A few weeks ago, I posted an article on this site called The Top Five Innovation Killers. One of you asked a good question: if the rules of innovation are so clear, why do so few companies embrace them?
Coincidentally, I hosted a roundtable discussion of UK Strategy Directors on this topic earlier this week. The conclusion of the group was that there are five misconceptions inhibiting innovation.
-
It threatens the core business. Innovation is disruptive. A mature, successful business can become defensive and unwilling to cannibalise its success. That is why new entrants more commonly drive innovation. RyanAir and EasyJet, not BA or Air France, for example, drove the growth in low cost flying. As a consequence, many companies wait until they are in real trouble before doing the right thing. Asda, for example, was at its most innovative in the early 1990’s — creating George, their ground-breaking clothing brand –- as a response to its poor trading and competitive position.
-
Innovation is high-cost and lengthy. Many business leaders believe that innovation requires deep pockets and long arms, but this is not the case. New entrants, for example, don’t have huge resources but are the source of the majority of industry-shifting innovations. A mindset change is required to prototype ideas quickly and cheaply, committing thousands or less rather than millions, in order to understand where the big opportunities lie.
-
For innovation, ask customers. Most companies use focus groups to ask customers what they want. The problem is they can’t tell you –- people are poor predictors of their future behaviour. Instead, you need to observe customers. P&G, the consumer goods giant, for example, focuses much of its research on watching people in their homes use their, and their competitors’ products. By observing rather than asking consumers, development teams can better identify the unmet needs that exist.
-
Failure is not an option. Get it right first time may be the mantra for existing operations, but is exactly the wrong approach to innovation where the focus is on failure. The secret is to fail quickly and cheaply. Executives who demand 100% success can find it difficult to deal with the uncertainty of innovation.
-
Innovation lacks structure. Innovation does not happen in a vacuum. It needs a simple, but structured process to encourage, test and develop new ideas. One organisation we discussed at the roundtable meeting, for example, ring-fenced a certain amount of money for researching ideas. It then held monthly meetings to review ideas. Importantly, the CEO attended these sessions. Many people were encouraged to participate in the process not so much by the investment available, but by the recognition they received from the CEO and the executive team.
The recession is demanding that all businesses find new solutions to the changes in customers’ needs. The companies that succeed will be those that best overcome these five barriers to innovation.
(Pic WTL photos cc 2.0)
