- December 2013
- Posted By Nitzan Shaer
- 0 Comments
The grand goal of sustained innovation has been a top priority for many enterprise executives in recent years. However, it seems that with a few exceptions, most have failed to deliver.
Why, despite the books, the articles, the conferences, and the goal setting, have so few organizations succeeded in delivering sustained innovation? Why, after all of the conversations and deliberations, haven’t business schools and the business community figured it out already?
Based on my interviews of executives and observations (at roughly 20+ companies), I’d like to share my personal hypothesis to answer these questions:
The conventional business rules that are ingrained at most large organizations do not only discourage sustained innovation, they actively stamp it out. Organizations that have succeeded have done so not by following the rules of conventional wisdom, but by breaking them.
If you feel your organization is not launching new products at the rate you think it should, the following rules may sound familiar to you:
- Rule (to be broken) #1: Don’t generate more product ideas than our company can develop. Do you stop generating new ideas for features / products after you come up with five? Ten? Don’t! Rather, strive for 100. It is human nature to settle for the first ideas we find, rather than pushing the envelope to discover the ones just around the corner. A client of ours generated 50 new ideas, some of them really good, only to say to the everyone in the room, “Nice work, now we need another 50.” That’s the right approach!
- Rule (to be broken) #2: Idea prioritization should occur in the board room. How many times did you see someone shoot down an idea, even though the customer would have loved it? In too many board rooms, the assumption is that the people around the table know their customers better than the customers know themselves and should choose ideas for them. Solution? Let the customer’s voice be heard in evaluating new ideas. Don’t reject an idea without first gathering customer feedback.
- Rule (to be broken) #3: Work only on ideas that can move the needle of the company’s bottom line. This is possibly the most common killer of innovation: setting the bar so high that no new idea can actually pass it. Did you know that 95 percent of successful startups pivoted (i.e. changed) their original product idea before making it big? Throw out the rule that dictates ‘‘new products need to generate $100M in three years to be considered.” Allocate a certain set of resources to smaller product ideas, recognizing that over time they will likely evolve into something else. By breaking this rule, you will not end up killing the one that will someday by your breakthrough product.
- Rule (to be broken) #4: Talking to a handful of your customers is good research. So you got out of the office and talked to ten people you know and a few “potential customers.” Enough? No! In recent years, the importance of getting out on the street and talking to customers has been recognized. I support this fully, but also subscribe that it is a dangerous process if not done with a large enough group. Can you imagine what our culinary diversity would look like if the “inventor” of jalapenos decided to ask the first five people he met on the street what they thought about it?
- Rule (to be broken) #5: Incent employees on annual measurable goals. Bonuses based on short-term revenue goals will not encourage innovation at your organization. Guaranteed. If anything, they will end up preserving the status quo. It is essential to create distinct incentives for new idea and business creation that look beyond short-term revenue results. These can be monetary as well as recognition-based.
Innovation isn’t just for startups anymore
Sustained innovation is never the result of following the conventional rules, but of breaking them. Through embracing a strategic approach to identifying, encouraging and executing on innovative ideas, breakthrough products are born. The conventional wisdom is that startups have a lock on innovation. The reality is that the vast majority of startups don’t successfully innovate. Only a select few become a big success, most fail trying. However, when large organizations nurture innovation wisely, embrace the risks and break some rules, their resources can deliver great results.