You will have seen from the Mastering Innovation series that service-based and customer-focused approaches work; that discontinuous innovation produces radical results; and that using external networks and start-ups can prime your idea pipelines.
You may wish to implement all of these approaches, but unless you can tackle the “dark side” of innovation, you will probably fail. Every year Edengene, an innovation consultancy, conducts a survey of the top companies in the UK and Europe on their growth and innovation performance*. One fact remains the same each year - only one in five consistently converts its raw ideas into large and attractive business opportunities.
So what is the “dark side” that prevents Europe’s best companies from delivering on innovation? It is the culture of short-term performance, which means that today’s lean and mean organisations are not set up to deliver innovation. By focusing primarily on 12-month P&L targets, they lack the spare resources to work on activities that do not produce a quick return.
This is not going to change. If your new innovation project is to succeed, you are going to have to understand how to overcome the “dark side”.
So what are the mistakes that companies make? At Edengene, we put them into four categories:
Amateurism - don’t get turned into a cottage industry!
The cottage industries are the plethora of poorly funded, inadequately resourced projects going nowhere. Spare-time innovation does not work. Innovation should be core to a company’s growth, not a part-time hobby for amateurs.
The mistake is to assume that results will come bubbling up from the business, rather than through a concerted effort sponsored from the very top. But sponsorship must also come with investment, people and resources. Your CEO will have to sacrifice some of this year’s profit to fund your initiative.
One CEO we came across actually said: “My innovative new products don’t need a marketing budget - after all, a good idea sells itself.” Another admitted he had spent £1bn last year on acquisitions - with decidedly mixed results - but doubted he had spent £1m on funding new innovation. Both later admitted that their businesses seemed to have forgotten how to innovate well and had stopped growing.
Doing the wrong things well - normal behaviours unwittingly choke the initiative
When the business has a short-term P&L focus, it is natural that its evaluation metrics will follow the same path. You will find it very difficult to shoehorn innovation initiatives into that structure. The most common comment we come across is: “Everything we do must have a payback within 12 months!”
Contrast this with a Scandinavian technology firm, with a $20bn turnover and one of Europe’s best growth rates, which does not expect its innovation projects to produce a projected P&L for their first two years.
The answer must lie between the extremes. You must have a clear financial objective for your innovation, but it is unlikely to be within the 12-month focus of your existing business. Short payback targets only result in small innovations - or more likely, business cases with fudged and dubious numbers.
Exhaustion - The team loses heart
We see many businesses that have striven hard to set up their innovation pipeline properly, with strong sponsorship and resources and the right metrics and rewards in place. The team works hard yet the initiative fails to deliver.
In many cases, the company has failed to give a focus to its innovation team. We have come across a business that has 17,000 growth projects with open budget codes against them. In another, the marketing team complains that it is running one above-the-line product launch every week!
Too often, the emphasis has been on setting up a great process and overfilling it with ideas. The team is overwhelmed with work and grinds to a halt. Good innovators kill more ideas than they implement - and they kill them for the right reasons. Filter your pipeline early and regularly - before someone does it for you! Focus on implementing the two or three big ideas rather than taking “the field of a thousand flowers” approach.
Sabotage - the ultimate weapon from the dark side
We once ran two workshops with a group of senior executives. In the morning they were asked to come up with some new innovative ideas. Two or three good ones emerged. In the afternoon, they were asked to come up with strategies to sabotage these initiatives. The list ran to many pages of a flip chart.
Trying to implement an innovative idea brings out the worst in an organisation - especially if it threatens this year’s performance. Individual managers group together to block progress, key sponsors are petitioned, lower-risk (but lower-reward) alternatives appear by magic and the motives of the prime mover are questioned. The dreaded phrases “channel conflict” and “cannibalisation” make their first appearance.
Paranoia can run wild. In one project, I was asked to remove my team from an area so it could be swept for electronic bugs. The eavesdroppers were not expected to be a competitor, but the sister division based on the floor below!
The innovator must have highly tuned political antennae and be ready to counter these threats. Delivering innovation requires you to know where your organisation will shoot itself in the foot. If you have trouble convincing your colleagues of these facts, try asking them this question: “What did you do the last time you had a crisis in your business?” I bet their answer will include setting up a properly resourced team, with clear objectives and rewards, focused on this one problem and with the full support of the business behind them.
Much the same as above then. Funny how we can all deliver innovation in response to a short-term crisis, but fail to deliver it on a repeatable basis over the long term.
* Edengene survey of 62 large businesses (turnover in excess of £1bn) March-April 2004
The writer is the chief executive of Edengene, a leading European innovation consultancy
