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7 Innovation Challenges CEOs Face

Innovation Challenges

Innovation is at the heart of business development and critical for staying competitive and driving growth in any market.

Deloitte found out that 96% of leaders consider innovation among the top five strategic priorities.

At the same time, when it comes to innovation management, it’s impossible without obstacles. Ask a roomful of executives if they’ve ever confronted innovation challenges, and you’ll see all hands raised.

How do you prepare, and what to do when facing hardships on your way to innovations?

First, there should be a total awareness of the inevitability of challenging situations and the willingness to cope with them and learn from them too.

Innovation Is Challenging – Let’s Accept That

These stats speak for themselves:

  • Nine in ten startups don’t survive.
  • 95% of all product innovations suffer collapse.
  • Merely 6% of executives are delighted with the innovation performance at their organizations.
  • Over half of the companies have issues bridging the abyss between their broader business and innovation strategies.

And there are even more discouraging numbers.

Why should this all be so difficult?

In his book, Sustainovation: Building Sustainable Innovation in Government, One Wildly Creative at a Time, Nicholas Kittle, CEO of Sustainovation, draws an analogy between an innovative process and a traumatic experience. It reshapes the way you’ve been thinking and acting before, and it’s an unfamiliar and obscure road with obstacles lurking over the corner.

That’s why innovation is hard; not everyone is ready for it.

What are the greatest difficulties CEOs experience when they lead innovation, and, more importantly, how do they deal with those? Let’s go through them one by one.

7 Biggest Innovation Challenges Faced by CEOs and How to Overcome Them

Take a closer look at the seven major challenges to innovation and grab some practical advice from chief executive officers and founders on how to address them.

  1. Poor communication

The founder of TED, Chris Anderson, once wrote:

“Every meaningful element of human progress has happened only because humans have shared ideas with each other and then collaborated to turn those ideas into reality. From the first time our ancestors teamed up to take down a mammoth to Neil Armstrong’s first step onto the moon, people have turned spoken words into astonishing shared achievements.”

Indeed, communication fuels innovation – it’s an undeniable fact, and it becomes critical for innovative performance. And yet, a striking majority of managers (69%), according to the Interact survey, don’t feel at ease communicating with their teams and delivering feedback. In some cases, they feel particularly uncomfortable (see the infographic).


A lack of common language prevents teams from turning ideas into innovations, while inadequate communication is a primary reason for 29% of projects failing.

How to tackle this challenge:

Anthony Martin, Founder and CEO at Choice Mutual, shares his tips on how to power up communication and drive innovative solutions:

  • Develop a communication plan (answer the five W’s: who, what, when, where, and why)
  • Use several communication tools to establish multiple information streams (Slack, Microsoft Teams, Skype, etc.)
  • Foster a culture of transparency and be honest about both successes and failures.
  • Master the art of asynchronous communication in remote teams
  • Formulate clear, unambiguous messages
  • Provide substantial feedback

“For me, one of the biggest challenges in innovation was to develop a habit of delivering feedback the right way,” Anthony confesses. “Especially when rejecting an idea.”

Here’s a short scheme he uses to reject ideas and give constructive criticism:

Could you please give more details? (never say “no” immediately, and if unclear, ask for details)

That would definitely help us ____ (mention the positive sides), but ____ (mention the reasons why it might not be the best option)

What about this one: ____ (suggest your alternative)

What do you guys think? (ask for other thoughts)

You might also want to use a toolkit that contains communication plan canvases, templates, and the best practices for succeeding at communications within your innovation team.

  1. Lack of collaboration

86% of employees and executives acknowledge that the low level of collaboration is one of the two greatest issues (the other one is ineffective communication) that lead to project failure.

What are the major causes of a disorganized team, and how to run a collaborative strategy process effectively?

The analysis of studies across the water innovation divide showed as many as 22 drivers of failed collaboration. Among the top five of them are: a) the incapacity of stakeholders to ignite changes, b) vague and fragmented responsibilities, and c) unclear vision of the long-term goals and priorities.

How to tackle this challenge:

First and foremost, you need a robust innovation strategy that will clarify all the directions and guide you on organizing innovation in your company.

“A strategic and systematic approach is the key to a properly organized collaborative innovation process,” believes Morgan Taylor, Co-Founder of Jolly SEO.

“That’s when innovation management software can become a game-changer. It gives you the following advantages: centralized communication, faster-fixed bottlenecks, better-prioritized tasks and assigned ideas, optimized file management, and improved productivity and employee performance, among other things.

Since our SEO team started using a dedicated digital platform to organize and manage innovation, the productivity level has increased by 17%. Now we normally have 30%–40% more ideas generated and sorted out per day,” Morgan announces.

Consider the best innovation management tools on this list: Qmarkets, Viima, Ideawake, Inno360, and more.

  1. Knowledge gap and talent shortage

According to Katherine Radeka, the author of The Mastery of Innovation, a Knowledge Gap in an innovation program is “the distance between the knowledge you already have, and the knowledge you need to create in order to solve one specific challenge that has arisen in your program.”

Such knowledge gaps are the biggest obstacles that bring innovative teams down.

Of course, these gaps could be closed faster and more efficiently if you had more talent. But here’s a problem – the talent shortage is gaining up steam.

75% of companies reported talent shortages in 2022. That’s up from 69% in 2021 and 35% in 2013. According to Gartner’s survey, IT executives regard talent shortages as the most serious adoption barriers to 64% of emerging technologies, compared to 4% in 2020.

How to tackle this challenge:

Focusing on organizations that develop high technologies, Marc Karahan, the Venture Development Lead at KI Park, developed a collaborative innovation method to fill the knowledge gap for high technology innovations. The method in question presupposes the four steps:

Step #1. Technology translation

Step #2. Idea generation challenge

Step #3. Idea validation + idea selection

Step #4. Idea concretization by experts


Concerning the top talent, heed the call from Mike Grossman, CEO at GoodHire, who recommends the following:

“Remember the golden rule – don’t hunt for diplomas and degrees.

E.g., Elon Musk, a famous innovator, Co-Founder, and CEO of Tesla, once said a Ph.D. degree isn’t necessary for landing a job at his company, and he doesn’t care if a person even graduated high school. Such giants as Google, Netflix, and Apple don’t require their workers to have a four-year degree either.

Instead, you should focus on employees with transferable skills, offer internships, and invest in training programs.”

  1. Low levels of employee and customer engagement

Pushing the change forward is one of the common challenges in innovation management because it requires a tween-effect: engaged employees and customers.

Based on a recent report by Gallup, 51% of US workers aren’t engaged at their worksites, whereas 13% of them are actively disengaged. As for customers, 54% claim that brands need to transform how they engage.

How to tackle this challenge:

Employee engagement

A case study of Thai Airways International demonstrated that innovation and engagement reinforce each other, and engaged workers are more likely to act innovatively at work. The conceptual framework developed in the course of the research illustrates how the following variables influence employee engagement and, in turn, promote innovative work behavior:

  • Career growth
  • Recognition
  • Job involvement
  • Job Responsibility


Each of the constituents should be given due importance.

Moreover, check the five key steps for building the process to energize and motivate your workers.

Customer engagement

Customer feedback supports and guides innovation. You should listen to the voice of the customer (VoC) and let them submit their own ideas. According to Statista, the VoC is entirely captured to drive innovations in roughly a half of US organizations.

In order to engage both employees and customers simultaneously, you can follow the example of Michael Nemeroff, CEO & Co-Founder of Rush Order Tees:

“We encourage a two-way interaction between our customers and employees via social media where they communicate directly. On TikTok, for example, they participate in challenges. People leave the I-challenge-you-to-make messages in the comments, and the guys try the ideas suggested by the audience and then publish videos (process + result). After that, they keep the challenge rolling with the question: What technique should we try next?

Listening to the voice of the customer, we’ve implemented new screen printing techniques and expanded our list of products with custom embroidered hats, apart from T-shirts.”

  1. The rising need for faster innovation

If you look at the results of the 2015 survey conducted by MIT Sloan Management Review and Deloitte, back then, nearly 90% of executives anticipated digital disruptions, but only 44% of them said their organizations were ready for those to come.

Some companies are still coping with the first wave of digital transformation, even though the second wave has already approached and made business leaders strive for a higher innovation speed. And the ever-accelerating pace of innovation isn’t going to slow down anytime soon.

How to tackle this challenge:

A tandem of disruptive innovation and continuous improvement makes it possible to achieve faster-scaled success when you innovate.

However, as Jerry Han, CMO at PrizeRebel, says, “You should never go to extremes. Find a balance between sustaining and disruptive innovation and mind that the latter may not pay off at once.

One of the examples in the world of IoT is how Energous disrupted the market with WattUp, a wireless charging router that can power devices from 15 feet away. A three-year-old company (at that time) made a splash with it at CES 2015. But only two years later, in 2017, it got approval from the Federal Communications Commission (FCC). The first WattUp-enabled consumer products were announced in 2018. For example, regulatory approval in South Korea was given in 2022.”

  1. Struggles to measure innovation

In the survey by Innovation Leader, 54% of managers said that innovation metrics are still taking shape in their companies, and over 12% of respondents admitted they don’t have any approach at all to measure innovation.

A robust measurement system can help firms gauge their performance and set a strategic direction for improvements, but defining metrics and measuring innovation KPIs may be a daunting task.

How to tackle this challenge:

“Every leader would want a universal recipe on how to measure innovation performance,” says Jesse Hanson, Content Manager at Online Solitaire & World of Card Games.

“However, the point is that, besides the basic innovation metrics, you should also identify those that speak to your individual situation. It’s also crucial to determine the metrics for both achievements AND failures.” Jesse highlights.

Start with measuring the ideation process. For this, it’s necessary to get a thorough understanding of idea management KPIs and metrics.


  1. Economic downturn

Have you tried innovating amid economic downturns or crises?

If you have, you must be well aware of how tough this is.

As per McKinsey’s research, for instance, two third of executives mentioned they consider business innovation during the COVID-19 pandemic to be the most challenging moment in their executive career, while only 21% of them said they have all the resources to pursue new growth successfully.

The COVID-19 crisis has caused major turbulence among businesses and forced owners to make cost-cutting decisions and, consequently, limit funding.

How to tackle this challenge:

Read the interview with Dr. Stephen Tang, former CEO of OraSure Technologies Inc., who explains how to lead innovation through a crisis. He says that “In times of crises, of uncertainty and ambiguity, decision makers like to see risk distributed. They don’t like all-in kind of decisions.”

That’s why it’s highly beneficial to create a portfolio of options and projects that decision-makers should look at.

When it comes to financial resources, “You should look for alternative sources of innovation funding, aside from relying on your own finances,” Jim Pendergast, Senior Vice President at altLINE Sobanco.

“Governments typically offer Research and Development (R&D) subsidy programs for ventures to spur innovation. You can apply for an innovation grant – a fund offered either by a government or a grant funding institution.

Some other variants are: crowdfunding, business angels, business loans from credit unions, equity financing, or venture capital,” Jim enumerates.

Round-Up of Obstacles to Innovation

There is not a single business leader or manager who has seen zero roadblocks while innovating. Indeed, it is a hard process. It’s full of uncertainties and difficulties. The key here is to accept the fact that those are inevitable.

As you are now well-armed with some actionable tips on how to overcome even the hardest innovation challenges, you can face them without fear.

Let innovation be a breeze for you and your team.

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