Five Reasons Why Enterprises Stumble at Innovation

Innovation

In an earlier post we covered social factors that lead to acceptance of failure in startups, reading it would help get some context. Writing that post gave me another perspective for why enterprises fail at innovation, I have written a few posts around this topic. For example in an old post replace collaboration with innovation and you will find views there still hold.

Conclusion from earlier failure in startups posts was that stance of accepting failure as possibility is key for new ideas and businesses be created. Which dovetails, in my view, about why large enterprises so often stumble at innovation, or don’t innovate at the level they should, especially considering the resources they have. Here are my five reasons.

Decide and Move Forward

The positive aspect of being risk averse is being thorough in planning and execution. The negative aspect is when all and sundry want to make sure fingers will not point at them when things go wrong. One does not need to play russian roulette with new ideas but can definitely exercise judgement in the interests of moving forward.

Blind Adherence to Processes

Processes that make sure repeatability actively prevent people from thinking about the case on hand. The letter of the processes takes front-seat, the spirit goes quietly slinking away. What I am responsible for becomes more important than doing what is right for the organization.

Assumptions of Invariant Context

Enterprises plan and organize for continuity of service. One key assumption in planning is that external factors, the context in which they work, do not change. Or even if they account for contextual factors it is often viewed via old lenses and biases. This was an acceptable assumption is the industrial era. For the information age, there could be no assumption more fatal to organizations. A globalized economy does not pause to catch a nap or a breather. Everywhere people are thinking, building and moving forward faster.

Not all Gatekeepers are Visionaries

Anyone who has pushed a new initiative in an organization must know the mind-numbing conversations where every passer-by is to approve the idea. They have a fancy term for this, “building consensus”, which is a sound process in principle but seldom works as it should. The assumption that all you talk to are skilled enough to judge an idea and understand nuances is not always true. Go to any organization who don’t innovate as much as they should and you will find well-intentioned, risk averse and turf hugging people holding the organization back.

Innovation is pursuit of an unknown perfection

Of course there will and must be solid research into the idea, business models built, costs and revenue estimated & tracked etc. But at heart innovation is a venturing into the unknown. Every prototype, every conversation, every contact with a potential customer peels the layer off the next revolutionary product. Having to run an idea past a committee or make it jump through bureaucratic hoops is a quick way to snuff out every wisp of innovation.

What do you think?

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Digg and Conditions that Make Failure Acceptable

Digg is dead. Digg’s failure was a chance for bloggers to speculate about Digg itself and what makes startups fail and rise up.

There were the usual condescending views on what happened to Digg. See picture below.

Failure of Digg

In case you did not get the joke, here is the actual cover published many years ago.

Failure of Digg, Original Cover

There were positive takes too, for example here is one from Sarah Lacy:

The lesson from Digg is crucial as Silicon Valley’s ecosystem has made it easier and easier to start a company. It’s that a great product is necessary but not nearly enough. Building a real company is harder, and it takes execution and leadership.

And Sarah ends the article with this:

There will be haters on this post. And that’s fine. But the people who write checks in the Valley have respect for what Digg built, whether the founders fell short or not. Smart people will always want to back these guys– as Mike Maples said on Ask a VC last week– and people like Arrington and me will root for them again.

Context of Failure

In my understanding there is a specific context in which the sentiment “failure is acceptable” occurs. This context is driven by three factors.

First, the economic drivers of society have changed from being manufacturing oriented to one driven by information and software. Software products are not typically capital intensive, besides Moore’s Law ensures more CPU power being available for less cost. So software companies are born, grow and mature at a much faster rate than those that manufacture things.

Second, most major economies are globalized, coupled with spread of internet and internet based services makes an unimaginable amount of competition possible. The key here is that location is not an impediment to build and sell software. As long as connectivity exists, any service can theoretically be served anywhere. Theoretically because there are laws around what can be sold from and to in each nation. But in principle location is not a hard barrier for digital services.

Third, increasing complexity of societies driven by change in demographics of nations, the migration from rural areas into cities, availability of cheap communication devices, affordable internet connectivity and other factors drive an inordinate rate of change and new perspectives that leave little room for certainty.

Consequence

With the above three factors influencing our context, it is easy to work out why investors and entrepreneurs take the stance that “failure is acceptable“. Basically very few have any certainty on what product or service will succeed in the marketplace. A product that succeeds in the US, does not even start in Brazil or India or China. There are no clear answers.

The option to not failing seems to be to sit tight, which certainly is no option for dreamers and builders. Besides in software related services the life-span of vetting a product is quite short. Unlike manufacturing a car where it takes a few years to build one and then test to see if it succeeds, a prototype software product can be done in as few as handful of weeks to get feedback from potential customers.

So a couple of years spent building a software product that has failed is no big deal, the experience of having executed idea still remains valuable. These lessons learnt from failure and the endurance built up in execution can be reused. The VCs and entrepreneurs have thought through these dynamics, leading to insight that failure does not kill and one can always try again.

Bottom line, execution builds competency regardless of outcome.

Is it just a fashion?

I also think, this is no ephemeral trend..this is a deeper perspective of what makes work essential to us as humans. Beyond its ability to put food on the table, work infuses meaning to many of us and without that ability to leave markers around many would be unhappy. But here I digress into philosophical territory and will have to stop I guess! What do you think? What makes failure acceptable, at least in the technology industry?

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Cure for Success and Failure

This post is on dealing with the effects of success and failure on the ego. Not a philosophical approach, as am usually inclined, but something more pragmatic for those working to make their visions a reality.

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