Steve Jobs, Apple’s former CEO, famously said: “Innovation is the only way to win.” He, along with many other experts, have preached the virtues and benefits of innovation for decades.
However, most companies continue to fail at the practice of innovation.
Consider these quotes:
“There are only two things in a business that make money - innovation and marketing, everything else is cost.”
– Peter Drucker, Management Expert
“I believe innovation is the most powerful force for change in the world.”
– Bill Gates, former Microsoft CEO
“We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they are the reason we’re successful: put the customer first. Invent. And be patient.”
–Jeff Bezos, former Amazon CEO
Yet, studies routinely show more than 90% of innovation projects fail to return the cost of their investment, and 90% of start-ups fail within 10 years. Even high-performing companies often fail at innovation--after managing hundreds of innovation projects at Amazon, I estimate about 50% of all projects fail there. Although that’s still a lot of failure, 50% success is significantly better than the 5-10% success rates other companies often have, and that single factor has helped Amazon accomplish the huge growth it has to date.
When meeting with company executives or train employees on innovation concepts, I often start with the question “who is responsible for innovation at your company?” That is typically met with a blank stare. When pressed on the subject, the answer is usually one of “Everyone”, “the CEO”, or a particular product or technology leader who owns a product roadmap.
After hearing even very senior leaders struggle with this question, I’ve made the conclusion that the typical reason why companies innovate poorly is most companies lack an understanding of what innovation is and how to do it effectively. As a result, they lack even a single person assigned to manage or improve innovation efforts. As Dave Limp, Amazon SVP is quoted, “The best way to fail at inventing something is to make it someone's part-time job.” I agree wholeheartedly with this, and think this is particularly true with innovation itself.
So it’s really no wonder companies fail at innovation. It’s hard to imagine how they could innovate well when company leadership doesn’t understand it, and no one is dedicated to it. Typically staff isn’t trained on it, and their organizational design, company values, technology infrastructure, and processes restrict it.
The result is that they approach what is the most critical success factor of business without any intentionality or realistic chance of success. They let innovation occur organically and randomly, and then are surprised when it fails.
So who at your company is responsible for innovation? The CEO? Your Product Leader? Or everyone (no one)? Do you have a Chief Innovation Officer, Innovation Manager, or Innovation Architect?
Who is responsible for improving how you innovate?
Anyone? Why not you?
Below I’ve outlined 5 simple concepts to help you begin learning about and improving your innovation.
1. Innovation is the process through which new ideas are created and implemented.
Invention is creating something for the first time ever, and it’s tremendously hard to invent new, profitable products and services, especially within less than 5-10 years. Instead, focus on continually improving how you identify, select, and deliver on your ideas. Look for new and unique ways to solve existing problems with new technologies. This is the core of innovation and how companies are proven to succeed long-term.
2. Innovation improvements provide the highest return on investment within a company.
Improving innovation pays high dividends by stopping wasteful work, better aligning work to strategic objectives, identifying high value opportunities, and quickly delivering new offerings to customers faster than competitors. Benefits continually compound, accelerating growth and reducing costs across all processes and products.
3. Leaders need to understand innovation and intentionally choose to pursue it.
Leaders need to recognize innovation is not just a buzzword, but a specific competency they can choose to develop. It’s imperative for leaders to take steps to understand innovation well, so that they can intentionally design their strategy, organization, and support structures to help it occur. There also should be someone allocated the responsibility to drive, monitor, and improve innovation, similar to other corporate functions.
4. Product Development processes are only one element of innovation.
Innovation effectiveness is driven by the whole management system that surrounds it, from employee hiring practices to how you identify new opportunities. If that system is not built to intentionally enable innovation, you will have limited success. If you think of innovation as a car, you can have great fuel (employees), but you still need a driver (CEO), steering wheel (values and culture), engine (resource allocation), tires (organizational structures), and a road to travel down (strategic direction). All these and other elements work together to support innovation.
5. Always start with the customer problem, not the solution.
Many companies and startups try to innovate by creating new offerings they think customers want. However, often they don’t validate customers actually want the idea enough to actually pay for it. This creates failure and waste, as often companies spend months (or years) working to launch a product only to have it fail in the marketplace. This is Amazon’s failure with the Fire phone. To be successful with innovation, the best practice is to start every project with defining first the exact customer and the problem or opportunity it will solve for them. Secondly, each idea and proposed solution should be tested as quickly as possible with real customers. When new data comes in from those customers, the company should quickly incorporate it into the offering. This iteration, starting with the customer, is the most-effective innovation approach. You can use our Working Backwards template to help refine your idea and ensure it is customer-focused.
At Day One Innovation, LLC, we help companies of all sizes improve their innovation practices modeled after Amazon and other high innovation companies, innovation and business theory, and real-world experience. We offer interim and fractional Innovation Officer, Adviser, and Architect roles, leadership and staff training, speaking engagements, idea generation and refinement, and other consulting services.
Contact us today for a free 30-minute informational discussion about how we can help you improve your innovation.