Why most companies whiff on innovation

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Let’s talk for a few seconds about innovative ideas. We’ll start with a story.

I had a boss once, back in the day, who used to call everything “smart.” It was the de facto buzzword of this situation. “That’s smart,” he’d tell someone. “Those are some innovative ideas.” This is a weird kind of boss to have. On the one hand, most of the shit you propose or say at work is getting praised. That’s good. On the other hand, if everything is within the subset of “innovative ideas,” well, how high is the bar really? It’s a confusing time to be alive.

We supposedly live in this era of “disruption” (mostly incorrect) and “entrepreneurship” (read: it’s the most bureaucratic corporate time in history), and we love to pound our chests about Amazon (“reinvented retail!”) and Uber (“the ultimate disruptive company!”). In reality, a lot of this is bullshit. Most companies have absolutely no innovative ideas — and stick to the same revenue models and business plans they were using in 1977. We ignore this, but we all know it’s true. In fact, companies not evolving around metrics is one thing holding “big data” back.

Let’s trace a bouncing ball. The point of a company is to provide value to shareholders, right? And shareholders want to see innovation and new revenue streams and market share, yes? So then … why are so many companies so bad at producing innovative ideas? There are a few reasons. Let’s start with a titan of business thought.

Innovative ideas: Let’s commence with Clayton Christensen

Clayton Christensen is a big deal among people that read business “thought leadership” and journalism. He’s a Harvard professor and has hit more than a few targets in his day about business trends and disruption, etc. Here’s a long discussion with him on Wharton’s website entitled “Why Marketers Often Miss The Mark In Product Innovation.” It’s a really good, nuanced article that covers a lot of business shifts in the past 10 years. If you’re interested in that kind of stuff, read it. Ultimately it becomes largely about customer experience (important), but it’s still good.

In a supposed Age of Innovation, why are so many companies so bad at it?

Here’s a money quote:

A recent McKinsey poll of global executives finds that the vast majority value innovation as “extremely important” to their growth strategies, “yet a staggering 94% were unsatisfied with their own innovation performance.” This shortfall comes despite the fact that “businesses have never known more about their customers,” and appear to have “structured and disciplined” systems in place for putting all that data to good use.

Soooo … companies know a lot about their customers. (Good!) They appear to have systems in place to utilize data. (Great.) But … 94 percent think the innovative ideas aren’t coming? Egad. What gives here?

So what does Christensen say about innovative ideas?

He talks about “process” mattering more than “product” — some executives would agree, but many would slit their wrists over this assertion — and brings up the example of Intuit, which makes Quickbooks. Quickbooks has 80 percent market share in small businesses, essentially. To wit:

But it wasn’t the product (accounting software) that mattered. It was the process, the job to which small customers were putting it to use — which turned out to be simple bookkeeping, the basic mechanics of moving money around. This new “job insight” led to the development of QuickBooks, an unlikely success in that it offered half the functionality of more sophisticated software at twice the price. But Intuit realized they weren’t competing against other accounting software — they were competing against the alternative of hiring a full- or part-time bookkeeper.

We’ve seen other examples like this. Twitter was supposed to be a podcasting platform. It became, well, Twitter. It kinda sucks now and might be dead in three months, but it was important to society for a while! Things pivot and change based on how the user wants to use them, not based on what the company thinks the deal is internally.

I try to think about work in different ways, and I also try to call out some managerial BS we’ve all experienced. If that kinda sorta interests you, I do a newsletter every Thursday. Feel free to join up.

This is the first thing to understand about the decline or stagnation of innovative ideas.

Innovative ideas: Other issues

Let me run through a quick list:

That’s just a quick list. I could go on for days with some of this stuff.

So how we can get more innovative ideas out of people?

Let’s start with what not to do. Do not buy some type of “employee engagement software.” That’s just another thing people will have to manage, come to resent, and you’ll abandon it. Don’t do that.

A few ideas for fostering innovative ideas:

None of this shit is rocket science. In reality, it’s barely even making an omelette-level hard. Why do so many companies whiff on innovative ideas? Because they’re terrified of changing something that might shift a revenue stream negatively. News flash: conflict drives growth. Wars, marriages, organizations, etc. You need conflict to move steps forward. So maybe a few “innovative ideas” totally bomb. No worries. You’ll hit one out of the park. Or you can stick your head about 18 feet up your ass and chase retirement with the same metrics you were taught in 1991. That might not end as well.

What else would you say about innovative ideas and their demise in the workplace?

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Blogging, largely about work and how to improve it. How I make (some) money: http://thecontextofthings.com/hire-freelance-writer-ted-bauer/

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