Why Innovate?

There’s no shortage of blogs, articles and books written by pundits offering advice to executives on how to nurture innovation within their companies. Take, for example, this recent post on Finextra.

However, the question “why innovate?” seems to have acquired the status of a “holy cow”, judging from the relative lack of buzz around this subject.

Even at the risk of badly mixing my metaphors, we need to take the “bull by the horns” or innovators will forever go round in circles trying to make innovation happen in their companies.

Why?

Ever since Amazon was founded, we’ve been hearing about how its disruptive model would alter the status quo in the book retailing industry, but it has taken some 15-odd years for a Borders moment to occur. And, well before that, we’ve seen WebVan, WebMD and several other innovators flame out. While organizational change might be a long drawn out affair, changes in consumer behavior don’t happen overnight either.
This brings us to the equally important question of “why innovate”, especially in highly-regulated industries and in ones where not too many players seem to be doing it anyway. As long as companies are under the pressure to meet quarterly numbers or else face the wrath of Wall Street, innovators will continue to be weighed down by naysayers in their midst posing this question.
I think the way out is to package innovative products and services in bite-size chunks and aim for ‘early wins’ so that there’s a win-win for all parties concerned.

Let’s take Amazon, for example. Ever since the online book retailer was founded, we’ve been hearing about how its disruptive model would annihilate Barnes & Noble, BORDERS and all other leaders in the book retailing industry in no time. However, note that it has taken some 15-odd years for a Borders moment to occur. Likewise, in the case of NetFlix v. Blockbuster. On the other hand, we’ve seen WebVan, Pets.com, WebMD and several other innovators hit the deadpool well before this period. While guidebooks can help companies to fast track their internal innovation process, they can’t bring about large scale changes in consumer behavior, without which innovation can’t deliver business results.

In short, innovation takes time, often costs a lot of money and rarely achieves commercial success.

Therefore, we can’t blame companies if they ask the “why innovate?” question, especially in industries that are highly-regulated (e.g., utilities) and where not too many players seem to be doing it anyway (e.g. banking). As long as corporations are under the pressure to meet quarterly numbers or else face the wrath of Wall Street, innovators in their midst will continue to be weighed down by naysayers posing the “why innovate?” question, even if they do so only within the confines of their offices (for no one would like to be caught on the 6 o’clock news challenging the holy cow).

The way out?

As this article says, it’s the little ideas that turn into billion dollar businesses. Innovation needs to be packaged into bite-size products or services that can deliver ‘early wins’. The greatest priority for the innovator is to prove that they can make a positive impact on the company’s P&L in the short-to-medium term.

Only then will they get the chance to change the world and leave their name on their company’s grand vision (assuming they want to do so!).

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