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Why Innovation Fails

By way of my introduction as a new member to IGN, allow me to share a recent post on the topic of innovation. 
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Why is it so difficult to innovate?  I’m talking about taking a good idea and creating something valuable enough for others to buy or use? There are a multitude of studies that suggest the failure rate for innovation ranges anywhere from 60 to 90% depending on the industry and product type (Matta & Ashkenas, 2003; Tidd & Bessant, 2009). According to a study that involved the Harvard Business School, close to 9 out of 10 attempts to innovate end up as failures (Ulwick, n.d.).  It reasons that the bolder the idea to innovate, the greater the risk of failure.  Failure is defined as an outcome that does not meet the anticipated benefits agreed before launch.

 

One can’t help but ask, why such a low success rate?  To understand the nature of this problem, a survey was conducted among a sample size of 65 participants across three different LinkedIn user groups from November 6 – 12, 2014. The participants were asked to list the primary reason why innovation projects fail.  The assumption is that the responses were based on a combination of the participants’ opinion, observation, and first-hand experience. Below is a summary of 50 reasons why innovation can fail.  

 

(1) Innovation fails due to lack of senior management support

(2) Innovation fails due to not having the “balls” to pursue new ideas  

(3) Innovation fails due to not having a well balanced portfolio of wacky & less risky ideas

(4) Innovation fails due to having the wrong people involved; attitude, creativity, & ability

(5) Innovation fails due to a bad culture fit that resists the need to innovate

(6) Innovation fails due to leadership not understanding how to manage innovation

(7) Innovation fails due to fear of job loss; fear of adverse affect on compensation or career prospects

(8) Innovation fails due to not connecting with customer needs in what gets innovated

(9) Innovation fails due to improper assumptions on product costs and customer value 

(10) Innovation fails due to leadership pressure to “de-risk” the product with less innovative features

(11) Innovation fails due to worrying too much about failure and not enough about learning 

(12) Innovation fails due to lack of consensus / support

(13) Innovation fails due to inflated egos among team members and stakeholders

(14) Innovation fails due to not have an effective sponsor with sufficient influence/clout to push forward

(15) Innovation fails due to insufficient detail on customer needs, cost data, business model 

(16) Innovation fails due to lack of inspiration from executive leadership to drive innovation

(17) Innovation fails due to ignoring “idea people” with valuable input to innovation

(18) Innovation fails due to lack of investment to fund prototypes, development, tests, and launch

(19) Innovation fails due to resistance to change and failure to see beyond a short term mindset

(20) Innovation fails due to emphasis on execution versus to discover, learn & ultimately succeed

(21) Innovation fails due to not having an effective innovation framework in place to guide execution

(22) Innovation fails due to trying to work with a bad idea (little to no market value)

(23) Innovation fails due to fear of the unknown, being overly risk adverse

(24) Innovation fails due to preconceived notions that closes mind to new ideas

(25) Innovation fails due to leadership not knowing how to cope with setbacks

(26) Innovation fails due to leadership not understanding that failure can lead to future success  

(27) Innovation fails due to a weak or non-existent business case to justify action

(28) Innovation fails due to conflict with established lines of business for budget dollars

(29) Innovation fails due to conflict between short term profits & the need to invest in the future

(30) Innovation fails due to unrealistic expectations of “saving” the company from failure

(31) Innovation fails due to rigid business models that fail to adjust to market demands & threats

(32) Innovation fails due to an unwillingness to step out of one’s comfort zone & experiment

(33) Innovation fails due to overconfidence in success while shortcutting steps needed to innovate

(34) Innovation fails due to poor timing in launching a new product to customers  

(35) Innovation fails due to moving away from existing products too soon (cannibalizing market share)

(36) Innovation fails due to lack of a clear vision to guide future initiatives and goals

(37) Innovation fails due to not being able to execute steps to innovate (conflict, uncertainty, inability)

(38) Innovation fails due to time pressures to rush to market while short cutting validation steps

(39) Innovation fails due to expecting too much from an innovative product (unrealistic benefits)

(40) Innovation fails due to mismatch between perceived product value and customer demand

(41) Innovation fails due to not forecasting future market need

(42) Innovation fails due to an ineffective product launch strategy; disappointing adoption rates

(43) Innovation fails due to absence of clarity on the organization’s mission and brand

(44) Innovation fails due to lack of imagination of what’s possible; what if …, why not …, can we …?

(45) Innovation fails due to giving up too soon, too often

(46) Innovation fails due to wrong or incomplete metrics to measure success

(47) Innovation fails due to being forced to make success happen NOW versus over time

(48) Innovation fails due to too much pressure put on the team to succeed without setback

(49) Innovation fails due to not knowing what the customer wants and how to give it to them

(50) Innovation fails due to tight leashes with overly bureaucratic impediments

 

Study Limitations

Several limitations need to be recognized that impact the study’s overall validity and credibility when compared to a larger population of organizations. The survey results are limited in that they represent particular points of view from members who belong to the following LinkedIn user groups: Strategy Management Forum, Strategy Consulting Network, and Front End of Innovation. Through association with these groups, the likelihood of bias existed given the members’ likely background in strategy and innovation as opposed to line operations or back office support. A total of 65 members volunteered from a total population of approximately 94,000 group members, representing a .065% participation rate. An unknown percentage of the groups’ members were inactive.  One can assume that the participation rate would increase if the population only included active group members. No tests were performed to establish whether this was a random sample.   Despite the limitations cited, 65 participants from various countries, industries, and organizations provided a wide range of insight as to what causes innovation to fail.

 

Findings

The findings reveal that the reasons for failure vary widely. Several participants claimed that there is no one single reason why innovation fails.  Often times it is a combination of problems that undermine innovation.  Distilling the 50 reasons cited as to why innovation fails, the following high-level constructs come to light:

 

(*) CULTURE:  Resistance toward Change

(*) FRAMEWORK: Ineffective or Absent Framework to Innovate

(*) CUSTOMER: Bad Ideas / Customer Disconnect

(*) LEADERSHIP: Absent / Ineffective / Unaligned

(*) BUSINESS CASE: Faulty Assumptions

(*) FEAR: Risk Adversity / Reluctance

(*) VISION: Fixation on Short Term

(*) RESOURCES: Inadequate

 

Whereas the survey’s findings provide valuable insight, addressing what can be done to avoid potential problems is where the real value to innovation lies. Knowing what to look out for, who to leverage, and how to adjust, leaders can take action to strengthen the overall ability to innovate.  The expectation is that the dismal 10 to 20% success rate can significantly improve for those organizations that understand how to adapt and adopt more effective means to innovate.     

 

Future Study

To provide for a more balance view of why innovation efforts fail, further study among subjects outside of the three LinkedIn user groups used in this survey is warranted. Obtaining varying points of view from a CFO or operations leadership perspective, for instance, can surface additional insight on why innovation fails.  Moreover, further segmentation of the population by industry and national culture will contribute to specific findings as to the causes of failure.  The objective is to highlight these failures so that others can be more successful in innovation than in the past.

 

References

Matta, N.F. & Ashkenas, R.N. (2003). Why good projects fail anyway. Harvard Business Review,

81(9): 109-114

Tidd J. & Bessant J. (2009). Managing Innovation, Integrating Technological, Market and

Organizational Change. Wiley Publishing

Ulwick, A. (n.d.).  Failing at innovation is likely and… costly. Retrieved from http://theinnovationandstrategyblog.com/2013/06/innovation-failure-probable-and-costly-12/


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Comments (2)
Posted by: Robert Bornhofen  (Guest Speaker  at University Of Georgia, Terry College Of Business ) on Nov 18th, 2014

thanks, Arthur. Someone  once compared the science/art of innovation to a golf swing ... there are a number of things that can go wrong ... even the slightest problem can shank the ball (idea). 
Posted by: Arthur Fox  (Founder And Chief Innovation Leader  at Innovation Global Network ) on Nov 17th, 2014

This is certainly a comprehensive list of the reasons why there is such a low rate of success when it comes to innovation.  It does point to the fact that all aspects of a company's leadership, reward and compensation system, processes and culture needs to be conciously and sustainability developed in order for hgh rates of successful innovation to occur.  The problem is that the Managment of many companies do not understand or are not willing to commit to doing everything that is necessary to make this happen.
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