Forbidden Truth About Innovation
GUEST POST from RoIf you heard it once, you heard it a thousand times:
- Big companies can’t innovate
- We need to innovate before we get too big and slow
- Startups are innovative. Big companies are dinosaurs. They can’t innovate.
And yet you persevere because you know the truth:
Big companies CAN innovate.
They CHOOSE not to.
Using Innovation to drive growth is a choice.
Just like choosing to grow through acquisition or expansion into new markets is a choice.
All those choices are complex, uncertain, and risky. In fact:
- 70 – 95% of innovations fail
- 70 – 90% of acquisitions fail
- ~80% of market entry efforts fail
Hold on. The odds of failure are the same!
All three growth drivers have similar failure rates, but no one says, “Big companies can’t acquire things” or “Big companies can’t expand into new markets.”
We expect big companies to engage in acquisitions and market expansion.
Failed acquisitions and market expansions prove us (or at least our expectations) wrong. Because we don’t like being wrong, we study our failures so that we can change, improve, and increase our odds of success next time.
We expect big companies to fail at innovation.
In this case, failure proves us right. We love being right, so we shrug and say, “Big companies can’t innovate.”
We let big companies off the hook.
Why are our expectations so different?
Since the dawn of commerce, businesses engaged in innovation, acquisitions, and market expansion. But innovation is different from MA and market expansion in three fundamental ways:
- Innovation is “new” – Even though businesses have engaged in innovation, acquisitions, and market expansion since the very earliest days of commerce, innovation only recently became a topic worthy of discussion, study, and investment. In fact, it wasn’t until the 1960s that Innovation was recognized as worthy of research and deliberate investment.
- Innovation starts small – Unlike acquisitions and new markets that can be easily sized and forecasted, in the early days of an innovation, it’s hard to know how big it could be.
- Innovation takes time – Innovation doesn’t come with a predictable launch date. Even its possible launch date is usually 3 to 5 years away, unlike acquisition closing dates that are often within a year.
What can we do about this?
We can’t change what innovation is (new, small, and slow at the start), but we can change our expectations.
- Finish the sentence – “Big companies can’t innovate” absolves companies of the responsibility to make a good-faith effort to try to innovate It’s time to acknowledge that innovation (or lack thereof) is a choice and expect companies to own that choice and act and invest accordingly.
After all, would it be great to stop persevering and start innovating?
Image credit: Pixabay
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