Why Corporate Innovation Fails: 7 Best Practices every company should know (Hint — None of them come from Silicon Valley!)
For almost a decade, I worked with innovation and transformation teams at four large banks in Canada and the US. As they say, it was the best of times, and it was the worst of times.
Prior to the financial crisis, leading change was fun, as it involved thinking about emerging technologies, online experiences, and new ways to generate revenue. In contrast, being on the “change the bank” team during the dark days of the crisis required quick utilization of every method possible to reduce costs while managing risk. Regardless of the time or the bullish or bearish nature of the market, driving innovation inside these behemoths was a daily lesson about what happens when an unstoppable force meets an immovable object.
Today, I live in Silicon Valley and work in technology. Despite being immersed in this wondrous place of ideas and innovation, I have come to realize that I gained an equal number of lessons about leading transformational change and disruption from those trying times in banking.
For any company large or small that’s looking for the key components of successful innovation, here are six tried-and-tested principles to adopt.
1. Innovation connects what’s possible to what’s valuable.
One of the challenges with introducing the topic of “innovation” is that people often have different ideas of what it is, which is why this phrase — ”Innovation connects what’s possible to what’s valuable” — became my working definition. Just because something is possible doesn’t mean it should be pursued. Unless it adds meaningful value to your customer or drives purposeful change inside your organization, then you run the risk of getting distracted and wasting limited resources.
In order to coalesce people around a shared definition and understanding, it’s also helpful to define what innovation isn’t. In the context of a large, very established bank, innovation isn’t simply ideation (it’s an end-to-end process from idea to execution), nor is it big-bang moonshots (small changes can add real value), and it certainly isn’t limited to technology. Recognizing this point made me realize the important role of context.
2. The context for innovation is what matters.
Having now worked in several different industries, I’ve come to appreciate just how contextual innovation is. Innovation means completely different things in different companies. The role of innovation is very different at Apple than it is at Boeing. Every organization has its own innovation genome made up of a multitude of factors including its industry, history, assets, leadership, customers, and so on. In short, context matters.
Your starting point matters, too. My banking colleagues often voiced frustration that we couldn’t easily replicate what the disruptive FinTech startups were doing. That’s the downside of being an incumbent player; unfortunately, it means starting with a myriad of legacy factors (like outdated systems or disparate data) and built-in complexity.
As much as we might all love to begin again with a greenfield opportunity, that simply isn’t a reality for many corporations. The lesson here is that your innovation journey will result in a lot of dead ends if your approach doesn’t factor in an awareness of your starting conditions and unique context.
3. Innovation adds a new value, not necessarily new things.
Corporations often begin their innovation efforts by gathering all the great ideas their employees have. This strategy, while commendable, raises a distinct challenge: what are you then going to do with all those ideas? How do you filter through them? And which ones can you actually implement? Organizations can create a sense of disillusionment among employees by actively engaging them in the ideation phase, only to leave them disappointed when few, if any, of their ideas end up being implemented.
Instead of a wide-open approach to ideation, focus employees on the new value that innovation can create. Importantly, this strategy doesn’t always involve the creation of new things. The person who added wheels to the bottom of the suitcase obviously didn’t invent either but instead unlocked tremendous value by bringing the two concepts together. Your employees are ideally positioned to pursue this kind of innovation because they know what assets you have to play with, but they will need to look on old treasures with fresh eyes.
4. Incremental innovation helps create the right culture.
Another stumbling block occurs when companies get hung up on the notion that they must find the “next big thing.” I’m here to tell you: innovation is rarely a Big Bang idea. When working in financial services, people referenced how groundbreaking the introduction of the ATM was… in the 1960s.
The point is, if we wait around for the next ATM-type breakthrough, we miss the opportunity to generate huge amounts of incremental value and improvements along the way. And little improvements can pack a large punch. The genius who decided to turn the Heinz ketchup bottle upside down made a small change but had a big impact on the customer experience.
The most innovative organizations place equal value on continuous, incremental improvement because they know that championing incremental innovation does a lot to create a culture of creativity and a mindset of progression and change within your organization.
5. Innovation is rarely about the technology alone.
Too many innovation agendas get hijacked by an obsession with new technology and new products. As many change leaders learn, technology often proves to be the easiest part of the innovation puzzle. What’s far more difficult is driving successful change across people, processes, and culture.
However, finding ways to creatively re-engineer processes can deliver in meaningful wins. Look for the canaries in the coal mine, which are symptoms of bad processes. For example, any paper-based form or — heaven forbid — a fax machine, by definition, in a digital age is an opportunity for process innovation. While you might be tempted to jump immediately to a technology solution pause first to purposefully design your ideal process and understand how you’re changing the way work gets done. Otherwise, you run the risk of ending up with a half-baked solution that underwhelms users and doesn’t create the seamless, digital experience you were hoping for.
6. Innovation occurs when three things align.
In order for innovation to be successful, a perfect intersection of three things must occur. Think of it as three legs of a stool where, if one leg is shorter than the other two, failure is inevitable.
The first leg is obvious: there must be a market or a customer need. At RBC, our first foray into mobile payments failed because only certain customer segments were ready to adopt them, which illustrates why it’s critical to enter the market right before the tipping point of mass adoption, but not too soon before. Too early or too late and you’ll fail to capture all the benefits, or worse still, a better-timed competitor will.
That point dovetails nicely with the second leg of the stool: timing. Despite an idea’s potential for tremendous growth, it’s sometimes too early. The slopes of Silicon Valley are littered with the skeletons of promising startups that had the right idea but were ahead of their time. They languish, only to watch later entrants swoop in and capture the market at the perfect moment. Remember MySpace? Or Bebo? As they say in these parts, the only thing worse than being wrong is being early.
Which brings me to the final stool leg: there must be technology robust enough, mature enough, and scalable enough to support your idea. All too often with emerging technologies, the merit is there, but the technology isn’t stable enough to scale for an enterprise-wide deployment at a large multinational. It’s one of the reasons why the marriage between small startups (who desperately want to secure large customers) and enterprises (who are equally desperate for the innovation that startups bring) is fraught with peril, broken promises, and disappointment.
7. Utilize an innovation conveyer belt, not a funnel
Combining these six principles is key for driving successful innovation but it’s particularly important to be attuned to timing.
Timing is one of the major reasons why the notion of an “innovation funnel” inside a company doesn’t work. By its very nature, a funnel implies that lots of ideas go in at the top with only a few making their way out of the bottom after being put through your organization’s “innovation process.” Logically, the ideas that make it through are those where the three legs of the stool are the same.
But what if there was an emerging market need that simply wasn’t developed enough? Or a promising technology that hadn’t hardened sufficiently? Those ideas are potentially worth revisiting in the future but may get permanently discarded when you use a one-way funnel.
I’ve seen countless examples of an idea being surfaced only to be shot down by others with the rationale that ‘we looked at that before’ or ‘we tried that and it didn’t work’. A healthy innovation practice involves challenging prior conclusions, examining previous assumptions, and being open-minded about revisiting ideas.
Alfred DuPont Chandler, a business historian at Harvard Business School, put it perfectly when he said “You can’t do today’s job with yesterday’s methods, and still be in business tomorrow”. Given the relentless pace of change in this digital era, innovation has to become a core competency for every organization. Without it, survival is not guaranteed. For today, it is the only job.
Dr. Anita Sands is an independent board director, international public speaker and creator of the #wisdomcards series. She writes and comments regularly on issues relating to boards, technology, and diversity & inclusion. Find out more about her at www.dranitasands.com or follow her @dranitasands. All comments personal.
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