5 Ways Corporate Innovation Leadership Activities Are Likely To Fail

Breakthrough Innovation In Corporations Is Essential Yet Hard

First, some backstory, if you will indulge me. Context is often king with influencing, storytelling, and leadership.

I’ve been leading (designing, hosting, inspiring, instigating, cajoling, warning, facilitating, advising, coaching, problem-solving) innovation projects and programs—over 100 full-scale breakthrough innovation programs for corporates like Virgin, Diageo, Genentech, Unilever, and Microsoft as well as developing disruptive products of our own—for 25 glorious, and gloriously challenging, years.

I have also trained 1000s of managers, innovators, entrepreneurs, and R&D folk on how to be innovative and I have coached, advised, and developed many senior execs to become transformational innovation leaders. It’s worth noting that I view innovation leadership as a specific instance or form of transformational leadership—perhaps its most difficult variant.

I have also given 100s of keynotes on breakthrough innovation and innovation leadership.

Over that time, I have witnessed a fair few successful innovations delivered into the world—like catalyzing the creation of the most successful TV show of all time—but far, far, far more failures. This article seeks to explain why this happens so reliably and why those given innovation roles get so frustrated, exhausted, and burnt out that they often end up giving up and changing roles/companies or managing some decent incremental improvements (line extensions, new flavors, improved delivery mechanisms, etc.) but no breakthroughs.

In general, large organizations—and most leaders—constantly get in the way of themselves when it comes to innovation (and business transformation). Even if they are open, curious, creative, and passionate, innovation is so different from Business As Usual, blending as it does creativity and control, freedom and rigor, intuition and intelligence, that the best intentions get destroyed by the reality of the challenges.

As someone who loves nothing more than supporting a team to have and deliver breakthrough ideas into the world, this tendency for innovation to fail, especially in larger organizations, has been a great concern to me.

Not only is my reputation, sense of purpose, and livelihood linked to leading leaders to innovate and transform successfully, but when companies invest in innovation but undermine their efforts, it costs not just them and their shareholders but the whole world, too.

Corporates Were Designed To Be Hyper Efficient, Not Effective At Change & Innovation

Leading a crack cross-functional team to engage in the perilous and pitfall-ridden process of birthing a big, bold, and beautiful breakthrough innovation is one of the toughest jobs in leadership and/or entrepreneurship.

All the failures below above are far more likely to occur than successes are. That is why so many speak about breakthrough innovation, and so few manage to achieve it.

Doing innovation in the creative industries—advertising, film, branding, design, etc—is tough enough.

When I worked at TBWA Chiat/Day, and then started my own brand agency and innovation consultancy at the tender age of 24, I discovered how hard the journey of leading genuine innovation is… even when the incentive structures, recognition and rewards, processes, hiring, performance management approaches, operational practices, legal compliance, and company cultures all align to land bold creative outcomes and the outsized value-creation that comes with them.

But most companies have incentives, compliance codes, cultures, and processes that have all been optimized up the wazoo—after 100+ years of “scientific management” theory, hardcore management consulting to reduce costs and overheads, performance management for efficiency, profit extraction, and hierarchy, etc., etc.—to engineer out as much risk, waste, variety (terrible in production lines, essential in innovation), and challenge (to received wisdom and the assumptions the underpin the old/outdated/mismatched business model) so that they can be efficient and deliver predictable returns to shareholders.

This makes sense when you have successful business and operational models that can churn out growth for decades. Why fix, or even disrupt, what ain’t broke?

But in today’s reality, no organization can just tweak the existing model, product line, and service experience indefinitely and expect to grow predictably… let alone retain the best talent, attract new generations of users, and make the world a better place.

The Urgent Innovation Imperative That All Corporates Face

Avoiding the considerable risks of innovation—for creativity always has an inherent risk of it not working the first time (which it rarely does)—is all well and good in stable markets that are unsaturated and not commodified.

Innovation can cause more problems than it solves in sectors where there are no nimble, agile, and disruptive competitors, and the means of production are hard to access by start-ups, so business models can be defended for 50+ years.

Innovation beyond obvious line extensions and continuous improvement is an optional extra in markets where customer needs and wants to remain static (and dictated by the industrial giants with “planned obsolescence” and need-creating marketing); employees do not need to be engaged, treated with dignity, or inspired to deliver or stay in their roles, and in which there are no global crises like the climate, pollution, or mental health.

During the period between 1950 and 199—which coincides with the exact period in which the execs who run most large organizations were learning how to manage efficient companies that deliver predictable returns to shareholders—innovation was an option but one that brought risks of waste, confusion, and chaos.

So naturally, it was avoided. Either way, innovation leadership was not seen as a necessity for an exec heading for the C-Suite.

But in the relentlessly and ruthlessly changing world that we live in, with all its potential disasters and dangers, with many unfulfilled needs and wants, and customers happy to switch to more relevant and matched solutions, innovation is essential if a company wants to avoid underperformance at best, and obsolescence at worst.

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The 5 Ways Corporate Innovation Investments Fail To Deliver ROI

In this reality, investors and the C-Team, after years of crushing innovation intentionally as it is risky and wasteful, tend to turn to the SVPs and VPs and say “go innovate new billion-dollar business models”… without first transforming the culture and structures—and without empowering and building new mindsets and behaviors (which take quite a while to transform because we humans are organisms, not algorithms). This is perhaps the first great error of corporate innovation!

This means pretty much everything about modern business is stacked against innovation success. This creates a tragicomedy where companies and their talent do their very best only to get blocked by mindsets and the cultures that nurture were designed to prevent said employees from challenging the status quo; and senior leaders who have been trained and incentivized over decades to deliver efficiency, not creativity.

Innovation is almost certainly destined to fail without great leadership, teams, and cultures.

I count all these as innovation fails, in order of magnitude:

1. Refusing to do strategic innovate because execs think they are dominant now, so they always will be; that profits are so good, so why bother; that debt is cheap, and it fuels apparent growth; that endless new markets can be opened up for existing products; and that the business deserves to exist eternally because they’ve been around for a while… and then the company’s products commodify rapidly, debt burdens are not offset by growth (especially in high-interest rate realities), margins are hit so everyone runs around cutting costs to generate accounting profits as opposed to topline growth from value creation… and then, seemingly “suddenly,” the firm loses competitiveness, goes into a death spiral, files for chapter 11 proceedings to restructure, or is bought for way under its peak market cap. Personal examples include working for Nokia just before their peak market share (and share price!), pitching the need for innovation to the makers of Blackberry after picking up customer insights in our ethnographic market research studies suggesting that their products were not a match for where the market was heading, and meeting with Credit Suisse to suggest ethical and creative leadership work that they thought they were too profitable/successful to need (until they lost the trust of their customers)
2. Failing to execute big and bold ideas that were generated in successful innovation projects—so they live on as pretty PDFs on the intranet and in the disappointed and increasingly disengaged minds of the team who came up with them, thus confirming to cynics that innovation investment is a waste and that the company simply is not serious about it. Personal examples are too sensitive to name names but include developing a suite of mobile apps 4 years before Apple launched the App Store, creating a last-mile delivery concept two decades before DoorDash and GrubHub et al., and a food and supermarket range that was executed by a competitor to create c.$5B in value. There are few things more likely to drive employee disengagement, attrition, and churn than being invited to play a part within a strategic innovation program, which they will need to invest all their remaining discretionary effort into to make it work—in the context of perpetual overwhelm, anxiety, and uncertainty—and then…. nothing happens.
3. Implementing innovations but way, way, waaaay too slowly or meekly—with fear, hesitancy, red tape, and endless piloting getting in the way of experimentation and prototyping—so by the time the company hits the market with their products/services/processes, the sector and its users have already been disrupted by more nimble and braver competitors and the offering is, at best, a me-too and, at worse, sinks without a trace (further traumatizing the organization around innovation so making it less likely to happen again)
4. Shrinking, minimizing, and sanitizing a big and beautiful innovation so completely—achieved by the triumph of the anti-creative and highly controlling Business As Usual mindset and its confirmation bias, groupthink, and shaming—that it becomes just another incremental improvement that could have been conceived without innovation work at all (and so delivers very little mid- or long-term value creation)
5. Inventing and implementing a breakthrough innovation… but one that is only driven by the desire to master the universe (tech start-ups), generate profit (corporates), or deliver fame and fortune (entrepreneurs/leaders) with products, services, and business models that drive resource extraction, addiction, carbon, and pollution—rather than being sourced in a compelling business purpose that is about genuinely improving the lives of millions with social and ecological constraints and natural and human flourishing built in from the start

These failures happen because of a set of predictable innovation myths, mistakes, and errors that appear time and time again in companies of all shapes and sizes. The perils and pitfalls and predictable because most of them show up in every single project we run. I kid you not.

The next article shares them with you. Because forewarned is forearmed!