Is your company anti-innovative?

It’s been said that launching a new innovation from within a big company is like getting a bill through Congress. You spend a ton of time getting votes from peers whose buy-in is critical, officially or unofficially. You have to raise money, and defend it, over and over again. Promises are made, and broken, along the way. Then, even if you’re successful, you can end up with something that looks almost nothing like what you wanted in the first place.

At the heart of this struggle is a tension between what it takes to win in the market, and what it takes to get something your corporate bureaucracy will keep supporting. In a perfect world these two things are aligned, but in reality they often aren’t.

For example, once in a while executives demand new, disruptive, big ideas from innovation teams. “Where’s my next billion dollar business?”  Yet when those out-of-box ideas start coming in the door, they’re immediately measured by in-the-box standards.

This process is both implicit and explicit. Questions like “why should our company do this, as opposed to someone else?” or “how is this innovation strategic to the parent company?” seem reasonable, but they kick off a series of compromises that can break whatever fragile novelty might be central to a big innovation’s success. Put simply, what’s good for a parent company isn’t necessarily good for a new innovation, or vice versa. Worse yet, sometimes an innovation should be funded precisely because it’s bad for the parent company, but a good idea anyway. Once upon a time it would have been good for Blockbuster to acquire Netflix, leave it alone, and let it fight head-to-head with its legacy rental business. Had it done so, today Blockbuster would be… well… Netflix, instead of bankrupt.

When forced to choose between what’s good for an innovation and what’s good for its parent company, the parent company usually wins. This bias can systematically cripple or kill most of those big ideas executives so desperately want. Worse yet, with assembly line precision this bias results in projects the parent company loves, but the market doesn’t. This is where the most expensive, humiliating, colossal failures tend to come from.

I tried to capture this phenomenon in the graphic below.  The black line is how exciting a new innovation may be to markets and customers. At first, corporate innovators can have keen insights into customers, markets and technologies that let them see amazing opportunities. In the beginning these inspirations are often pure and market-focused, based on what’s likely to win, even if it doesn’t fit with the parent company’s processes, culture or internal politics.

 internal vs external align over time graph

The blue line is how well the innovation fits within its parent company. Over time, as the innovator tries to marshal support and funding, compromises are made as the parent company demands better alignment with its mainstream processes and mandates. Tragically, innovators who stick to their guns often don’t get funded because their innovations aren’t seen as corporate-enough (although it’s usually referred to as ‘strategic’ or ‘aligned’). Meanwhile those willing to compromise and shift their businesses in the corporate direction move ahead. In this way, many of the the best insights are routinely weeded out while a lot of mediocre or bad ideas – albeit corporate-friendly ones – keep going.

The dominant way corporate innovations are evaluated, grown and funded isn’t neutral – it’s systemically biased. So when priorities conflict, in ways that are big or tiny, there’s a biased drumbeat towards harmony with corporate bureaucracy rather than innovation fitness in the marketplace. This is both a deep problem and a flabbergasting irony; left unchecked, the default bias of corporate innovation is anti-innovative.

This Post Has 6 Comments

  1. Ludlow

    The perfect investment both fits the company and the market, but yes this is rare. Should companies only fund these rare innovations that are both good for the company and the market, or are there too few of those so the company needs a broader view?

  2. Alok

    The real problem is how to maintain start-up energy when organizations grow big. Few companies realize this inability and go for inorganic growth as they can’t work like they were working earlier.

  3. Lynn

    All, and I mean all, organizations must have an eye on the future and this can be accomplished by having an Innovation team OR provide time for all employees to be innovative. Those who don’t promote innovation just may be left in the dust!

  4. Philip

    Great article sadly this is all too familiar. It is the biggest challenge I face day to day.

  5. Warren

    All organizations doing routine jobs playing by the rules, against any changes, are anti-innovative.

  6. Sharjeel Sohaib

    I think is Intuit is a good example. They didn’t let SnapTax to fall victim to Intuit’s corporate managers/culture. Maybe we can learn something from them. But the point raised is a genuine issue.

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