Killers of innovation

What most people don’t understand about failure in innovation is that it’s an investment. It’s actually an investment in experience.

— Christopher Galvin

Build your innovation on the firm foundation of the pillars, but avoid the innovation killers. Obviously, a massive lack of elements of the three pillars has enough killer potential. Still, there are specific factors that can be isolated and need to be addressed at any cost. There is a lot of research on why innovation projects fail. Surveys (e.g., Prof. C. Christensen’s Milkshake Marketing) show that 95% of new products fail. As more innovations shipwreck than succeed, there are also more reasons for failure than for success.

Factors for the innovation cemetery

Concerning various studies, we define four categories of factors often responsible for the failure of innovation projects. The list compiled is by no means exhausted but emphasises specific aspects with enough destructive power for innovation.  

Individual factors

In a Forbes article from 2018, Alex Goryachev (Managing Director of Innovation Strategy & Programs at Cisco) states that „Innovation is Communication.“ In his view, it is the most critical factor. Communication is the driver of every innovation project. On an individual basis, it happens with your team, with ecosystem partners, with clients, with venture capitalists, etc. Thus communication mistakes can deliver a fatal blow to all innovation activities. Missing transparency, a lack of empathy, insufficient inspiration, not listening, or missing feedback are all communication mistakes that can deliver a fatal blow to innovation projects. 

Another innovation killer is individual uncertainty or insufficient conviction. This factor automatically leads to a lack of energy, required to be a constant driver and reminder of an idea, its value, and its potential. Without conviction, it is difficult to inspire others and to overcome the various obstacles that await on the innovative journey.

Innovation projects usually are like narrow paths with a lot of forks in them. They are not like highways with regular and early announced exits. Thus Innovation requires a lot of spontaneous decision-making. Which way to follow best, whom to talk to, which feature to implement, what to do next? Maybe due to insufficient available information or feedback, wrong decisions have often been a cause for an early exit for innovation trips. Acting too much on a potentially biased intuition and missing relevant facts puts the ventures at risk. While wrong decisions often prove to be fatal, delaying important decisions can have the same effect. Of course, gathering information is vital to make them on solid ground, but sometimes speed and timing are crucial.

Innovation is also depending on setting the priorities right. A lack of focus on prioritisation can prove to be costly. Setting the priorities fact-based is essential. However, an „analysis paralysis“ due to a data overload could lead to getting lost in measuring and analysing activities. Of course, it is also essential to follow up on urgent matters with a high priority, but not at all at the cost of critical issues. There is always a danger of getting lost in these little urgent tasks’ hyperactivity and losing sight of the big picture. This could also spell doom on any innovation effort.

Team Factors

The process of team building must be as organic as the development process of a caterpillar into a butterfly to be able to produce innovations. Diversity is the magic word. Numerous studies (Study Boston Consulting & TU Munich – The Mix That Matters: Innovation Through Diversity) prove that diversity in a company is strongly related to innovative capacity and market success. 

This is not just about differences in gender, demographics, age, social status, characters, or experience. Instead, it is about creating flexible units in which specialists from various sectors discuss problems and inspire each other. Too much homogeneity prevents divergent, innovative thinking. Ideas do not go in all directions, but only a few, like the daily walk’s trampling paths. There is a danger of self-congratulation and hasty approval. Heterogeneous teams need to make more effort to understand alternative approaches and viewpoints. They have to communicate more to make others understand their respective thoughts, and it takes longer to reach a consensus. In the process, ideas and innovation emerge. So the right choice of team members is directly related to the success of innovation.

But how do you find the right team members?

Studies in high-performance sports teams show that it is less harmful not to consider the one right expert than the one who does not fit the team at all. Jenewein & Heidbrink speak of alpha and beta errors. However, the beta error, i.e., choosing the wrong person, is much worse for the team climate and groupthink. 

Groupthink and group dynamics

There is a danger that groupthink develops so strongly in one direction that other options can no longer be recognised. Group dynamics also play a role in this. Group dynamics and groupthink go hand in hand. Therefore, it is crucial to keep an eye on these aspects and the resulting innovation killers.

The main consequence of groupthink is the loss of individual creativity, uniqueness, and independent thinking. It’s destructive from an innovational perspective. 

This psychological phenomenon occurs when the desire for harmony in a group disregards a healthier discussion of alternatives. Group members try to discover common ground, minimise conflict and reach a consensus decision. Alternative ideas or viewpoints are no longer critically evaluated. Factors such as the diversity within group members, the lack of an impartial leader, and external threats from the organisation or stakeholders all play a role in the likelihood of groupthink influencing the decision-making process or not.

Organisational Factors

When it comes to corporates, various organisational factors can spell doom for the innovative efforts. Innovation in organisations is a well-researched topic. An entire library exists about corporate innovation deficits, and it provides valuable insights on the potential killers. If an organisation does not provide the proper foundation, successful innovation is like trying to grow a flower in a barren land of concrete. It does not work!

Increasing pressure from the markets, high volatility, especially in times of crisis, forces corporates to focus increasingly on short-term (financial) goals. Instead of turning to innovation as a solution, companies fall into the default mode right away and only scan the first horizon while reprioritising medium- to long-term activities. As a consequence, short-term objectives dominate long-term perspectives. Because innovation projects typically take longer to pay off and require funding, they are among the first to be stopped. In general, the imperative to perform well in the stock markets enforces a system where achieving the short-term objectives is paramount to at least the listed companies. Here and there, it might happen at the expense of Innovation.

Organisational culture is cited very often as the culprit for failed innovation efforts. However, culture is too general a term to gain valuable insights. Thus, taking a closer look at specific details is necessary. Basically, the organisational culture is the character of an organisation, defined by its shared values and beliefs that drive the employees’ actions. Innovation involves failing. A lack of psychological safety, coined by Professor Amy Edmundson (Leadership and Management at Harvard Business School), inhibits innovation. Psychological safety describes a desired mindset where employees are ready to be vocal about their opinions and ideas due to an open and trustful atmosphere. Companies that punish failure, mistakes, or errors ‒ establishing a „no-failure-allowed culture“ ‒ force employees to avoid them, thus strangeling innovation. Feedback is at the heart of the innovation process. It helps to reflect on an idea, identify blind spots and make room for improvement. A lack of personal feedback, which comes in various forms (only top-down, insufficient time for feedback, strong hierarchies that inhibit exchange), can drive up the failure rate of innovation projects. Feedback is vital for another reason. Innovation often means change, maybe through altering the portfolio or establishing new processes. This raises questions and fears in associate’s minds and could cause resistance towards innovation if not taken seriously.

Establishing an innovative culture and designing the organisation is a leadership responsibility. The people recognise a lack of management buy-in in innovation. Even if the senior management praises innovation, however, acts otherwise, for example, by cutting innovation budgets simultaneously, employees get the message. They will automatically reduce their effort in innovation projects and bringing them to a halt. 

Management is also responsible for designing the organisational structure. Strong vertical hierarchies have difficulties in adopting an agile approach to meet the required speed. They can considerably slow down communication and decision-making. This reduces the sense of urgency and the drive of the innovation projects significantly, increasing the probability of failure. A commitment to innovation needs to be stated clearly in both job descriptions and annual target agreements. Without it, the motivation to participate in innovation efforts might be too low to generate the desired success.

Wrong Approach and Wrong Turns

Many potential pitfalls jeopardise the Innovation Journey, either as insufficient provisioning or deviating from the course set.

Setting out on an innovation journey alone drastically increases the risk of failure, especially in today’s dynamic, highly interdependent, and complex world. Of course, the legends tell of successful entrepreneurs, almost being worshipped due to their enormous achievements. However, these are very few, and the environment changes require more diversity and range in skills than a single innovator can muster. This is why actually, most of the solo projects (also if they are happening inside of organisations) fail. However, little is known about them because they are all buried in a mass grave. 

This is an obvious one! Innovation requires sound and reliable funding, irrespective of being a corporate project or a start-up. A lack of funding proves to be a massive impediment to Innovation. In corporates, cost for Innovation or research and development are often the first to end on the cutting room floor. A look at the different international start-up-markets shows that where more capital is available to finance start-ups, the bigger the start-up-sector activity. Availability of continuous funding is essential in the early, but even more in the later stage, when the start-ups need to overcome the market entry barriers and scale their business successfully. Without the necessary financing, both corporate innovation projects and start-ups run out of fuel and drop out of the race.

A deep understanding of demand and markets is key to successful Innovation. A poor market analysis comes back to haunt corporates and start-ups alike and ultimately dooms innovative ventures to failure. The same is true for an insufficient customer-centricity. The user or customer needs to be at the center of innovative activities. It is tempting to put the innovative idea, the product, or service at the heart of the project. However, then the Innovation might either fail to materialise or be short-lived. Or, as Professor William A. Sahlman (Harvard Business School, Business Administration, Entrepreneurial Management) put it: “Products don’t create value. Customers do!“