23.02.2021 Fabian Roschig
Understand the root cause of failure and get actionable steps to prevent it.
I assume it is unnecessary to point out that nowadays external forces drastically increase the pressure to innovate.
We all know something is wrong, as innovation initiatives are delivering little return on investment and all industries are struggling to execute successful innovation.
Most executives struggle to find the key to commercially successful innovation.
Based on a McKinsey Survey in 2020:
21% of executives believe that they have the expertise, the resources, and the internal commitment to successfully approach new growth.
Even though there are countless hypotheses and articles around the failure of innovation, finally it always comes down to 4 major buckets:
Many initiatives get shut down or deprioritized as they are working on projects that hardly make a contribution to the company or are not aligned with the parent company’s strategic prioritization. Even if new products/services are successful they often turn into “orphans” as there is no internal willingness (and stakeholder) to scale them.
Almost half the respondents to a recent survey of corporate innovators by KPMG indicated that their innovation efforts were only “somewhat connected or aligned” or “not at all connected or aligned” to their organization’s overall business strategy. Only 40% suggested that their innovation efforts were considered strategic. (Data provided by Board of Innovation)
Strategic misalignment often happens because of
As I said in the beginning innovation is definitely top of mind and there is a common understanding that it is important, but the question is what the role of innovation in the company really is and often it leads to what we call “innovation theatre”.
Even though there are processes and techniques to de-risk innovation initiatives, innovation is inherently risky (especially when we talk about disruptive innovation and not only incremental improvements). There has to be an understanding in the parent company’s culture that high rewards come with high-risks and that failure is part of the journey. Most companies are risk-averse and failure intolerant.
In this context, I read a quote by Tristan Kromer at the end of one of his blog posts:
“Nobody ever got fired for hiring McKinsey “
And that's exactly what happens in larger organizations. In the end, we try to take the safe bets which normally do not come with a lot of upsides.
To create a culture of innovation, you need to have a clear focus where people know what success looks like, you need to start small and build momentum, and be comfortable with a defined level of risk and failure.
We have to understand (and act that way) that traditional management and “exploiting” our core business requires completely different people, cultures, processes, and accountability than “exploring” new potential business.
This will take time, money, patience, and external facilitation to get there and will definitely give space for some more blog posts…
Even though you can run smaller innovation initiatives and create minor changes on a company level bottom-up, but you’ll definitely need the management buy-in to make larger steps, increase capabilities, change the culture and establish new processes. So the management of the company needs to play an active role in communication and change management.
Lack of the right process
As described above we can not use the same process for exploitation and management of our current business vs. exploration of new business. It requires different tools, approaches, and tactics.
Often businesses struggle to create a process that helps to make business decisions in a world that is driven by volatility, uncertainty, complexity, and ambiguity, where cause and effect can only be perceived in retrospect and the results are unpredictable. They are optimized for stability, incremental improvements, and risk mitigation based on historic data.
Governance kill new initiatives
Almost no words needed.
There are too many layers and levels of hierarchy between the “idea” and the “execution”. Budget allocation, resource allocation, different agendas, and complicated gate processes hinder innovation and speed of execution.
Idea-first approach or making stuff nobody wants to buy
Possibly my all-time favorite. Houston, we have no problem / The absence of a consumer problem.
Many growth initiatives start with the solution approach before the actual customer problem is being properly defined or validated in detail.
Companies rely on luck to create winning products when they employ the ideas-first approach to innovation. The chance of randomly devising a solution that addresses the customer’s unmet needs — when the needs are unknown — is near zero. — Tony Ullwick, Founder of Strategyn
Lack of lean thinking and lean tools
Companies tend to overengineer and overthink new business approaches. There exist sophisticated business cases before many of them even had a single contact with their customer or a Business Model Canvas has properly been filled out to see where current gaps or flaws of the new approach are.
As described above, many companies tend to start with a clear idea in mind before actually validating the customer problem or define in detail how they create value e.g. with the help of the Value Proposition Canvas or other tools.
Lack of experimentation processes and culture
There seems to be a larger gap in most of the companies. After discovering a customer insight (based on research, trends, observation e.g.), the product department (or a crossfunctional team in some of the companies) develops a solution approach that will be handed over for execution without detailed prior testing to reduce problem uncertainty (Does the problem exist?), solution-uncertainty (Is the solution designed the right approach for the problem?) and market-uncertainty (Is the customer willing to pay for it?).
Many companies lack the necessary process, speed, and culture to realize agile experiments, test during development processes, and adopt new offerings in early phases to minimize the risk of failure.
Do you want to execute innovation more successfully? Do you want to develop concrete measures to implement projects beyond routine more efficiently?
👉🏼 Get more information about my service portfolio
Helping companies with effective strategies and execution for a systematic, user- and growth-centered innovation.
My name is Fabian Roschig and I am a consultant for innovation strategies and innovation management.
My mission is to drive innovation at all levels, based on the individual strengths of each organization, to enable and accelerate sustainable commercial growth. Together we make this happen by setting clear goals, focusing on the right balance between strategy and execution, and using validated, systematic methods and tools that guarantee continuous, measurable results.
For more than 12 years, I have had the privilege to successfully plan, implement or optimize new strategies, products, and services, innovation programs, structures, agile teams as well as processes for a variety of clients and employers such as The Coca-Cola Company, Condor, kicker, Dr. Oetker or TUI. In doing so, I work closely with executive boards, middle management, cross-functional teams, and external service providers.
Dan Stern 👇🏼
Tendayi Viki 👇🏼
Tony Ulwick 👇🏼
Brett Bivens 👇🏼
95% of innovations fail. Understand the 4 main reasons why and learn how you can do better. was originally published in BeyondFortune on Medium, where people are continuing the conversation by highlighting and responding to this story.