(Innovation & Technology commercialization process, from Credit Suisse First Boston New Economy Forum 1999 Synthesis)
In his celebrated book The Innovator's Dilemma,
Clay Christensen explains how successful companies can be "held
captive" by their customers to the point that they become vulnerable to
disruptive innovation from competitors and new entrants, and unable to
sustain the types of innovation that brought them those loyal customers
in the first place.
He's absolutely correct, but there are a set of business dilemmas
around innovation that are even more profound, pervasive, and cultural
entrenched. It is only when you get past the heady idealism of
innovation ("the entrepreneur's competitive advantage") that the
gravity of these dilemmas becomes apparent, and the reasons for the
current dearth of innovation in our society become clear.
Things happen the way they do for a reason. There are thousands of
writers, consultants, business advisors and social reformers out
there calling for more innovation as the means of improving
organizational performance, productivity and resilience, and
achieving breakthroughs in how we tackle social, political,
educational, health, economic and environmental problems. They say we
need to learn to be better innovators, hire more innovative people,
employ more innovative processes and tools, and they'll tell us how to
do it. But somehow, when you look past the hype, this is mostly wishful
thinking: There is astonishingly little true innovation happening
anywhere in our society, or in business. The more I study this, the
more I work with entrepreneurs and the more I think about it, the more
I realize there are three, terribly discouraging reasons for this,
reasons that have more to do with our modern human culture than
economics, marketing or any conspiracy of the established
anti-innovation corpocracy.
Before I summarize these three reasons I will predict that this article
will provoke a minor storm of protest. It goes totally against
conventional
wisdom and the current wave of popular, euphoric thinking about the
untapped potential of innovation. Unlike Christensen's Dilemma, there
are no ready solutions for these three Dilemmas -- and people don't
like to hear about problems with no ready solutions. These Dilemmas
suggest that
innovation consulting and innovation change programs may be largely a
waste of time, energy and money. I will probably be accused of being a
defeatist, of sour grapes (because I'm not as successful as Christensen
and the innovation-touters) or of being discouraging at precisely the time we need to be encouraging organizations to be more innovative.
No matter. I just call it as I see it. I've seen these Dilemmas played
out again and again. I blamed myself for not being able to help my
clients and colleagues imagine better, research better, or implement
better. I blamed myself for not being able to persuade them that more,
bolder innovation was critical to their success, and even their
survival, and for not getting them to see the value in imaginative, innovative
ideas. But it wasn't my fault at all. These Dilemmas are insuperable,
endemic, and totally engrained in our culture.
The three Dilemmas are:
- Most Entrepreneurs Aren't Innovative:
They got into business to fill a niche that the big companies weren't
interested in. They succeeded on the strength of relationships and
know-how about the business they entered, not because of innovation.
They aren't really interested in innovation (unless it's sexy and
marginal and doesn't push them beyond their comfort zone). Real
innovation is risky, and they're very
risk averse -- even moreso, in my experience, than corporate
executives. They do what they must and change when they must. For the
most part, entrepreneurs are not very imaginative. While their CEOs
emulate large corporate managers in their passion for developing
missions, value statements and strategies, and their propensity for
'reorganizations' when things are going badly, they are mostly terrible
at implementing change. They have little or no knowledge of successful
innovation practices and processes. They hate doing research. As
die-hard do-it-yourselfers, they distrust (with some justification)
consultants and others who might
help them become more innovative. They read all the hype books and
articles about corporate CEOs and actually believe the hype. Beyond
flipping through these breezy, phony best-sellers, they are too busy to
be well-read or very well-informed about anything beyond the day-to-day
mundane details of their own business. And they know nothing about
complexity, and hence haven't a clue why the solutions to problems
they've identified don't seem to work. In short, they're scaled-down
versions of corporate managers, who are probably the least innovative
people on the face of the Earth.
- Most Customers Don't Want Innovations:
Customers are as change-resistant as managers. They want sexy, marginal
enhancements (e.g. cosmetic design improvements) not true innovations.
They want movies that are sequels of movies they liked and music that
sounds just like the music they like. They buy cars and watch reality
TV shows that are clones of the ones they bought and watched last year.
Perhaps because changes in products and services generally come with
price increases, they want most things to stay the same forever, even
though they complain endlessly about them -- they've learned that many
so-called improvements and enhancements aren't, and most come with a
new learning curve. And since most products are not intuitive, anything
that requires new learning is annoying, not exciting. Most customers
are terrible learners anyway -- they've never learned how to learn,
so they rely entirely on trial and error ("what manual?"), and end up
using the product ineffectively, until if they're lucky someone (likely
half their age) shows them how to use it properly. Half of all product
returns are due not to product defects but because the customer
couldn't figure out how to use the product, and gave up. Examples of
resistance to innovation and change are everywhere -- after fifty
years, the US still hasn't
converted to the metric system, despite the massive and unnecessary
costs their refusal costs everyone. Brilliant innovations like TIVO
just don't catch on with most customers. A decade after hybrid cars
were introduced, there are still only a handful of models available,
and few customers are clamouring to trade in their SUVs for them.
- Those Who Need Innovations Can't Afford Them: True innovation is about identifying and finding ways to satisfy deep, unmet human needs,
but if you look at the 'wicked' problems in our society -- poverty,
disease, dysfunctional health and education systems, crime, global
warming and environmental disasters -- they have only worsened in
recent decades. Inequality in our society is growing and accelerating,
so that those with the money to pay for innovation have few of the
problems that plague the majority. The rich have private health care
and education, live in gated communities and drive luxurious cars that
keep them distanced from those with real needs. So we get a plethora of
cures for impotence while millions of children die of preventable,
treatable diseases each year -- there's just no money in developing
innovative products, services, distribution mechanisms and channels,
supply chains, and businss models for customers with no income and no
assets. And in our so-called 'market' economy investment in innovation
will only occur when there's a good ROI.
I'm not
saying that there aren't a lot of people who 'get' the value
proposition for innovation, and are full of good ideas and good
intentions. But most of those people are marginalized in our society --
they lack the wealth, the connections and the key skills to bring those
good ideas to market. And even if they do manage to find some interest
for their idea, they are likely to be told that there is no commercial
'market' for it, or launch their own business unsuccessfully to
find that out for themselves, or have their idea so watered down in the
commercialization 'process' that it becomes an incremental novelty
rather than an innovation. Or, if it's a really great idea and actually
does get close to realization and start to attract buzz, it will be
bought out and shut down (or starved of resources, or mismarketed, or
unmarketed) by some big corporation who offers the potential
entrepreneur an offer she can't refuse. And since most budding
entrepreneurs have none of the skills (and relationships, and
self-confidence) needed to start their own business (and no money to
acquire those skills in the 'market'), most great innovative ideas will
never get off the drawing board, or even out of the heads of their
imaginers.
Many solutions have been touted for these Dilemmas
(I've touted most of them at one point or another): Education is
proposed in entrepreneurship, and in imagination, for everyone,
starting in high school while it's 'free'. Not going to happen -- the
education system is a poster child for lack of
innovation, and has no capacity or incentive to teach these essential
skills. 'Best practices' in entreprepreneurship and innovation fill the
Business shelves of the bookstores, but these (even when they're honest
and not exaggerated to stroke the ego of the author or case study
interviewee) are devoid of context, and without a major investment in
time and money learning how they apply and how to apply them, they're
useless and often even dangerous to the reader. Governments promise
R&D credits, government/university facilities, and other incentives
to promote 'innovation', but the process for evaluating and operating
these programs is so political, bureuacratic and otherwise flawed that
the money generally goes to the company that has learned the 'system'
of writing creative, conforming applications and getting them sponsored
by influential people, not to the one that could actually benefit from
such programs.
Solutions have been proffered to make customers
more open to and savvy about innovations, too, but for the most part
they haven't worked either. We all know products that are designed to
be simpler and more intuitive are taken up by customers more readily,
but designers and developers are so disconnected from customers that
they can't resist adding unneeded, complicating functionality (in
response to louder voices inside and outside the organization) that the
size of the unfathomable manual ends up exceeding the sixe of the
product. And while true innovators focus on 'must haves' -- real needs
-- in their design and development, they are usually overruled by
marketing and advertising types who find it much easier and more
profitable to sell 'wants' -- to those with so much money that they
have no real needs. Customers are so used to being conned by false PR
and advertising hype that they don't believe anything they hear about
new products anyway. So, being wary, most follow their neighbours (or
kids) in what they buy, rather than buying what it truly innovative.
And
of course there are lots of foundations and advocacy groups trying to
persuade companies and governments to invest in supporting the
development of, and subsidizing, products and services that go to those
who can't afford the 'market' price. With 90% of all government
subsidies and contracts going to a tiny handful of mostly oligopoly
companies with deep pockets and politicians at their beck and call, you
know how successful most of them have been. They end up spending most
of their time competing with other foundations and NFP groups all
begging for the dollars of the few tapped-out citizens who care enough
to support any altruistic endeavours and the funds of parsinomious
government sponsors facing annual double-digit budget cuts. The economy
simply and relentlessly mitigates against innovation for those who
really need it.
As I said at the outset, I see no solutions for these three Dilemmas. I still believe in the innovation process I have been writing about on these pages for the last four years. In an ideal world, this prescription should
work. Unfortunately, our world is far from ideal, and perhaps its time
for innovation enthusiasts, advocates, consultants and pundits to get
real. Our culture, and the economic, political, educational and other
systems that support it, are all stacked against true innovation. We
need to find a better way, a more practical and realistic way, to bring
about the changes that our world so desperately needs. I'm not yet sure
what that is, and I'm sure open to suggestions.
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