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Death by Innovation

Have you ever wondered how innovation can kill a business?

I have experienced it and witnessed it enough times to know it can happen. Don’t let it happen to you.

Usually, innovation keeps the company moving forward, avoiding disruption. An organisation that fails to innovate is almost guaranteed to get left behind. Innovation is the lifeblood of sustainable success.

So how can innovation be a company killer?

Because innovation:

  • Takes resources and focus
  • Involves experimentation and trials
  • May have a higher cost than benefit
  • Innovation in a closed system provides no learning for those outside the system, decreasing the return of innovation activities.

So unless the innovation is open, invested in, supported and correctly focused, the likelihood is that the innovation will cost more than it returns. Not the recipe for a successful business.

Even worse is when innovation becomes an ego trip and personal crusade of a leader, who can’t allow a project to iterate or change due to their high personal engagement with the original idea.

Then there is the innovation that was never wanted in the first place. Innovation only has value when it supports how you can better serve your customer. It doesn’t matter what you want, only what the customer can truly benefit from.

A painful example (that almost killed a company and an iconic brand)

Do you remember the tale of New Coke? A massive multi million dollar ‘innovation’ that rapidly died – giving Coke a huge ‘hit’ and taking some top executives with it. What happened?

  • Coke was losing market share to Pepsi, which was advertising heavily on ‘blind taste tests’ (the Pepsi challenge)
  • Coke decided to alter the recipe and chase a ‘sweeter’ profile (a second Pepsi, almost) to try to capture the market share losses that were shifting to Pepsi
  • They asked the market about what they thought needed to be improved, and the market agreed (asked the wrong people the wrong questions)
  • With much fanfare, new Coke was launched in place of traditional coke – and fell flat. People who were coke drinkers didn’t want their favourite drink changed! Market share started dropping and traditional coke had to be rapidly reintroduced.

Lessons to learn:

  • People didn’t want another Pepsi. They already had one!
  • The market decides what matters, not the smartest person around the boardroom table (it actually wasn’t about sweetness)
  • If you ask the wrong questions, you will always get the wrong answers.
  • Loyal coke customers were disenfranchised with the change. Coke had always been coke – trusted to be what it was.
  • The massive investment in the whole process was committed to and nothing but a successful launch was going to be acceptable (there were no exit points in the process)

I have seen this happen in many industries, with extreme outcomes for those involved.

‘Death by innovation’ often happens where the smartest in the room ‘knows best’ and that the ‘customer will learn’ to love the new product. It is compounded when poor quality market research is conducted to confirm a current bias. It is encouraged when poor innovation process is ascribed to, and amplified where people stake their political futures in the company to the success of the ‘innovation’, leading to them doubling down on a course of action without regard for alternatives (such as exit strategy options).

Red Flags:

What can we learn from this to help us innovate better?

  • Understand that customer needs, wants and expectations are the sole reason for innovating (not internal success, market share or political advancement).
  • The smartest person in the room is ‘dumber’ than you simplest customer when it comes to innovation. Watch for the manager who knows best, knows what the customer wants – and doesn’t actually ask them.
  • Market research only answers the questions you ask of it. Be careful to ask the right questions, not only to confirm your current beliefs.
  • Watch out for an ‘all in’ approach to new big ticket innovation, rather than iteration and learning as the first goal, and progressive value creation happens from there.

When innovation is on the table, ask:

  • Who really needs or wants the big idea?
  • What does it mimic in the customer ecosystem that means it has a viable path to acceptance?
  • Who does it matter to?
  • How can you truly test the idea, without massive investment?
  • How do you allow experimentation and learning to be more important than political outcomes?

Innovation is the cornerstone of sustained success, but it can also be the death of a business if done poorly.

What is the brightest idea you have seen crash and burn?

How do you avoid ‘big tickets’ to self destruction?

If you want to find out how to make innovation a positive force in your business, get in touch to find out how Better Game programs can help you.

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