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Innovation Isn’t Always the Answer

For any executive or entrepreneur, this may seem like a blasphemous statement. Innovate or die, right? In today’s fast-paced world where technology is advancing at an increasingly rapid rate and markets are growing more complex every day; it can be easy to jump to this black-and-white thinking. Calling “innovation” a business buzzword would be a […]

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For any executive or entrepreneur, this may seem like a blasphemous statement. Innovate or die, right? In today’s fast-paced world where technology is advancing at an increasingly rapid rate and markets are growing more complex every day; it can be easy to jump to this black-and-white thinking. Calling “innovation” a business buzzword would be a massive understatement, and whether it’s fear of irrelevance or falling in love with a flashy new technology, many motivations for driving innovation do more harm than good.

How can innovation be harmful? Although we often have a naive positive association with the word, the danger of innovation is embedded in the definition itself. As defined by Oxford Languages, innovating is when you “make changes in something established, especially by introducing new methods, ideas, or products.” Seems fairly straightforward, right? However, many people focus on the potential benefits of new methods, ideas or products, and ignore the key factor: make changes in something established. If that established thing is one of the foundations of your business, your exciting new changes might very destroy the value proposition of your business or industry. This danger is not hypothetical; indeed, it has happened time and again.

Innovation is not about incremental change or gradual refinement.  Real innovation is about moving past the status quo, completely changing the existing order of things by creating new markets, shaping the future of industries, or creating new industries entirely. Real innovation is like a force of nature, or the opening of Pandora’s box. Once the box is opened, you can’t close it, and you can’t control the outcome.

Does that mean innovation is always bad?  Of course not. If your organization is resilient and well led, you have a chance capitalize on these changes. And the benefits and improvements that upend an industry are often an unmitigated good for everyone else. But innovation can be very dangerous, especially to innovators.  That is why some incumbents focus their innovation efforts outside their main line of business, such as Alphabet (Google) directing the efforts of their X innovation division at problems outside of search, Google’s core business.  The hope is to capitalize on the upside that innovation can provide, while protecting the foundations of their main business from disruption.

To be clear: change is inevitable, and in no way am I saying that innovation is unnecessary, because even if you aren’t innovating, your competitors certainly will be. Rather, I am saying that it is imperative for you to understand the costs, benefits, and risks so you can formulate the right strategy for your organization. Sometimes the best approach for your business will be to drive the change, but just as often it may be best for you to be a fast follower. Just look at Internet Explorer. Microsoft did not invent the internet browser, and yet for over a decade it was the browser of choice for millions of people. Another such example is the iPad. Tablet technology existed well before Apple introduced it, but it is customers rather than technology that drive innovation, and they were able to build a product with mass appeal by integrating existing technical and functional capabilities with design and marketing.

If you understand the benefits and risks of innovation, have a resilient and well-led organization, and have a clear strategy for how to capitalize on the positive changes innovation can bring, driving innovation may be the right choice for your business. However, there are always costs and risks. Below, we explore some of the scenarios in which it may not be the best time for you to invest in innovation.

Your main business is broken

This may seem like a no-brainer, but investing in innovation when the core of your business is broken is unlikely to succeed. If your business is struggling, it may seem like the solution is to double-down on innovating in order to create new markets and drive profits, but in fact turning inward and looking at your operating model may be the wiser choice. Ask yourself this question: does your business have a solid foundation on which innovation can build? Innovation isn’t free, it doesn’t happen overnight. For every successful innovation, there are many other equally compelling product concepts that fail in the marketplace. Developing truly innovative products typically takes years and costs tens of millions of dollars.  Before you focus on driving innovation, fix the foundations of your business to provide a stable platform for a well-resourced, multi-year effort.

You lack a common language for innovation

Another common failure mode is a lack of a common language.  If the sales division sees innovation as a marketing buzzword and the engineering division sees innovation as deep tech development, it might not be surprising that the product team is confused about the concept as well. As evidenced earlier, innovation can mean different things to different people which is why making sure everybody within your company is on the same page as to what “innovation” means for your business is imperative before taking any concrete steps toward the innovation itself.  Leadership can help by framing innovation in a strategic, product-focused way, and talking in concrete terms about the desirability and need for incremental improvement (not innovation) as well as the necessity of being flexible in the face of disruptive change (innovation). In summary, innovation won’t push your business forward if your team doesn’t know what it means and can’t talk about it in a meaningful way.

Your employees don’t trust leadership to support innovation

Trust is also a fundamental part of any innovative company, and employees can see right through executive teams that aren’t truly committed to innovation. If your employees don’t feel like their contributions have the possibility of being considered they will likely never bring them forward;  push as you might for innovative product ideas or the establishment of an “innovative team,” what you get will be more incremental product development. If trust is broken, you need to start by repairing that trust.  That means investing in taking real product risks and rewarding employees who take risks that ultimately don’t succeed. If the only way to get promoted in your company is to ship a product, then all of your products will be as safe and boring as possible.  

Once it is clear to your employees that taking good innovation risks will be rewarded, the next step is to clearly articulate a vision, strategy, and goals that are aligned with an internal innovation process. This will be different for each organization, but the essential feature of any innovation process is a framework in which your employees are supported for working on “extracurricular” ideas, and a systematic process for choosing, funding, and developing the best ones. For example, both 3M and Google allowed employees to work on “20% time” projects that were outside their usual responsibilities and had more-or-less systematic ways of picking the best ones to commercialize. (This is where Post-it notes and Gmail came from, among other products.) Innovation requires an investment in organizational capability and readiness, because if your employees don’t understand what innovation is and why it is important to the continued success of the organization, you may be surprised to find that they sit on the sidelines.

You are lacking unique, valuable customer insight

It may be safest to innovate outside your main line of business — that way, if you create something truly disruptive, the foundations of your existing business won’t be shaken.  However, this approach can pose problems if you wander too far outside the domain where you have actual customer insight.  While brainstorming sessions and the ideas generated in them can be valuable, they don’t necessarily drive innovation within a market, or guarantee the success of an innovation. As stated earlier, it is the customer that determines whether an innovation is successful, not the invention, technology, or product itself. Innovation for innovation’s sake will get you nowhere if you don’t have the customer support to back it up, and the only way you can get that is by developing a new solution to a problem that delivers more value than every existing alternative. This isn’t to say that by following ethnographic research, behavioral data, and other sources of customer insights, an innovation is a guaranteed success, but if you don’t have this base in reality the odds are much higher that it won’t be.

You don’t currently have the capacity for structural changes

So — you have a great product concept that could disrupt a market. Does your business have the capacity to develop and sustain it? Committing to building a truly innovative product often requires deeper changes to organizational structure, rewards and recognition, budgeting, executive compensation, business unit goals, and other structural elements, and your organization may not be ready. No matter how well-intentioned or beneficial the ultimate results might be, there will be winners and losers, and change is difficult.  The larger the organization, the more difficult it is to make deep structural changes.

It is important to be realistic about the scale and speed of change necessary to develop a new product or category. While it may be a hard pill to swallow, sometimes your business may not be capable of moving fast enough to realize the market potential of the innovations they may create. One classic example of this is Xerox PARC, where in the span of roughly a decade researchers for the company invented nearly everything important in the digital revolution prior to mobile, from the core technologies of personal computers to the graphical user interface based on windows, icons, mouse, and pointers. However, although Xerox invented everything they failed to capitalize on their massive disruptive innovation, allowing others to come in and do so instead.

Your innovation came to early

Timing is everything. Brilliant product ideas that come too soon aren’t innovation, they are a market failure. There can be many reasons why a product is ahead of its time; customers may not being ready, or the technology may not be mature or scalable. For example, Compaq developed a hard disk-based MP3 player years before Apple launched the iPod, but chose not to launch it. Why? Because without the elegant navigation and music organization capabilities that Apple had it would have certainly failed – in fact, the iPod itself didn’t take off until three years after its launch, coinciding with the launch of the Windows version of iTunes. Although Uber is known as the disruptor who revolutionized online car services and the gig economy, others had floated around for years but customers weren’t ready to try them at scale until the capability for a map showing nearby available cars was developed. Airbnb certainly wasn’t the first company in the vacation rental-by-owner market, but they were in the right place, at the right time, with the right marketing for their innovation to have success. The list of examples goes on and on, but all of this to say that sometimes recognizing the tipping point is as important as the idea itself.

Conclusions

To say “innovation isn’t always the answer” may be a bit of a misnomer. As Peter Drucker said, “marketing and innovation produce results; all the rest are costs” and it is impossible for a business to grow without innovating somewhere along the way.  However, the full value of innovation is only realized by execution at scale, and with incremental refinement and development of products.  Never forget that innovation has tremendous risks as well as upsides, and that successfully driving innovation requires an organization with solid foundations, a clear strategy, and effective leadership.

Disruptive change will come. Not every organization should be in the business of driving innovation, but even companies that choose not to drive innovation should develop the resilience and flexibility to survive and thrive when their world is turned upside down.  By reflecting on the negative scenarios I discuss above, you can develop positive aspects of resilience that will help your organization survive and thrive, whether the disruption comes from inside or out.

To thrive in the face of disruption, your business needs solid foundations, a shared language to talk about change, the trust of its employees, a process whereby adaptive new ideas can emerge, and meaningful insight into the problems of new and existing customers, and a strategy to drive or respond to change. With these foundations and solid, visionary leadership, you will be well prepared for disruption, whether you are driving innovation or responding as a fast follower.

Connect with Richard DeVaul on TopioNetworks and Crunchbase.

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