June 28th, 2013 15:17 EST
Why Your Innovation May Be Failing - And What To Do About It
I`m looking over green fields on the rolling campus of a major US corporation, sitting quietly in the cafeteria, having just finished a two-day innovation session here.
We designed a thing of beauty: six disruptive strategies that are not hard to execute but could really change the game in how they recruit and engage their employees. The team left focused and energized and hopeful.
But I`m scared. Because if things play out as they do for too many would-be innovators, these beautiful ideas will never take root.
Not long ago, I spoke with Adi Alon, a managing director in Accenture`s Innovation and Product Development Consulting practice, about the challenge of innovation and why so many large companies fail, and what he outlined was shocking.
A recent Accenture study of 519 executives (see http://www.accenture.com/us-en/Pages/insight-low-risk-innovation-costly.aspx) from large companies showed that 70% of large companies view "innovation" as one of their top five priorities (18% hold innovation as their number one priority); 67% say that their strategy depends on innovation for its long-term success. And yet less than 1 in 5 (18%) would say their own innovation strategy is delivering a competitive advantage.
In other words, companies depend on innovation and innovation is failing.
Here are four reasons innovation may be failing you:
- You focus on product innovation: Most companies focus their innovation efforts on new products and services, overlooking the disruptive power of things like pricing, organization, and culture. Pick ten companies you admire and ask, "Why are they great?" I bet things like people and organization will outshine products.
- You apply NPVs and ROIs: Most companies measure the quality of new innovative ideas by traditional measures like net present value (NPV) and return on investment (ROI). But truly new ideas don`t lend themselves to such analyses. Could you have accurately projected the market size for energy drinks before Red Bull or fast fashion before Zara?
- You think you prototype, but you don`t: As Alon said, many companies "say they do prototyping but actually fully develop and pilot an idea in one market." One of his clients sunk $20M into piloting a new financial service innovation and called it a prototype.
- You add but don`t subtract: We need to clear room for new innovations yet few companies are good at "sunsetting" old strategies. Think of a telecom service company inventing new pricing plans without expiring old ones. They tangle themselves with the complexity of selling, calculating, billing, supporting more plans than they need.
So if you say you want innovation but are not getting it, ask yourself:
- Are you focusing too much on product?
- Are you using the wrong measures?
- Are you really prototyping?
- Are you "sunsetting" to make room for the new?
Over the past two days we spent a good deal of time considering these four questions, and I think they laid the foundation for the launch of a successful set of innovations.