How to navigate the tension between bold strategic intent and organisational self-preservation
In Australia’s corporate offices across multiple sectors, I’ve watched innovation initiatives shelved countless times. The CEO announces a bold and big innovation agenda, and the board applauds. Budgets are allocated with new roles created. Then, one to three years later, those same innovation champions quietly disappear from the organisation chart as the innovation agenda was too big, and nothing noteworthy happened. Anything accomplished is relegated to footnotes in annual reports, and often reported in the business press.
The truth? Most people want innovation, if it keeps their job safe. Nobody really wants disruption! Every executive I speak to loves the word ‘disruptive’… until it disrupts them. Real innovation breaks silos and forces uncomfortable decisions and may take many years. That’s why so many ‘bold’ initiatives quietly die after the first year.
This observation isn’t merely cynical – it’s a fundamental tension that exists in virtually every organisation attempting transformation. Understanding this paradox is essential for directors and executives who genuinely seek to drive meaningful change.
The Innovation Theatre Trap
Leaders must acknowledge the importance of innovation for future competitiveness, and be willing to make the changes to enable it. However, ceasing or pausing innovation initiatives has become a comfortable refuge for organisations unwilling to confront the uncomfortable realities of genuine transformation, and they are often neutralised for human self-preservation reasons. Disruption, by definition, challenges the status quo – threatening established roles, expertise, and authority structures. When innovation initiatives begin to reallocate resources, question long-standing practices, or render certain skills obsolete, without a quick pathway to an uplift in business competitiveness, the initial enthusiasm often gives way to resistance.
“Seventy percent of transformations fail. Contributing factors include insufficiently high aspirations, a lack of engagement within the organization, and insufficient investment in building capabilities across the organization to sustain the change, among others.” [1]
Over eighty percent of Australian business leaders acknowledged the importance of innovation for future competitiveness however, only twenty three percent reported being willing to make significant organisational changes to enable it. [2] The self-preservation instinct is incredibly strong. Disruption, by definition, challenges the status quo – threatening established roles, expertise, and authority structures. When innovation initiatives begin to reallocate resources, question long-standing practices, or render certain skills obsolete, the initial enthusiasm often gives way to resistance.
The Leadership Contradiction
As directors and executives, we must confront an uncomfortable truth: our organisations often resist innovation precisely because we’ve built them to prioritise stability, predictability, and risk management. The governance structures we’ve established with quarterly reporting, performance metrics and risk management frameworks can inadvertently create environments where innovation suffocates.
As board directors we mostly identify that innovation as a strategic priority, yet we do not know if the board effectively monitors and measures innovation outcomes [3]. This gap illustrates the leadership contradiction that perpetuates the innovation paradox.
Breaking the Cycle
How then do we reconcile this innovation tension? My experience suggests several approaches that can help organisations move through the innovation trap toward transformation:
1. Separate Transformation from Core Operations
Creating structural separation between innovation initiatives and core operations can provide the space needed for new ideas to develop without triggering organisational antibodies. Research from Harvard Business shows that successful disruptive innovations often emerge from autonomous units with different metrics and expectations [4].
2. Align Incentives with Innovation Outcomes
A fundamental misalignment exists when executives express commitment to innovation while their compensation remains tied exclusively to short-term performance metrics. According to the Productivity Commission’s research on Business Set-up, Transfer and Closure, organisations that explicitly link executive compensation to innovation metrics are 2.4 times more likely to successfully implement transformative initiatives [5].
3. Establish Governance Frameworks That Contribute to Innovation
Effective boards create governance structures specifically designed to oversee innovation portfolios, and become comfortable with the innovation intent. This includes dedicated committees, specialised reporting frameworks, and explicit discussions about the organisation’s innovation ambition and risk appetite. Organisations also contribute to Australia’s productivity and global innovation ranking where Australia ranked 23rd out of 133 economies in the Global Innovation Index (GII) for 2024. This ranking reflects a struggle for Australia to significantly climb the rankings despite its strengths in certain areas [6].
4. Embrace Selective Disruption
Not every aspect of an organisation requires simultaneous transformation. Selective disruption allows organisations to target specific areas for radical change while maintaining stability elsewhere. This approach creates space for learning while containing risk. The Commonwealth Bank of Australia’s digital transformation journey exemplifies this approach, focusing initially on customer-facing technology while gradually redesigning internal operations [7].
From Innovation Theatre to Transformative Reality
At the heart of every boardroom discussion about innovation lies an unspoken dilemma: we want the competitive advantages of disruption without enduring its discomforts, the outcomes without accepting the process. This fundamental contradiction explains why Australian businesses invest billions in innovation initiatives while our national productivity growth remains stubbornly flat. The path forward requires a new kind of governance courage – the willingness to protect fledgling initiatives when they threaten established interests, to measure what matters rather than what’s convenient, and to reward the learning that comes from intelligent failure. True governance leadership in the innovation age is paradoxical: we must simultaneously demand transformation while creating the institutional patience for it to occur, serving as both the voice urging change and the shield protecting those brave enough to deliver it. Only then will our organisations move beyond the comforting charade of innovation theatre to the uncomfortable reality of genuine transformation. In Part Two, we’ll explore a practical governance framework that enables board directors to navigate this paradox and drive authentic organisational transformation.
About: Gary Morgan is an experienced board chair, non-executive director, and corporate advisor who specialises in guiding organisations through genuine transformation. Gary is a director and principal consultant at MPT Innovation Group. A fellow of the Governance Institute of Australia and member of Griffith University’s Industry Advisory Board for the ICT School, Gary’s extensive publications on board governance, technology, AI, and cyber security reflect his commitment to advancing practical knowledge across multiple sectors.
Acknowledgment: I would like to thank Dr Peter Kambouris and Dr Roger Kermode for their valuable input and feedback. This article incorporates AI-assisted research and drafting.
References
[1] – McKinsey & Company. (2019). Perspectives on transformation.
[2] – CSIRO. (2019). Australian National Outlook.
[3] – Australian Institute of Company Directors. (2022). Innovation in the boardroom: Rising to the challenge?
[4] – Christensen, C. M. (2016). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.Harvard Business Review Press.
[5] – Productivity Commission. (2015). Business Set-up, Transfer and Closure. Australian Government.
[6] – WIPO Global Innovation Index. (2024). Australia ranking in the Global Innovation Index 2024[7] Commonwealth Bank
[7] Commonwealth Bank of Australia. (2022). Annual Report 2021-2022.
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