In a previous post, I wrote about why corporate leaders may be right to shut down non-performing innovation labs. That article focused on what innovation managers get wrong when they engage in innovation theatre rather than real innovation, which is the combination of great new products with sustainably profitable business models. In the interests of being fair and balanced, this article turns its attention to the mistakes that corporate leaders make when managing innovation.
The buck for innovation success stops at the desks of the CEO and his executive team. It is ultimately their job to create an environment in which innovation can flourish. Although there may be real challenges with poorly run labs, there are innovation managers who get it and try to do the right things. Their efforts are often frustrated by how their company makes decisions on strategy and innovation. Most of these talented innovators will quit in frustration; taking their talents to competitors or starting their own company. Below are 10 things that companies should stop doing that may drive their innovators to quit:
1. Telling Innovators To Come Up With Some Cool Stuff: This sounds good. Liberating even. But what about strategy? What exact kinds of cool stuff do leaders think the company needs to meet its strategic goals? Innovators are being set up for failure when leaders say to them; “Never mind strategy. Just bring me some cutting-edge products. You are the startup guys!”
2. The Business Case: Innovators can come up with whole bunch of cool new stuff to work on. But now they need budget. In order to get money, they have to complete at 25 page business case with five year projections. Business planning does not work for innovation. Five year revenue projections for new and untested ideas are fiction. Innovators know this, and so does leadership. But it’s a ritual we must follow. So if you have no business case. No money for you.
3. Arbitrary Decision Making: Fine. We will do the business case. We will also attend the meeting where we pitch our ideas. In those meetings, half the execs will not have read the business case. But these are powerful folks. So they will begin to quiz innovators with random questions. And no… you didn’t just ask the innovation manager about strategic alignment. Your colleagues told her last month to ignore strategy and come up with cool ideas. Executives will fund their pet projects, products they personally like or cool ideas that sound convincing. It’s hit and miss when you pitch ideas. You have no real clue what is going to get money and why.
4. Sales Own Customers — So Don’t Talk To Them: You are one of the lucky few to get money for your project. Now you want to start doing some customer interviews to learn more about customer needs. The sales director is incensed at this idea. Sales owns all customer relationships. Please do not talk to customers without approval from the sales director. Innovation requires that we create customer value. We can’t build our products in a vacuum. Furthermore, waiting to get approvals from the sales director slows down the innovation process and limits the number of iterations we can test.
5. Your Minimum Viable Product Will Hurt The Brand: Speaking of testing. Leadership panics when they see a proposal to launch a minimum viable version of the product to test and learn from customers. The fear is that this will hurt the brand. This is not a ridiculous fear to have, as there are some real risks. However, there are ways to mitigate these risks. Rather than stop experiments altogether, companies can work with innovation managers to set some basic rules of when and how the company’s brand can be used when testing solutions.
6. Our Tech Team Will Only Get To That In Six Months: And no… You can’t hire your own developers. Part of the innovation process is building, testing and iterating on solutions quickly. In some companies all software building belongs to the technology department. All software products must be built or approved by this team. Everybody else must submit their specifications and wait six months while the tech team works through its backlog. This process is deliberately designed to be slow-moving and is the antithesis of innovation.
7. On Time, On Budget: If innovators somehow manage to jump through all these hoops, they will then have their quarterly or annual review meeting to talk about progress. If they have new learnings that caused them to change their idea or business model, all hell will break loose. Why are you doing that?! It is not what you stated in the plan we approved? All we want to know is: are you on time and on budget? Are you delivering on the plan? It doesn’t matter that the plan was never a reflection of what would work in the market.
8. Unexpected Budget Cuts: The company is not going to meet its projected sales this coming quarter. So to save money, leadership decides to cut the budget on innovation projects. One of the things that makes a startup ecosystem work is that the teams always knows how much financial runway they have left. Imagine an investor calling a startup founder to ask for some money back because their fund is not going to meet projections! Ever changing budgets are not good for innovation.
9. You Failed, You Are Fired: For innovation to flourish, failure must be celebrated within the company. If innovators see individuals with failed projects losing their jobs, this will create an uninspiring environment. Furthermore, people working on innovation projects will become unwilling to admit failure. This will make the projects run for longer than they should, which creates an unnecessary expense.
10. Hope You Enjoyed The Workshop, Now Get Back To Work: To support innovation, a lot of companies are running design thinking or lean innovation workshops. However, even as their employees learn these great skills, the companies are not setup to benefit from them. Most employees will find that they cannot apply their newly acquired skills within the company they work for. What is the point of learning customer development, if you are not allowed to talk to customers.
Organizational structures and processes have tendency to overpower human capabilities. Even the most skilled innovation managers cannot create great new products, while doing battle with their bosses about process. Some of these battles can become quite negative and personal, leading good innovation managers to quit their jobs for greener pastures.
Our book The Corporate Startup covers these topics. Please order here.