This is one of the most popular saying in the business literature for a lot of years and nobody can claim it is not true.
Companies once in Top Fortune 500 disappeared. Kodak, Blockbuster, Compaq, General Foods, Pan Am are all but memories. Even technology companies like Hotmail, Netscape, Yahoo were not spared. Amazon is now bigger than most of its competition put together. It became clear that if you are not adapting and innovating faster than the competition you will decrease and finally enter the death spiral.
Unfortunately innovation is an overused term. PWC Innovation Survey 2017 shows 64% of the people surveyed considered innovation and operational effectiveness were equally important to the success of their companies.
They consider innovation is needed in the following aspects: products, technology, customer experience, systems and processes, business models, systems and services, supply chain.
The key ingredients according to them: culture supporting innovation, strong visionary business leadership, willingness to challenge organisational norms and to take risks, capturing ideas throughout the organisation, capacity and capability for creativity, collaborating with customers, locating and training the right people.
The most interesting part is the constraints that are stopping them to be innovative: financial resources, existing organisational culture, lack of talent, political and regulatory factors, inadequate technology, weak leadership.
I think the key ingredients are identified quite correctly, but if we look at the constraints it means that no start-up will ever survive: they usually lack strong financial resources, they do not have an organisational culture ( look at Apple made by 2 people, Airbnb, Uber started the same), the fight with the same political and regulatory factors and their technology is not perfect at the beginning. Indeed start-ups score very good at leadership.
Would than leadership be the only ingredient to save companies from extinction and make them innovative?
I personally doubt. Indeed, strong leadership is a key ingredient, but is not enough. Average and large companies need more than this. These companies need a system to be innovative. And this system includes strategy, vision, innovation culture, idea gathering and selection system, project portfolio, metrics, resources and many more.
If you just declare you need to be more innovative or you innovate by chance and accidentally, than it is very possible you will be over-passed by competition.
You have to make changes while it is not too late. It is not easy. But it is mandatory. And make it sooner than later.