Innovation should be an everyday success factor - why do 95% fail?
Several studies over the past years have shown that the majority of corporate innovations fail to meet their objectives, or even make the launch phase. Andrew Lewis, Managing Director at TRA, outlines why innovation should be part of every-day reality for optimal results.
I work with organisations to help them solve some wicked problems – from getting people to engage with Covid-19 vaccines, to figuring out how desirable products can be fashioned from freeze dried cheese. And through all this one thing is consistent, the weird, near-mystical relationship we, as a business community, have with innovation.
Of all business functions, it’s the one we tend to mythologise the most, treating it more like some dark art than everyday work practice. We look upon those who get it right in a big way, like Apple or Tesla, as sorts of wunderkinds; magicians or alchemists transforming ordinary perceptions of markets into precious game-changing ideas. We whisper in hushed tones about those who fail spectacularly, lest the taint rubs off on us.
This religious zeal is not without some merit. We all claim innovation is critically important but acknowledge its elusiveness.
Separate studies from McKinsey and Accenture show that over 80% of executives claim innovation as key to their future growth strategy and vital to future success, but the same studies show that less than 10% of executives are happy with innovation performance. And data tells us that 95% of all product innovations and 92% of new start-ups fail.
Which is fascinating, really. Imagine if the same were true of other functions, such as marketing or human resources? What if 95 out of 100 employees failed to perform, or 95% of our ad spend missed the mark? If it’s so critical, how come we don’t get it right more often? It’s not like we aren’t spending money in this endeavour – in 2019/20, Australian business alone spent $18.2 billion on R&D.
We’re wired to innovate
From a human behaviour perspective, one thing that has always interested me about these fail rates, is how they run against what we know about how brains work. As humans, we are essentially wired to seek out variety. When confronted with novel situations or stimuli, our midbrain lights up with activity and floods us with dopamine, encouraging us to investigate further in order to find reward. As long as we don’t perceive threat, we naturally prefer novelty.
This implies that rather than innovation being a ‘one in a million’ success, created by rogue geniuses, it should be part of the everyday ebb and flow in business.
So how come we get it wrong? How come so many ideas fail to hit the mark? It seems we are still approaching the task of innovation in the wrong way – and failing to make good on the variety-seeking nature of people.
Kaihan Krippendorff, innovation writer and founder of consulting firm Outthinker, has spent years looking into this space and determined that success from innovation largely comes from individuals – employees or entrepreneurs – spotting an opportunity other have failed to see, and of course, having the passion to see it through to fruition.
He argues that innovation success, despite most internal setups, comes less from research & development or a corporate-sponsored team and more from individual perspective and connection to markets.
This also rings true from a human behaviour perspective. Generally, internal teams and labs are more motivated by loss aversion biases in how they approach innovation: playing things safe, harnessing existing beliefs from important senior stakeholders and working within internal confines. This same bias will also likely ensure they aren’t supportive of wildcard ideas coming from individuals outside their teams, who have their own personal breakthrough insights. And therein lies the lost opportunity.
A connected individual, with a unique perspective
Our work as a human insights agency can be thought of as trying to replicate entrepreneurial insights that drive successful innovation. Through use of cultural currents, data and ethnographic research we are looking to achieve this same breakthrough perspective – an angle on a problem that opens up new ways of thinking about solutions.
In this light, it makes a lot of sense that successful innovation often starts with a connected individual seeing a market differently. Unfortunately it also makes sense why this is something organisations find hard to accept and adopt.
Consider how innovation works in the sciences. Science is exploratory in nature, actively testing hypotheses that come from a systematic approach to surfacing new ways of thinking. The scientific method is built to minimise biases and prevent existing beliefs or assumptions from clouding results.
And scientists do not limit themselves to previous work – the equivalent of organisational knowledge – they take a wider view, borrowing and stealing from other disciplines and life experiences. If Archimedes hadn’t made the leap from taking a bath that overflowed, his principle of displacement may not have emerged for many more years.
In the same way, only by creating a culture of innovation in your business, with wildcard ideas up for exploration, and where individuals have a green light to experiment and test, will we be able to increase innovation success rates.
Until we can break down our own limiting ideas about what creates success, innovation is bound to remain in the realm of mysticism rather than that of every-day reality.
