We risk becoming addicted to innovation.
Over the last few years I have seen an increasing number of companies becoming what I am calling addicted to innovation.
There has become a deep-rooted belief that if you aren’t constantly innovating you will become obsolete. Yet innovation was and remains an activity that is risky (today there is a low 20% success rate - it is hard to predict the consequences of your predictions!), but now it seems to have become an activity that makes a company’s management “feel” safe. Some say the abundance of cheap capital over the last 10 years has fueled this, arguing “when the price of keys is low, it pays to unlock a lot of doors before deciding which one to walk through.” Unfortunately, I don’t believe this because once you combine the operational impacts of opening and walking through just one door, you had better have chosen it carefully.
I believe that a lot of the innovation we see and hear about today is a defensive reaction by management to when they and their company feel vulnerable and it tends to come at the expense of supporting their well-established existing products and services.
What managers fail to appreciate is that there is a material increase in complexity the organization must handle resulting from the desire to innovate, whether rational or not, and it can subsequently bring an organization to its knees. It should never be an activity to help executives achieve short term business goals but be focused on strong customer needs. If it is not, focus will quickly be lost, confusion will reign and what you once had will be lost.
Poor product and portfolio management can also help to confuse the value proposition, market position and sales cycles (ie requiring new decision makers to be included) and at the end of the day anger customers.
The chart below is an adaption of Clayton Christensen's which shows how customers simply aren't able to adopt new innovative technologies at the speed software companies are developing them today and for us to succeed we must be super sensitive to this.
To avoid an increase in complexity and dilution of the value proposition, innovation must be driven by “true” cross functional teams with a customer centric focus. I suggest reading blog where I talk about hacking innovation.
Innovation for the sake of innovation has little value. It is how you position innovation and it is organized within the company that makes the difference.
• Align and involve of all key divisions and include your customers • Constantly assess whether your innovation efforts are misdirected by measuring any increase in complexity for customers • Constantly assess what value you are releasing for customers over and above your core services and products
In summary, unmanaged innovation leads to excessive business complexity in sales, marketing, product development, IT and administrative processes – this results in higher expenses and difficulties for customers and employees.
Be careful.
