5 Reasons Why Innovation Fails

by Enrique Ramirez

5 Reasons Why Innovation Fails

Today, many corporations are doing startup calls, setting up company accelerators, intrapreneurship programs, tech scouting, hackathons and datathons. However, despite these efforts, many companies still do not achieve innovation results.

Getting innovation results is somewhat difficult, but keeping innovation going is even harder. Regular innovation depends on many factors such as the top management’s leadership, the corporate culture, the available resources and the methodology.

After years of conversations with professionals in multiple sectors (e.g. construction, energy, manufacturing…) we have identified some tips to overcome factors that either kill or slow down innovation in companies.

1. Your organization is not ready to innovate

If you want your company to change the way it works, you need to help the organization get their buy-in. First of all, the management of the company needs to play an active role in communication and change management.

Get people excited. Show your company vision and goals. Explain how the world is changing and how technology entry barriers are getting lower. Encourage the organization to work together and build knowledge networks to scale up your innovation capabilities.  

Make a plan. Create a roadmap to articulate the change process. There are many ways to do open innovation, prioritize the ones that can create networks of expertise as quickly as possible. Translate the global goals into actionable ones for the business areas. Invest: You will not get sustainable results without resources.

2. You only bet on one type of innovation

If you only bet on disruptive innovation, you are taking the risk of getting no results, even in the long term. If you decide to only go for incremental innovation, you can end up being the king of a big obsolete business, like Kodak.

A good option would be to create an innovation portfolio that aims for short and long-term goals. A balanced portfolio enables a regular delivery of business results while also betting on long-term or disruptive innovation.

Regular successful milestones are also important and create trustworthiness. Therefore, do not forget about incremental innovation, which is fundamental to stay competitive and also builds adaptability.

3. Business innovation results are not set, measured and shared

Two years ago, I met a recently-appointed corporate innovation director in the metals sector. I asked about their innovation goals but he said that, before setting the goals, he needed to hire people and create an innovation team. I thought that it would be more convenient to set some goals first and then hire the right people to achieve them.

Last year, an energy company’s innovation area answered the same question with the number of newly published patents. My thoughts were that patents cannot be considered as an innovation result, at least not until they bring some income.

Whenever I try to find innovation rankings online, I always find that most reports use R&D investment to show innovation performance. Actually, this indicator is rather an input and not an appropriate innovation output. At the end of the day, I wonder how companies get better results or improve their innovation without setting clear goals.

4. Innovation happens ‘by accident’

Business results, like the income from new products or services, must grow as the innovation becomes more mature within the company. However, these results should also be somewhat predictable and not accidental.

I learned from the founder of a consulting company how some companies innovate by accident and, for it to happen again, you have to keep pushing them constantly. The reason for this situation is a poor innovation management.

In order to achieve an efficient innovation, you need to actively manage it. This management is responsible for setting up a process, devote resources and monitor results. Progressive companies combine a solid innovation management, which brings recurrence, with effective execution capabilities, which bring results.

5. Innovation is only focused on continuous improvement

The higher the business results, the better the innovation. Therefore, the most innovative companies are using technology innovation not to improve their internal efficiency (e.g. reducing their production cost) but to generate more income, (e.g. through diversification).

For instance, a steel manufacturer may be considered innovative so long as it reduces the energy use or improves manufacturing traceability through IoT. However, its innovation level will dramatically increase so long as it uses IoT to generate more income (for instance, by introducing a new service to sensorize inventories of steel coils at customer sites).

Continuous improvement does not make a company innovative per se. What really makes the difference is the ability to change the products and create new operations or services.

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Enrique RamirezEnrique Ramirez has worked over 15 years as a business consultant at Accenture Management Consulting where he led the Innovation & Product Development practice for Spain, Portugal, Africa and Israel. In 2014 he founded ennomotive, the first engineering crowdsourcing platform to solve complex technological challenges. He holds a Engineering Masters from the Universidad Pontificia Comillas / ICAI in Madrid and an Executive MBA from Instituto de Empresa. He is @ennomotive on Twitter.