Three Reasons Most Corporate Innovation Programs Fail

For most of the twentieth century, large organizations could project what the next five years would look like with a high degree of confidence, but technology has changed the rules of the game in the twenty-first century and created an increasingly ambiguous and befuddling business landscape.

These same organizations are now finding themselves having to adapt to said changes so that they can be a force tomorrow, without compromising what makes them a force today. The challenges of navigating this delicate balance were shared by GE’s former head of innovation, Beth Comstock, on the Future Squared podcast.

See Also: What C-Suiters and Corporate Innovation Teams Can Learn From Jeff Immelt’s Demise

Innovating in the corporate landscape is kind of like riding your bicycle across a minefield; doing it successfully requires planning, skill, and luck. But instead of landmines, what awaits a corporate innovator in a traditional, large organization is cultural inertia by way of entrenched values, processes, and systems that ultimately sabotage their good intentions.

Want to do some customer interviews?

Sorry, sales won’t let you speak with their clients for fear of compromising the relationship.

Want to run a fast experiment?

Sorry, you’ve got to complete this 10-page business case to apply for funding, and it will be several weeks before the investment committee meets. Oh, and what’s the ROI of your experiment anyway?

Want to host a prototype in the cloud?

Sorry, you’ve got to host it on our internal systems for privacy purposes, so the risk, time and cost to get this done will go up dramatically. Still want to proceed?

These common scenarios barely scratch the surface of what’s in store. In order to have a shot of succeeding, processes, systems, and values must be aligned with behaviors and realities required to truly innovate —such as speed, experimentation, cross-functional teams, access to customers and so on.

Sounds like a lot of work, right? That’s because it is. And that is precisely why most innovation programs fail before they’ve even begun, and it’s often manifest by the following three big mistakes that I come across all the time when speaking with executives in the field.

1 — Simple Sells

Most traditional organizations lack the capability inside the building to do anything other than incremental innovation, so naturally, they look to external consultants to assist. This not only helps them gain access to guidance and capability but perhaps more pertinently, outsource accountability to an external party.

Don’t Know What You Don’t Know

Sadly, an overwhelming number of executives buying corporate innovation services don’t know what the hell they’re buying. It’s hard enough knowing where to start in this space, but this is made all the more difficult when executives are plucked from the wilderness of say, accounts payable, administration, and then given a token title of ‘innovation manager’ (often with little to no actual authority), despite not having spent any time in the space.

Such hiring decisions also speak volumes about how serious an organization is about innovation. That’s not to say that a procurement manager, or any unrelated role, can’t thrive as an innovation lead, but if I was hiring for such a role, I’d much bring someone on with much more experience in the space and look to develop people who have no prior experience, but have an interest in the space.

A sanitized version of an all-too-common innovation lead’s past experience.

For consultants selling services that aren’t as tangible as, say, an umbrella, leading with “look, what you’re trying to do is really hard — we can’t guarantee success, but we can increase your chances of it…what it’s going to take is a deep understanding of your objectives and the capability gaps presented by your values, systems, processes, and resources, and then we’ll have to address all of these gaps in order to build an environment that truly supports innovation…it could take months, or years, to see genuine results, and it’s going to be hard…we’ll receive a lot of push-back and make a lot of enemies…..or you can just run a hackathon.”

Silver Bullet Solutions

Too many consultants sell what they purport to be silver bullet solutions, such as design thinking training, or a startup accelerator program, or an innovation lab; and while these can all add value, creating meaningful change and genuine value requires more than just isolated initiatives, but a holistic approach that accounts for the underlying organizational foundations and culture above all else.

Sometimes its because consultants genuinely fall victim to the law of the instrument bias; when you’re a hammer you see everything as a nail. Other times it’s because they just want to make a quick buck selling what they know.

A subject line for an email I received from an innovation consultancy.

Conflicts of Interest

Because consultants are in the business of making money, they are going to sell simple, ‘cookie cutter’ solutions, rather than solutions that are tailored to the client and will drive meaningful change. Of course, this helps them keep their margins high, and spend the time that they would otherwise spend customizing solutions on winning and delivering more work. Makes great sense for the consultancy, but the client usually loses out with an inferior product that doesn’t serve much purpose once the initial sheen wears off.

Too many times to count, I’ve heard clients of ours say that “we previously spoke to Consultancy X — they didn’t want to tailor their offering and insisted that it was the best and only way forward.” Alarm bells ring every time I hear absolute statements like these because every company is different.

What might be great advice in one situation can be terrible advice in another situation, and that extends to life in general. Not accounting for the nuances of an organization, its industry, and the ever-shifting competitive, societal, economic, political and technological realities of the day, is a surefire sign of a half-baked solution to a poorly-defined problem.

2 — Bias Towards Action

As human beings, we desire control, and so we take action in order to derive a sense of control. This is what behavioral economists know as the action bias (Patt & Zeckhauser, 2000). A classic example; opting for medical treatment instead of no treatment, despite clinical trials not supporting the treatment’s effectiveness.

Action bias is particularly likely to occur if we do something for others expecting us to act, which in the workplace, extends to our peers, superiors and our shareholders — we need to be seen to be doing something.

Football goalkeepers too have a tendency to dive to left or right on penalty kicks, even though they are statistically more likely to save the penalty kick by standing still (Bar-Eli, 2007). So corporate innovators take action, even though it might be the wrong action to take, to feel like they have a sense of control, as well as to appease other’s expectations.

Lowest Hanging Fruit

In addition to the action bias, human beings are hard-wired to follow the path of least resistance, according to a study out of University College London. Our brains trick us into believing the low-hanging fruit really is the ripest. We have a cognitive bias moving us away from the effortful decision, so instead of embarking upon an elaborate program to address the systemic barriers to corporate innovation, we opt to print out quirky t-shirts, order pizzas and pretend we’re Google for a day. Then we go back to our jobs.

Bias towards action is great, but not if it’s the wrong action.

3 — Creativity is NOT Innovation

Ideas and innovation are too often confused as being one and the same in the corporate innovation ecosystem, so much so that an entire industry of idea platforms has emerged, promising to solve the innovation woes of large companies, as if ideas are all that matters.

Michael Dell put it best, “ideas commodity, execution of them is not. Fast Company echoed these sentiments in its definition; ‘there is a difference between creativity and innovation. Creativity is the process of generating something new. It is a prerequisite for innovation. Innovation, however, is the practical application of creativity. A good idea is a great thing, but if the idea is not implemented, for whatever reason, we simply have creativity‘”’.

When venture capitalists invest in early-stage startups, they come across countless compelling ideas. But here’s the thing; they typically track about 8,000 startups a year, meet with 2,000, invest in 20 and two hit home runs. That’s because the execution is the hard bit, and no matter how good a team or idea is, timing and luck need to be on your side. This is also a key reason why 75% of Series G startups — that’s companies that have raised billions of dollars — fail to exit (that, and the fact that exorbitant valuations that an exit strategy becomes difficult to find).

Ideas Go Nowhere

More often than not, when large companies run idea challenges or design thinking sprints, there is no clear next step to turn those ideas into effective experiments. When there is a next step, it’s usually a jump, to conclusions that is, and an unnecessary amount of funding (and executive support) is wasted on building a bell and whistle solution, instead of a low-fidelity prototype.

Instead of say, setting up a small pool of funds, to run 50 experiments across a wide bucket of ideas, senior executives — often with little experience in early-stage innovation — will themselves select the two or three employee ideas that they, not their customers, think are good, and invest big into turning them into reality. Inevitably, the ideas fail, and because of the time and money poured into them, they leave a bad taste in the mouth of executives and so innovating becomes harder because we’ve developed a stigma associated with it.

When Innovation Programs Backfire

Worse still, without a robust way to take ideas forward, we compromise the energy and enthusiasm of our most innovative and entrepreneurial people, who write off such initiatives as theatre and a box-ticking exercise due to the lack of tangible outcomes, and over time, stop investing their efforts or look to move to another organisation where their contributions are valued.

All the ideas in the world will amount to nothing without disciplined execution.

Navigating These Challenges

So, how might you avoid stepping into the pitfalls associated with corporate innovation, insofar as using consultants is concerned?

Aside from watching out for silver bullet solutions, and consultants speaking in absolutes, you might want to ask the following questions of consultants before engaging, in order to save you and your organization time, money, belief, and enthusiasm.

Some questions you might ask consultants before you even think about engaging:

  1. How do we know that what you’re selling will fit our needs?
  2. What measures do you use to track success? Do these track outcomes or inputs?
  3. Will you customize your offering to the nuances of our organization? If so, how?
  4. Do you have a proven track record or case studies that clearly demonstrate the delivery of desired outcomes?
  5. How will you address our organization’s underlying barriers to innovation, and where have you done this before?
  6. What qualifies you to teach us how to become more innovative? Who at your organization will we be working with and what are their credentials? How has your organization practiced what it preaches and what have the results been?
  7. Can you help us move beyond ideas and turn ideas into reality? If so, how? Where have you done this previously?
  8. How much do you charge and what is the price based on? (watch out for large consultancies passing on the cost of bloated headcounts, partner salaries, A-grade office space, company junkets, and business class flights, only to serve up junior consultants to work on your project)
  9. How long have you been doing this? (watch out for design thinking consultants who took an online IDEO course last week)
  10. What partners do you have? (you’ll want to work with consultancies that have links into technology companies, startup ecosystems, academia and more)
  11. Which companies have used you more than once? (note: retention is a signal of quality, not a guarantee)
  12. Do you implement what you preach through regular experimentation of product ideas and growth hacks for your own business?

Forget Occam’s Razor, a relic of a time when bloodletting was a common practice. Simple solutions aren’t always the best. When it comes to corporate innovation, an incredibly complex problem, complex thinking is required.

Anything short of that is likely to end in failure, but not the kind that innovators glorify.

Steve Glaveski is the co-founder of Collective Campus, author of Employee to Entrepreneur and host of the Future Squared podcast. He’s into everything from 80s metal and high-intensity workouts to attempting to surf and do standup comedy.