Several studies in recent years have shown that most business innovations do not meet their goals and do not even reach the start-up stage. Andrew Lewis, CEO of TRA, outlines why innovation should be part of everyday reality to achieve optimal results.
I work with organizations to help them solve some wicked problems – from getting people to buy into Covid-19 vaccines to figuring out how to make freeze-dried cheese into desirable products. And through it all, one thing is consistent, the strange, almost mystical relationship we as a business community have with innovation.
Of all the business functions, this is the one we tend to mythologize the most, treating it as some kind of dark art rather than everyday work practice. We look at those who get it right, in a big way, like Apple or Tesla, as some kind of miracle species; magicians or alchemists transforming ordinary market perceptions into rare game-changing ideas. We whisper in hushed tones about those who fail spectacularly so that the taint does not rub off on us.
This religious zeal is not without some merit. We all argue that innovation is critically important, but we recognize its elusiveness.
Separate studies by McKinsey and Accenture show that more than 80% of executives say that innovation is central to their future growth strategy and critical to future success, but the same studies show that less than 10% of executives are satisfied with performance in innovation. And the data tells us that 95% of all product innovations and 92% of new start-ups fail.
Which is really fascinating. Imagine if the same was true of other functions like marketing or human resources? What if 95 out of 100 employees aren’t performing 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 endeavor – in 2019/20 Australian business alone spent $18.2 billion on research and development.
We are ready to innovate
In terms of human behavior, one thing that has always interested me about these disorders is how they clash with what we know about how the brain works. As humans, we are fundamentally wired to seek variety. When confronted with new situations or stimuli, our midbrain lights up with activity and floods us with dopamine, encouraging us to explore further to find the reward. As long as we don’t perceive a threat, we naturally prefer novelty.
This means that innovation should be part of the daily ebb and flow of business, rather than being a “one in a million” success created by rogue geniuses.
So how come we’re doing it wrong? How come so many ideas fail? We still seem to be approaching the task of innovation in the wrong way – and failing to improve the nature of people who seek diversity.
Kaihan Krippendorff, innovation author and founder of consulting firm Outthinker, has spent years researching this space and has found that innovation success largely comes from individuals—employees or entrepreneurs—spotting an opportunity that others haven’t, and of course with enthusiasm. see it through.
He argues that innovation success, despite most internal settings, comes less from R&D or a company-sponsored team and more from individual perspective and connections to markets.
This also applies to human behavior. In general, internal teams and labs are more motivated by a loss aversion bias in how they approach innovation: playing it safe, leveraging existing beliefs from important leadership stakeholders, and working within internal constraints. The same biases are also likely to ensure that they do not support wildcard ideas coming from individuals outside their teams who have their own breakthrough insights. And therein lies the lost opportunity.
A connected individual with a unique perspective
Our work as a human insights agency can be seen as an effort to replicate the business insights that drive successful innovation. Through the use of cultural currents, data, and ethnographic research, we aim to achieve the same ground-breaking perspective—a point of view 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 begins with a connected individual seeing the market differently. Unfortunately, it also makes sense why this is something that organizations have a hard time accepting and adopting.
Consider how innovation works in science. Science is exploratory in nature and actively tests hypotheses that come from a systematic approach to discovering new ways of thinking. The scientific method is designed to minimize bias and prevent existing beliefs or assumptions from clouding the results.
And scientists are not limited to previous work – the equivalent of organizational knowledge – they take a broader view, borrowing and stealing from other disciplines and life experiences. If Archimedes had not jumped from the overflowing bath, his principle of displacement may not have appeared for many years.
Likewise, we will only be able to increase the success rate of innovation by creating a culture of innovation in your business, with wildcard ideas that can be explored and where individuals are given the green light to experiment and test.
Until we can break through our own limiting ideas about what creates success, innovation must remain in the realm of the mystical rather than the realm of everyday reality.