Innovation Program Pitfalls

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Pitfalls of Innovation programs

Some major pitfalls that contribute to the failure of innovation programs for organizations include misalignment of innovation and corporate strategies, a lack of adequate resources (both financial and human capital), a lack of adequate governance, a lack of a relevant business model, and a lack of a diversified workforce for innovation teams. An overview of each of the pitfalls, relevant sources highlighting these challenges, and potential ways to avoid these pitfalls are summarized below.

Strategic Misalignment

  • Moves the Needle's "How to Align Innovation Strategy with Corporate Goals" article showcases the challenges of strategic misalignment on innovation programs and ways to avoid those issues.
  • Strategic misalignment often occurs when organizations either explore innovative solutions for the wrong reasons (i.e., investing in new technologies simply because they're cutting-edge and not because they're solving a current problem), leadership turnover which may lead to differences in opinion for strategic vision, ineffective communication of corporate and innovation strategies, or context (i.e., loftier initiatives with longer time frames may appear misaligned with immediate corporate strategies).
  • To mitigate the challenges with strategic misalignment, organizations must fully comprehend consumer pain points, create a feedback loop, clearly communicate corporate vision and strategy, and consider context in their strategies.
  • In considering context, it is important for corporations to keep in mind that while certain innovation projects may not align with corporate strategies in the current time and place, that does not mean that there will not be alignment in the future; therefore, it is important to envision longer-term outcomes of innovation programs.
  • Consulting firm KPMG recently released its "Benchmarking Innovation Impact 2020" report, which revealed that nearly half (45%) of respondents to the survey indicated that their innovation efforts were "somewhat connected or aligned" or "not at all connected or aligned" to their organization's overall business strategy.
  • Further, less than 40% of survey respondents' organizations had innovation programs that were defined, integrated, optimized, or perceived to be strategic.
  • To avoid hefty investments with no clear alignment with corporate goals or vision, it is essential that organizations evaluate whether their innovation programs form a cohesive strategy, ensure they are adaptive in implementing agile investments and experimentation to meet shifting requirements, and have a consistent vision of where their organization falls and a strategy of how to achieve that vision.

Lack of Resources

  • A 2018 survey by market research firm Vanson Bourne revealed that 71% of its global IT firm survey respondents struggle with finding adequate funding for innovation projects.
  • Among those who struggle with financial constraints serving as a barrier to innovation activities, 76% indicated that constraints were due to lack of board support for significant investment in innovation."
  • To avoid the pitfall of financial constraints to innovation activities due to board disapproval, it is important for corporations to develop and spread an organizational culture that encourages risk-taking and acceptance of failure for innovation and learning.
  • Developing an ecosystem of innovation is a powerful tool that may be used to bypass pitfalls in finding adequate human capital for innovation activities.
  • A recent survey by consulting firm Deloitte (2019), "The Innovation in Europe" report, found that European firms are often reluctant to form partnerships to grow their wealth of external resources for innovation efforts; however, it is essential that corporations collaborate and engage in knowledge-sharing with external partners to foster a sustainable innovation program.

Lack of Governance

  • For innovation programs to be successful, they must be led by strong and dedicated innovation teams, as identified in Phil Swisher's, former Global Head of Innovation at Brown Brothers Harriman, 2019 article for Harvard Extension School.
  • The article, "How to Lead Successful Innovation: Lessons from Experts," identifies the need for a senior leader to serve as a champion for the cause of an innovation program to serve three purposes: one, to determine allocation of resources to innovation activities; two, to shepherd the growth of a disruptive growth engine that consistently produces successful innovations that contribute to the overall business model; and three, to identify changes in circumstances and assist innovation teams with adapting to these contextual shifts.
  • Leaders overseeing innovation programs must be able to anticipate threats, explore insightful opportunities, and take risks with innovation efforts.
  • A late 2017 Harvard Business Review piece, "The Board's New Innovation Imperative," describes the shift in roles for corporate board members, who were once called upon to mitigate risks for organizations but are now asked to govern initiatives that promote innovation.
  • This adoption has not been smooth for most board members, who are often reluctant to corporate changes for more innovation in favor of more traditional, cost-effective, or evidence-based methods.
  • Given the importance of senior leaders embracing the inherent nature of risk-taking involved in innovation efforts, it is critical that organizational culture shifts to revisit board compositions and encourage changes in their behaviors to promote an openness to exploration of new ideas.

Lack of Relevant Business Model

  • Innovation programs must create value by satisfying a need for an organization and/or its consumers in order to be successful.
  • University of Pennsylvania's Wharton Executive Education course, "Mastering Innovation," is predicated upon the belief that successful innovation programs are not randomly driven but rather, they are the result of a managed process to generate ideas in a way that drives corporate profit and growth.
  • Exceptional opportunities for innovation must be thoughtfully pursued by leaders, who must expertly leverage tools and knowledge to strategically select opportunities and discover ways that they may be directed to meet the strategic needs of an organization.
  • "Avoiding Common Innovation Pitfalls," a 2018 article authored by Jake Carter, a partner at the strategic consulting firm, Credera, also identifies ignorance of end-user needs as a common pitfall for innovation programs.
  • Organizations' innovation programs may be faulty if they either make assumptions about user's needs without verification of those assumptions or if they conflate those needs to better align with the personal interests of the organization.
  • To mitigate this issue, organizations must make concerted efforts to better understand their consumers through observation-based studies, one-one-one interviews, panel discussions, or surveys for qualitative data to substantiate assumptions and ultimately create value for both the organization and its consumers.

Lack of Diversified Workforce

  • Harvard Business Review's "4 Ways to Build an Innovative Team" article explores the importance of creating an organizational culture in cultivating a workforce that is diversified and successful in driving innovative initiatives.
  • Organizations may mistakenly hire a specific type of employee for innovation programs, which ultimately leads to a homogeneous team that lacks diversity in opinion and may normalize and reinforce inherent biases.
  • Corporations must pay particular attention to hiring a diverse set of workers, as studies have shown that diverse teams are smarter, more creative, and are more thorough in their analysis.
  • While team diversity may risk psychological safety due to the inherent risk for tensions, organizations with successful innovation programs establish an environment in which teams may recognize diversity, identify any tensions, and work through them constructively.
  • Additionally, published an article, "4 Reasons Why You Need to Focus on Innovation," which also highlights the importance of strategically hiring the right workforce to drive innovation efforts.
  • Companies need to create a culture of innovation to attract more innovators, who seek opportunities to be challenged and encouragement to create.
  • Recruiting the right talent will lead to an innovative reputation, leading to more growth, competitive advantage, and better meeting of customers' needs.