Why Innovation Fails6 March, 2018 / Articles
How do we get our employees to come up with more ideas? This is a question I have been hearing more and more from corporate leaders. And it is a good question to explore, because the more ideas we generate within our organizations, the better the chance that we will find good ideas. In the 21st century, we must design our companies for serendipity and encourage the sort of cross-functional collaboration that results in the cross-pollination of ideas and concepts.
And yet this article is also a cautionary note. Getting our teams to generate a lot of great ideas is just the beginning. Successful innovation is the combination of great ideas with sustainably profitable business models. In my experience corporations have a much bigger problem – what to do with good ideas once we have them. Employees who have been part of ideation sessions, are often frustrated because nothing substantive happens with the ideas they generate.
It can get worse. I have seen companies that run idea competitions or hackathons that are highly popular among their employees. But after the winner is chosen, they are awarded the grand prize of having to create a twenty-page business case! Such practices can stifle innovation.
Sometimes the winners are lucky. They are simply given money and resources to execute on their idea. Go to the lab, build it and they will come! Such practices are likely to lead innovation failures.
And so beyond creativity, every modern company needs a clear process for taking ideas from concept to profitable business model. One way to frame the conversation is to explore what can cause our great ideas to fail. We can then design our innovation frameworks to mitigate those challenges. With that in mind, this article will describe three main reasons why innovation fails.
Making Stuff Nobody Wants To Buy
Innovators are most excited about bringing their product ideas to life. They hate the cold wind of reality that is raised by questions about customer needs. And yet, all great business models are rooted in great value propositions. No matter what we do, our cool new products will not succeed if we are making stuff nobody wants. To make stuff people want, we have to spend time exploring their needs and developing empathy. What are they trying to accomplish in their lives? What are their jobs to be done? What would cause them to reach out into the world and grab our product? These questions are so foundational that if we do not answer them well, we will end up making products nobody wants to buy.
Selling Stuff Without Making Profit
Here is another dose of cold reality. It is possible to make stuff that people want and still lose money doing it. Innovation is not just about making products that will deliver value to customers. It is also about ensuring that we can deliver that value in a sustainable way. You cannot sell products at a loss and then make it up in volume. Sustainable traction means that our products pay for their own existence. As such, we have to ensure that customers are willing pay sufficient amounts to cover the cost of value creation and delivery. We need to find a price point that will cover the cost of customer acquisition and retention. And we need profit, which is surprisingly treated as dirty word in some innovation circles. Profits are how we will pay our own bills and sustain the company. We may not need to answer the profit question early in the innovation process, but it is a question we will eventually have to answer. If we don’t, our products will fail because we are selling our stuff without making profit.