Why Innovation Efforts Fail

Several arrows miss the target

A recent McKinsey survey found that 94% of business leaders are unhappy with their innovation efforts. Meanwhile, research by Capgemini reports that 80-90% of innovation labs fail. Yet, the need for innovation isn’t letting up. Companies that don’t innovate are at serious risk of being disrupted. We all know iconic brands that no longer exist, and that rate of extinction will only speed up. It’s now cheaper to enter the market than when established companies started.

Today, a bright duo can start and run a company from their dining room table. By the end of the week, they will be global. Their supply chain, distribution network, and a targeted marketing campaign…all global. Washington University predicts that in 10 years, 40% of the Fortune 500 won’t exist. If you take that a step further, many of the Fortune 500 circa 2029, may not yet exist today. Global leaders shouldn’t be most nervous about the competition they know; they should worry about those two women at their dining room table. The two that, within a year, will disrupt their marketplace. The two that will take over as the market leader in a key element of the corporation’s portfolio. Big companies are trying to innovate like entrepreneurs at their dining room table, but they are failing.

The speed of innovation and disruption is increasing. Historically there’s been a 10/10 rule for new technological breakthroughs. New technology takes 10 years to develop into a commercially viable product, plus another 10 years for mass commercial adoption. This held true enough to make it a rule that people could subscribe to…color TV, HD TV, Cell phones, PCs, the list goes on. By way of contrast, YouTube took one year to develop, and one year to get mass adoption. YouTube was able to do this because the internet serves as a platform for development and distribution. Now we’re seeing platforms develop in other spaces. How will the pace of disruption increase going forward?

I’ve spent the last decade, or so, of my career helping companies innovate. During that time, I’ve developed my own point of view on innovation programs and how to make them more successful. To expand my point of view and expose any blind spots I may have had, I consulted innovation leaders to research what they saw in their work. Participants ranged from leading footwear and auto manufacturers, pharmaceutical companies, high tech, insurance, and software companies. Through my experience and this research, I’ve identified six innovation failure modes. Innovation fails when companies are:

  • pursuing the wrong ideas
  • making high-risk, big bets with little visibility into probable outcomes
  • utilizing ineffective funding approaches
  • lacking the knowledge to build and position an innovation team
  • unable to transition from an innovative experiment into a full-blown product
  • lacking the leadership and culture to support innovation

Let’s dig into each of these six innovation failure modes:

Pursuing The Wrong Ideas

The ideas that organizations pursue are likely to fail when they:

  • don’t understand the product, service or business model that may result
  • are the wrong company or brand to take a finished product or service to market.
  • don’t have the skills to implement a solution
  • don’t have the patience to take a solution to market
  • fail to envision the potential ROI of the solution
  • don’t see alignment to the company’s broader strategic objectives

Making High-Risk, Big Bets With Little Visibility Into Probable Outcomes

Innovation teams see waning interest from their organization when, after significant investment, they:

  • found a lack of consumer interest pre- or post-launch
  • were unable to take a solution to market due to lack of technical feasibility
  • found that the top layers of management didn’t understand the go-to-market fit
  • failed to capitalize on any learning from the effort, other than, “we don’t want to do that again!”

Utilizing Ineffective Funding Approaches

Otherwise successful innovation efforts falter or fail when:

  • they are haphazardly funded and don’t adhere to a strategic plan
  • they fail to get to the marketplace at the 11th hour after significant investment
  • the organization doesn’t create an intentionally blended innovation investment portfolio

Lacking The Knowledge To Build And Position An Innovation Team

Businesses find that innovation groups and innovators hit barriers within the organization when they:

  • don’t include business, experience and technology expertise
  • haven’t structured a power balance that ensures all three of the skills above get a seat at the table
  • lack a liaison back into the line of business
  • don’t have an advisory or oversight board that includes the office of the CFO
  • fail to understand who has the skills to innovate, versus take something to market, versus run a line of business

Unable To Transition From An Innovative Experiment Into A Full-Blown Product

Innovations are precarious when transitioning to production when the Line of Business:

  • has a “not invented here” mentality
  • view the potential evolution as a threat to their existing offerings
  • don’t understand the innovation and turn it into what they already do
  • receives the offering prematurely, and is unclear how to advance it

Lacking The Leadership And Culture To Support Innovation

Innovation gets derailed when the leadership and culture of an organization:

  • won’t allow offerings that may cannibalize existing products and services
  • doesn’t understand, or is unable to support new business models
  • will allow existing business units to morph the innovation into something more familiar, resulting in an incremental improvement instead of a disruption
  • won’t offer c-suite support of innovation efforts
  • doesn’t understand nor support that innovation work requires different methods than “run the business” work

Recognizing these common pitfalls in innovation is just the first step. The real challenge lies in actively avoiding them. This is where Rutabaga will step in, helping organizations stay laser-focused on their customers’ needs, significantly reducing the risk of pursuing the wrong ideas. Rutabaga provides clear visibility into the probable outcomes of your initiatives, enabling you to make informed, lower-risk bets. Moreover, Rutabaga champions a culture of customer-centricity that permeates throughout your organization.

As we at Rutabaga embark on our own journey of disruption, these lessons in innovation failures are not just cautionary tales. They guide us in shaping a tool that aids organizations in navigating the complex maze of product innovation with more confidence and clarity. In today’s fast-paced entrepreneurial world, Rutabaga will stand as a testament to our commitment to empower organizations to innovate with purpose, direction, and a deep connection to customer needs. And I couldn’t be more excited to be part of this transformative journey.

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