31 October, 2018

Why Your Innovation Initiative Probably Failed

The usual suspects are lack of senior leadership’s commitment and middle management’s resistance to change, but I have found the real reasons run much deeper.

It’s likely you’ve lived through something called “an innovation initiative”. This usually happens in mature companies when the CEO or some other senior executive becomes obsessed with the potential benefits of “disruption.” It’s not hard to see why the innovation initiative has such a seductive pull. Everywhere you look (and read) someone is extolling its magical powers to transform industries and turbo-charge companies’ growth.

Take Apple, Amazon, Google and Facebook for proof of how innovation can drive explosive profits. If you’re not trying to be a disruptor, it’s easy to feel like you’re being left out of a giant party. Worse, you are told you are vulnerable to upstarts who are circling like hungry sharks (you don’t what to wind up like Kodak, Sears or the New York Times, do you?). Queue the innovation initiative—a program to transform your enterprise into a world champion innovator, usually through some combination of structural, process and/or cultural change. Or not.

I’ve had the opportunity to witness many such innovation initiatives over my 30-year career. By my rough estimate, these innovation initiatives have about the same success rate as New Year’s resolutions. They follow an all-too-familiar pattern: they start with great hope and fanfare; then reality sets in.

After a year or so, there are few, if any, tangible signs of progress (where are those transformational ideas?). As time passes, the innovation initiative loses energy. There is less talk about innovation and more talk about “getting back to basics.” Skeptics come out of the shadows. Some senior managers who happily associated themselves with the innovation initiative early on start to distance themselves from it. The innovation initiative starts getting tired, and everyone quietly (and happily) moves on.

So, why do innovation initiatives fail so often? The usual suspects are lack of senior leadership’s commitment and middle management’s resistance to change, but I have found the real reasons run much deeper.

Four Reasons Your Innovation Initiative Failed

  1. Underestimating the time and difficulty to transform an organizationToo much of the talk about innovation gives the illusion that becoming an innovative enterprise is straightforward. Nothing could be further from the truth. Innovation is really hard. That’s why it’s such a valuable competitive weapon. Becoming an innovative organization cuts to the core of how a company operates and changing that is neither quick nor easy. Senior leaders and the rest of the organization need to go into the process with realistic expectations about how long this will take. Think years, not months! By having realistic expectations about what’s involved, the early challenges will be more easily surmounted.
  2. Failing to come to grips with trade-offs. Any company with existing lines of profitable businesses faces a fundamental strategic dilemma: how much should it invest in existing businesses and capabilities versus new (uncertain) ones? Too often, there is an assumption that companies should always be investing in the new wave of “disruptive” innovation, and that investments in existing capabilities are myopic at best and suicidal at worst. Such thinking grossly oversimplifies the problem. There is often no simple “right” answer to these choices, just complex trade-offs. Clarity about how you will manage these trade-offs is critical early on.
  3. Getting seduced by so-called “best practices.” Innovation initiatives tend to become a grab bag of widely touted “best practices” such as open innovation, design thinking, rapid prototyping, autonomous decentralized teams and internal venturing. There is nothing wrong with any of these practices per se, but, in reality, there are no universally “best” innovation practices. Every innovation practice has its strengths and weaknesses and thus building a capacity to innovate requires making some very difficult organizational and process design
  4. Ignoring culture: Building innovation capabilities requires profound cultural changes. Just about every behavioral norm that enables a company to succeed with existing products and services—reliability, predictability, disciplined execution of well-defined plans—runs counter to the behaviors required to foster innovation: risk taking, creative exploration, rapid learning and experimentation, comfort with ambiguity, etc. It’s not as easy as banishing the old culture, because that culture is critical to driving performance in the existing businesses (which are, after all, paying the bills). A new culture that’s more oriented toward innovation must be created while preserving the culture that also supports the existing businesses. Innovation initiatives have to confront this conflict.

Getting over these hurdles requires three steps. First, senior leaders need to craft an innovation strategy that clarifies the trade-offs between current and new businesses, and specifies the kinds of innovation that will be important to gaining competitive advantage.  Second, senior leaders must engage deeply in the design of the organizational systems required for innovation. Forget about “best practices”—think about which practices are “best” for your organization gives its strategic priorities. And finally, senior leaders must become cultural architects. If you want the culture to change, be clear about what you want to modify, and then personally take responsibility for driving that behavioral transformation.


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