When Innovation Fails: The Skills, The Wills and The Bills

Through my experience at Swisscom, I’ve worked to help our partners scale up their innovation initiatives. I’ve discovered that the following three factors can play a role in preventing this innovation from occurring:

The Skills

First, check if they have the right skills available within their company. Every new technology comes with different architecture, delivers a different type of performance and requires different tradeoffs. Look for skills that make the old practices obsolete. There are hundreds of books and articles about acquiring and developing the proper skills, but in summary, bring together skillful and curious people. Then, make them question the status quo, and learn with them.

The Wills

These are the factors that affect the will to change in the company. Some of them are part of the vaguely defined company culture. Start with the innovation teams. Do they really want to scale? The teams face an innovator’s dilemma:

• If the project is successful, they might get a small bonus, but their job will become more routine.

• If the project scales up and fails, they risk their reputation and maybe their job.

This high-risk, small-reward deal makes people keep themselves busy with “innovating” for as long as possible, not willing to scale up or shut down. Some may even leave and start their own companies. To fix the dilemma, work with management to provide an attractive path for innovators to do their best work, and keep them with the company.

If the innovation is a sprout in a pot, there are four domes above it that should be opened and aligned so the innovation can scale.

Domes

 

The first dome is other business units. Usually they are not incentivized to support other innovation projects. They don’t want to share their budget, focus and scarce resources for risky endeavors. If the new project fails — which is highly possible — they don’t want to be associated with it. If the project is successful, their own product might be disrupted, and they could be fired.

What can management do about this? If there are expectations of support from other units, they have to be accounted for and properly incentivized. Set common goals, share credit, provide training and offer transition paths for employees. Be sure to give incentives for collaboration, or else keep the units fully separated. You should also be on the lookout for acts of sabotage between the different teams.

The second dome is formed by the big, powerful customers, partners and suppliers whose interests might be affected if the innovation succeeds. They can influence people in charge to slow or shut down the internal development. They can threaten to hurt your business if you step on their feet.

Some of the big online retailers regularly step into the business of their suppliers. This irritates the suppliers, but, as it is in the companies’ best interests, the retailers keep doing it. Work with the company to set clear priorities, and keep them focused on their strategy. If a partner is really important, they might stop the project, but make sure it is in the company’s best interest to do so.

The opposite can also be true – one company started developing their backend with open-source components just to make their vendors more collaborative. They had no real intent to grow this project further, but it gave them a stronger position at the negotiation table.

The third dome that can prevent the scale of innovation is the leadership of the company. The threat comes from a misalignment of priorities and a lack of commitment.

It is not enough if they support innovation in general. They have to support aligned efforts. Technological innovation takes time and money. It could take three to five years before they see any return on their investment. Without a commitment and an alignment of goals, the priorities can change with a dip in resources, and the positive results will never come. Before starting a project, think what you will do if it succeeds. Are you ready to double down on it or not?

The top dome is the shareholders. What kind of strategy do they support? Are they looking for a short-term or long-term return? How much risk do they want to take?

These questions are answered at the very top level and rarely come down to the innovation teams. Try to make sure that there is an alignment of the innovation activities and the owners’ strategy.

The Bills

Corporate innovation serves many goals – building an innovative culture, increasing the engagement of the employees and collaborating with the ecosystem. But its most important role is to create new revenues. This is the bill the innovation needs to fill.

Many times, management expects to see a few big, wonderful projects — ones that use cool new technology, solve world problems and bring good margins. In reality, the innovation portfolio consists of a bunch of small, hairy projects with bizarre business models, high risk and puny margins. Try to address this gap between expectations and reality up front. A magical grassroots innovation that can transform the company doesn’t happen. It requires well-defined and communicated strategic intent, clear financial goals and commitment from the whole company.

To summarize, dedicate a team of skilled and motivated people, and get the management aligned and committed to strategic goals. Communicate clearly across all levels. Learn, adapt and stay on the course.

And may the innovation force be with you.

This post was first published at Forbes.com

 

Stefan Petzov

Stefan Petzov is an innovation manager leading the Technology and Innovation function in the Swisscom Outpost in Silicon Valley. Stefan Petzov has a long experience in agile product development of cloud-native enterprise solutions.

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