Are You Caught In The Innovation Purge? Part 1

Sometimes, you can almost feel it coming. It’s a palatable thing. The innovation purge. It goes something like this:

  1. A new leader or leadership team decides that your company is flagging on the innovation front and hires a Chief Innovation Officer or CINO.
  2. This CINO is given a budget and a mandate to create an innovation group that will create new, highly profitable products and services.
  3. The CINO hires several key people and sets them to work, generating new business ideas. They do that through a combination of strategic foresight, design thinking (including the hard parts of bringing your real customers and prospective customers to the table and having them tell you exactly what is wrong with your company and product set). They may even tap employees’ full brain trust throughout the organization to generate new ideas, leasing to new businesses.
  4. The team builds new business cases, typically using the Business Model Canvas, completing all of the keys steps necessary.
  5. These are then reviewed by the rest of the business to determine if they will decide to move forward on further developing this business.
  6. They may suggest that the concept be presented to customers and prospects in a focus group.
  7. Or they may decide to fund a small proof-of-concept.
  8. They may even decide to take it as far as running a small map out the business fully
  9. More often than not, 100% of the projects will be killed anywhere between steps 6-8.
  10. The reasons will be any or all of the below:
  11. The new product or service will cannibalize the current product or service (even though it will likely be a minor amount)
  12. There is no way to prove beyond a shadow of a doubt that this concept will be highly profitable. today
  13. This concept does not appeal to the companies current market.
  14. The concept is killed, and we restart at step 4

This goes on, typically for around 2 years. Many great concepts are developed. Some of them are even really good. But because they are new to the world products and services, there is no way to prove immediate ROI. Even though most of the multi-billion dollar businesses envisioned out there are developing these types of concepts because they cannot show immediate ROI, they are killed. This repeats.

In some cases, the members of the innovation group spend time experimenting with different technologies. They may but drones and VR rigs and all sorts of cool, neat tech and play with it. They may even create a lab to play around with these devices. They might even build a small internal team of developers to create these proofs-of-concept and run internal experiments. In the best cases, most of the concepts created are filed as patent ideas, allowing the company to use this IP in the future – either to protect future products or license them to others.

It sounds like a cool place to work, doing interesting, useful, and forward-thinking things. It sounds like a dream job, right?

But it is ultimately doomed. Here is what happens next.

Sometimes, a “black swan” hits (like COVID), and financials are scrutinized. Or leadership changes. Or both. Then financials start being scoured.

They see the expense of the innovation group and the lack of profit. Even though this group is actively mapping out the future of the company, they are purged. Sometimes the CINO is fired first. Sometimes the teams are split up and drawn into the rest of the company.

In this purge, the future of the company is eliminated. Short-sighted leadership, looking at the bottom line of today – not the potential bottom-line of the future – eliminate the innovation group, typically with the adage “Innovation is everyone’s job”. To paraphrase The Incredible’s Dash, “If innovation is everyone’s job, its no one’s job.

The story ends. The future of the company is eliminated. The company is effectively dead; it just doesn’t know it yet. I’ve seen this happen over and over and over again. Every time it happens, the company has less than 10 years to live.

Is this your story? Do you see where you are in this process? But all is not lost. There is a way out. You just have to break the cycle.

Continued next week…

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