In a recent Harvard Business Review blog Is R&D Getting Harder, or Are Companies Just Getting Worse At It?, Anne Marie Knott focused on the decreasing success of corporate innovation projects. Innovation drives growth. Leaders must ensure a constant stream of new, creative ideas to develop innovative solutions to stay ahead of competitors. Though companies have increased investments in research and development (R&D), returns have declined 65% over the past 30 years.
Innovation is Getting Harder
Some leaders and academics feel that R&D is currently much more difficult than in the past – most good ideas are already developed and the increase in additional scientists have diminished returns (more scientists, less innovations). Accurate or not, Knott (and myself) feel that another argument that explains the decline of innovation (if it exists) is that companies are just not very good at innovation. Knott studied publicly traded company financials and found that industry innovation had declined; however, corporate innovation was strong, as new industries were created.
Knott noted that though innovation might have gotten harder for some, it had not gotten harder for everyone. This insight potentially showed how some companies were better at innovation than others. Knott also showed how industries might disappear, but companies do not have to. For example, some companies moved beyond typewriters and moved into the growing computer industry. The typewriter industry is gone, and so are many companies that did not embrace change. The computer industry is currently larger than the typewriter industry ever was, and more companies are benefiting from ongoing innovations. New ideas continue to be developed, new companies form (e.g., Uber, WeWork, Thinx), and new industries (e.g., share economy, AI) are created. A company does not have to die unless it allows itself to. Companies that are strong in innovation and strategic transformation adapt, grow, and thrive.
Polaroid is basically gone. It was the market leader in instant photography but refused to accept market and technology trends. Founder and CEO Edwin Land hired people who did not challenge his ideas. Group think and avoiding dissent permeated the organization. As the market moved towards videotape-based systems, Land hung onto film and poured increasingly larger resources into niche products. He could not reinvent himself and Polaroid paid the price. Hanging onto the status quo resulted in a once powerhouse of innovation to decline and basically disappear.
Smith Corona was the leader in typewriters. The company was also one of the first to develop innovative word processors. Unfortunately, the firm had great word processors but never leveraged the advantage – leaders did not see word processors replacing typewriters (nor the computer trend). Executives did not embrace the growing computer market and did not invest beyond typewriters. Now Smith Corona only offers labels – a shadow of their past.
Any industry and company can disappear. Innovation is hard, but not impossible. And no, not all the good ideas have been used. Developing creative ideas can be done much easier than people think. Like any skill, it can be developed with practice and the right tools. Individuals and companies must reinvent themselves. It is critical to understand trends and see where the world is moving, and not be left behind.
My personal experience is most teams use poor methods to develop new products and services. Ideation is typically done ad hoc and haphazardly. Most teams do not learn, adapt, and improve business practices. A team member might practice golf three days per week, but will not study how to perform their job better. Learning typically ends after the diploma is earned. Leaders and employees only know what they know.
Without a constant, proactive mindset (individually and corporately) new trends will pass you by (competitors, too). Teams need to move away from haphazard habits to create ideas and develop innovative solutions. Adopting deliberate and systematic tools and techniques can increase innovation return.
It is time to embrace change and ambiguity. Teams must be encouraged to continuously learn, improve, and share new techniques throughout the organization. They need to create habits of testing, experimenting, and embracing failure.
Innovation is not about serendipity, it is about using systematic techniques to formalize ideation to drive a higher quantity of ideas resulting in a few, high quality “golden nuggets”.
Differentiate yourself, your team, and your company. Practice using different innovation tools and techniques and keep the ones that work. Encourage ongoing learning and experimentation. Stop relying on what worked in the past. If you are not working harder than the competition and creatively leveraging new technologies and meeting unmet needs, growth will decline and you will be passed by. Don’t be like Polaroid, Smith Corona, Kodak, Blackberry and so many other incumbents of the past. Learn, change, and grow. Strategic transformation is hard work, but worth the effort.