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Bridging the innovation gap

For innovation to thrive, the CEO and innovation team must share a common vision. Here’s why—and how to address gaps and misalignment.

What does innovation mean to you? It’s an important question, to be sure. But what matters even more is what innovation means to your CEO—and whether your definitions align.

Indeed, minding that “innovation gap” is essential for a successful business transformation initiative as we detail in two new KPMG reports, which explore the challenge of aligning vision and execution across the enterprise, and how to address that challenge head-on.

Let’s start with the on-the-ground reality at many companies today: In general, innovation teams are not on the same page as the CEO, as we found in our surveys and discussions with both CEOs and innovation leaders.

The CEOs have bold ambitions for innovation as a driver of top-line growth—creating new products, acquiring new customers, enhancing the brand’s image, and improving how the company does business overall.

Meanwhile, innovation teams all too often find themselves curled up in a corporate corner, citing a myriad of blockers that keep them in tactical mode. A common challenge is that innovation teams are typically organized, funded, and incentivized to create incremental improvements—short-term enhancements to existing processes, capabilities, and business models. This creates massive misalignment, and quickly turns innovation into iteration—where it’s doomed to fail.


CEOs we surveyed said their innovation goals are nothing short of transformative change—yet just 3 in 10 of the innovation leaders said their company was actually set up to deliver on that.

Source: 2022 KPMG U.S. Innovation Study.

Where misalignment starts

The disconnect between CEO and innovation team creates a short-term focus on existing business models and capabilities at the expense of future growth. Our research exposes gaps in four key areas:


How innovation expectations are set


Who has authority over innovation decisions


How innovation impact is delivered


How success is measured

The gaps result in innovation projects that primarily support small-scale, piecemeal innovation, settling for incremental enhancements over transformative game-changers. It’s the difference between regularly making a series of small, safe bets vs. taking a few big swings on some big new ideas.

For innovation teams, identifying any gaps and filling them—from drivers to owners to outcomes—is an urgent priority. It may sound like a lengthy, complex undertaking, but it really begins with a conversation. Only then can transformative innovation become rooted and grow.

Start by asking your CEO these six questions:

CEO Question #1: What Does Innovation Mean to You?

Disruption? Digitalization? Invention? Each CEO has a different perspective on what innovation is and what drives it. If the innovation team’s definition differs, the opportunity to create tangible value or impact will be limited.

CEO Question #2: What Do You Want to Innovate?

Tying innovation to strategic priorities is critical—it will drive greater value more quickly. However, it isn’t always easy. Sixty-nine percent of innovators say that functional silos cause operational dysfunction that stands in the way of innovation.

CEO Question #3: What Do Our Customers Expect or Demand?

Understanding trends in your customers’ behavior and needs is essential for creating an innovation strategy and action plan that both drive toward a better future. The most successful and impactful products, services, and experience are based on unmet customer desires and requirements.

CEO Question #4: How Does Our Organizational Culture Cultivate or Stifle Innovation?

Innovation should be integrated into everything an organization does and be supported by a culture that consistently enables it. It’s a mindset, not an activity. Analyzing your company's innovation philosophy will help you understand where current innovation structures, practices, and capabilities may be falling short.

CEO Question #5: How Expansive Is Our Innovation Ecosystem?

Innovating with impact requires a system of diverse tools, people, capabilities, partners, and insights—not a group of technologists operating in a bubble. New ideas and solutions must be incubated and accelerated, while the organization provides incentives and opportunities to bring innovative concepts to fruition. 

CEO Question #6: How Do You Measure Innovation Success?

Forty-three percent of CEOs say they measure the return on innovation investment by looking at profits, despite half of CEOs having a vision for transformational (not incremental) innovation. Metrics that are not aligned with top-line innovation goals may create friction along the journey toward long-term innovation.

From iteration to innovation

Asking these questions is just the starting point, of course. After all, transformational innovation is hard. It’s higher risk, tougher to define, and often slower to produce results. A CEO’s bold vision isn’t enough, as our research shows.

But asking the right questions sooner will start an honest dialogue that tightly aligns goals, KPIs, and hoped-for outcomes with everyone moving forward toward a shared vision for innovation—and a genuine chance to actually execute on that vision.

For much more on how to get that dialogue started for your company, or to view survey results and case studies on how leading companies are solving their own innovation challenges, explore our reporting below.

Explore More

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