Complacency and risk aversion blocking innovation in the Middle East

01 May 2020 4 min. read
More news on

Now more than ever organisations need to be innovative, and eliminating the fear of risk and building an innovative culture are crucial to this end. This is according to a new report by management consultancy Sia Partners, The Talent Enterprise and the Global Innovation Management Institute.

The analysis comes against the backdrop of Covid-19 disruption, which is forcing virtually the entire global business environment to be creative in its continuity efforts. The trio surveyed nearly 600 business leaders, executives and experts. Executives from SAP Middle East, RTA Dubai, Sanofi, The Executive Council Dubai and others were also brought on board to offer expert views on innovation.

Businesses in the Middle East have previously expressed confidence in their abilities to manage under Covid-19, but the new survey sought to examine their capacity to innovate.

Perception of industry peers vs own organisation

“A few months ago, the economic landscape was evolving quickly but in the past few weeks, we’ve seen market needs literally changing overnight. Organisations without the necessary flexibility in their strategies and processes to adapt will struggle. The ones who that do will capture new opportunities,” explained Rafael Lemaitre, Partner at Sia Partners.

Leaders were asked about the state of innovation in their sector, about innovative facets within their own organisation, and where innovative capabilities could be improved, among other indicators.

The report detects a hint of complacency amongst the senior leadership, given that most executives believe their organisation has strong innovative capabilities vis-à-vis their industry, while the lower managerial ranks do not necessarily agree. This could indicate a surplus of information in senior ranks, although experts in the report highlight that complacency in senior ranks is common and dangerous.

Major brands in the past such as Kodak (camera's), Nokia (telecom), Motorola (mobiles) and others have succumbed to such a scenario in the past.

Where do organisation's most important innovations originate from?

The importance of awareness in senior ranks become all the more important when considering that most innovation is driven from the top down. Most respondents indicated that the board and top management drive innovation in their organisation, followed by senior and middle management.

Experts warn that this can be a sub-optimal setup. Innovation lies just as much in improving day-to-day operations as it does in developing growth strategies. Businesses that get all ranks involved in the ideation process tend to be more innovative, according to experts.

Most organisations rely on leaders, however, which also explains why an innovative culture and innovative processes are present in the lowest share of businesses. Most are innovative when it comes to their products, services and strategy, while culture and processes appear to fall by the wayside – once again a product of a top down approach.Where do organisation's most important innovations originate from?This might be one factor hindering the capacity to innovate. Another factor that is placed in sharp focus by the report authors is the aversion to risk. While most businesses appear open to innovation itself, 75% report being “risk averse.”

CEO of The Talent Enterprise David Jones explains how this is a critical finding, and a major barrier to innovation.  “An organisation’s ability to innovate has never been more critical than it is today, and risk-taking is an inherent part of innovation,” said Jones.

The innovation and risk behavior of organisations

“If leaders are not willing to analyse risk, it suggests that they don’t truly embrace innovation. In fact, while most managers and leaders feel upper management is supportive of innovation only 59% believe it supports trial and error pertaining to it. According to the experts we interviewed, resistance to change seems to be what lies beneath this phenomenon,” he added.

According to the report, addressing these factors could expand the corporate lifespan of a business. Opening up to change and building a culture of innovation are key to growing and surviving under constantly evolving market conditions.