs dotted around the world, all working on individual projects intended to bolster some aspect or another of the company’s green transformation. However, you have failed to implement mechanisms and incentives for intentional communication between these teams. Even though you have all the talent you need, suddenly you find yourself with two teams in different locations producing largely identical hydrogen fuel cells. Were these teams more thoughtfully coordinated or able to actively collaborate, the end result may have come about sooner, or an appreciably superior innovation may have emerged.

The silo mentality can also wreak havoc on the overall coherence of an innovation initiative. Without a unified approach and no incentive to communicate, different teams could pull the company in directions that are fundamentally at odds with one another. That’s why it is crucial to ensure that business goals are translated into lower-level strategies for different functions, and that conscious effort is made to keep everybody motivated and on the same page.

Tearing down barriers

The way to break the silo mentality is simple in theory: implement structures that actively counteract it. In practice, it’s a bit more complex. For innovation management, the structures should aim to make everybody an active participant in communicating and maintaining wider strategic goals. “It’s critically important to have an end-to-end model, from idea through to full-scale. Employees from the entire value chain should be present throughout the innovation process, whether on the working teams or in advisory roles,” explains Lauren Furstenthal, senior partner at McKinsey. “Having opportunities to rotate into the innovation centre or into sales and marketing roles also helps create healthy cultures by creating more interaction.”

There are several key measures an organisation can implement to ensure that the silo mentality does not emerge. Perhaps most obviously, all participants must regularly seek input and feedback on projects. Engaging and connecting regularly with peers – not only those working directly on the project, but also in adjacent departments – is invaluable for gaining diverse perspectives. Having a wider set of opinions will help teams better understand the actual impact their innovation will have. For similar reasons, you should seek to encourage the formation of cross-functional teams for said projects. In addition to bringing diverse skills and perspectives to the table, it erodes the barriers that form between departments that emerge when a silo mentality sets in.

Clear and regular communication of organisational strategy is another must. By actively promoting what your company is looking to accomplish, innovators are less likely to develop tunnel vision and lose track in pursuit of their pet projects. This is kept in check through leadership, and so it is essential your project managers have established routines for scrutinising projects against strategic goals. If you’re worried about over-communication: don’t. Continuous feedback and strategic discussions will pay dividends when the time comes for implementation. It should be noted that alignment doesn’t mean the absence of conflicting ideas. To the contrary, it is essential that diverging perspectives are heard and conflict is managed thoughtfully. Failure to do so could erode trust and hinder collaboration; on the other hand, too much harmony could foster a sense of complacency and apathy. 

8. AI scepticism

AI is the catalyst for countless potential innovations, but many remain distrusting towards the technology – often out of fear for their jobs.

It is basically impossible to talk about innovation without the subject of AI coming up repeatedly. As you are no doubt aware, AI hype is everywhere these days. While most of that hype is earned, sometimes it doesn’t match reality. While AI tools undoubtedly have the potential to streamline people’s workloads – particularly the mundane and repetitive busy work – it must also be acknowledged that they have shortcomings. Generative AI is still prone to hallucination, meaning that you can’t just take its word on something. People easily mistake an advanced autocomplete with a lot of training data for a subject matter expert, in much the same way some think parrots actually understand the words they’re saying. 

At the same time, AI cannot simply be put on the backburner. Advancements in the last few years alone have seen it take on dimensions previously thought impossible. Now, we can conjure beautiful artwork and sprawling, elaborate texts within mere seconds of entering a simple prompt. A few mistakes here and there are insufficient reasons not to take it extremely seriously. The truth is, it is absolutely crucial that businesses get their foot in the door with AI technologies sooner rather than later. 

That potential is not lost on the C-suite: 88% of executives globally believe that helping their business speed up the adoption of AI is important according to 2025 research from the World Economic Forum (WEF). Unfortunately, 91% of leaders told McKinsey just several months prior they doubt their organisation is “very prepared” to actually implement and scale AI technologies in a safe, responsible or productive manner. Those aforementioned concerns about reliability continue to loom large, but this isn’t being reflected in actual innovation strategies. 

Research indicates that scepticism about AI is affecting organisations at every level. 95% of decision makers surveyed by Qlik in 2024 said they were confident about the types of AI that could be used in their business, while an additional 42% felt their subordinates did not trust the technology. 37% of decision-makers suspected senior managers felt the same way, and 61% believed a lack of trust was causing their business to significantly reduce their investments in AI. A case could easily be made here that the concerns around AI are offering companies tacit permission to ‘play it safe’ at their own risk.

Purpose-driven use

Clearly, the concerns over AI are not going to clear up overnight – but using them as a reason to opt out is risky at best. Even at this early stage in the AI revolution, companies that correctly implement the technology could enjoy a revenue increase of 10% or more according to the WEF. Acceptance will therefore require a delicate balancing act between human needs and business use cases. Education and training on responsible AI use is critical for employees and leaders alike if they are to mitigate its tendency towards misinformation and bias. Simultaneously, workers should be placed in continuous training programmes to ensure they are keeping on top of new developments.

Dispelling concerns around AI can also be achieved by clearly articulating plans for how the technology will be used – not just dropping it on employees’ laps and expecting a ‘productivity boost’ to magically happen. “Business leaders know the value of AI, but they face a multitude of barriers that prevent them from moving from proof of concept to value-creating deployment of the technology,” explains James Fisher, chief strategy officer at Qlik. “The first step to creating an AI strategy is to identify a clear use case, with defined goals and measures of success, and use this to identify the skills, resources and data needed to support it at scale. In doing so you start to build trust and win management buy-in to help you succeed.”

That’s why it’s so important to start with limited, clearly-defined use cases and build outwards. Teach employees to automate certain repetitive tasks, or teach them how to use prompts effectively. Taking this foundational approach and achieving small wins day-by-day will pave the way for more substantive and disruptive innovations further down the line. Allocating some time every week for employees to experiment with AI tools will also help to normalise the technology as a mechanism for new innovations.

“Rapid advancements in AI and generative AI offer exciting prospects for companies worldwide, but organisations are sitting on a ticking talent time bomb if they don’t upskill and retrain their workforces now to fulfil the potential of AI.”

Brian Duffy, chief executive of SoftwareOne

9. Lack of talent

In an increasingly heated job market, you can’t count on new recruits alone – you need to start reskilling your existing workforce for change.

The final reason companies often struggle to innovate – certainly not the least – is simple: they lack the talent in-house to stay current with major trends. A 2024 report by Deloitte highlights that the half-life of technology skills may be shrinking substantially. For some technology, like AI, it can be as low as 2.5 years. Thus it is essential that any company looking to innovate ensures that its workforce is up-to-date with the latest technologies and developments.

The breakneck progress of AI systems is at the very core of this talent dilemma, according to a recent survey conducted by enterprise software firm SoftwareOne. Not only did it find that 53% of companies currently lack the AI skills they need to leverage rapid innovations, they found that around half are struggling to find relevant talent. “Rapid advancements in AI and generative AI (Gen AI) offer exciting prospects for companies worldwide, but organisations are sitting on a ticking talent time bomb if they don’t upskill and retrain their workforces now to fulfil the potential of AI,” remarked Brian Duffy, chief executive of SoftwareOne.

Today’s job market for AI talent is so heated that organisations must instead look inwards to ensure they can meet the challenge of innovation. Without the necessary skills in-house, a company will invariably struggle to match the progress of their frontrunning peers. A further 88% of companies surveyed by SoftwareOne indicated that a lack of such skills was an ongoing impediment to their ability to innovate. What’s more, 37% of leaders intimated that their organisation was either slightly or not at all prepared to address talent concerns around generative AI adoption. While the brunt of this concerns AI, it is not the only area where struggles are observed. In the adjacent area of data analysis, 43% of companies also reported a lack of the required skills.

From the ground up

Taken as a whole, these numbers reveal the dire conditions many companies face securing the necessary skills to remain competitive in the future – particularly, but not exclusively, around AI. However, they may also reveal a path forward in the form of fostering new mindsets. Many people, particularly seasoned career professionals, can become comfortable in their role and therefore resistant to substantive change. With competitors out there who are successfully gaining access to the world’s greatest tech talent, this is not tenable. 

Leadership must then work to implement top-down reforms in the areas of training and reskilling programmes with the broader goal of creating a culture of learning. These should begin at the fundamental level, taking aim at legacy mindsets that are resistant to change, and putting the entire organisation on the track towards future-forward progress. As mentioned previously, many remain sceptical about AI, so then it is natural to co-integrate mindset transformation courses alongside those that teach the basics of AI and how it can easily be integrated. Such efforts will serve as the starting point for more comprehensive retraining and upskilling programmes. 

As you look to transform the workforce, it may be worth developing skills inventories to gain deeper insights into the skills and expertise of your existing workforce. For all you know, there could be talent hidden in plain sight you simply aren’t taking advantage of. You should also look to the examples of other companies looking to work around the talent shortage. In the case of IBM, for instance, there is a “new collar” jobs initiative wherein core skills are prioritised over degrees, and extensive training is provided to potential hires who need more conventional qualifications but nonetheless demonstrate the necessary aptitude. By offering vocational training and apprenticeship courses in-house, the company effectively widens its talent pool. Not only are they tapping into a sector that traditional recruiters often overlook, they are demonstrating a willingness to invest in their employees, which will pay dividends as far as retaining said employees is concerned.

Finally, you cannot discount the potential of AI itself to partially address the talent shortage. One of the technology’s core advantages, after all, is its ability to automate repetitive busywork across multiple departments. In the case of HR, for example, it can streamline recruitment and onboarding process, and produce crisp copy for use in email correspondence. On the software side, it can manage basic coding and data cleaning, while overseeing cybersecurity threat detection, freeing up human talent to work on more innovative pursuits. AI is also a core player in training and upskilling programmes; indeed, AI-driven learning platforms can make the learning journey easier by tailoring and personalising content to suit the needs of the individual. 

In closing

If there is a common thread that runs through most of the examples we have shared here today, it is this: organisations that move beyond their qualms around change and proactively invest in innovation will overwhelmingly be those that reap the results. Innovation is not a passive process after all, but something that requires deliberate and structured effort to execute successfully. This means systemic evolution of a company’s innovation strategies to ensure they align with overall business goals.

However, innovation will mean different things to different companies, and therefore different strategies will need to be enacted in order to execute it successfully. For some, reverse mentoring will be a strategic priority to catch leadership up on major trends and bring them in line with their younger peers. For others, a great deal of the focus may instead be on building innovation ecosystems and partnerships to circumnavigate a lack of available capital. Generally, it will require that companies work to build the right mentalities – the cultures of learning and pro-change mindsets – that counteract legacy thinking and scepticism around new technologies.

For those companies that can successfully harness their innovative potential, the advantages are clear. Not only will they become more alluring in the eyes of the world’s top talent, they will help to ease the minds of investors looking for reassurance as the company navigates increasingly-frequent disruptions. Of course, it will also ensure that the company has the necessary resources to remain competitive in the world of tomorrow. Failure to keep pace with change, on the other hand, could spell disaster: history is littered with examples of major companies slowly fading away because they lost relevance.