Mastering Innovation’s Toughest Trade-Offs
Leaders must answer eight key questions to address the hidden tensions underlying innovation strategies.
Dan Page/theispot.com
Innovation is frustratingly hit-or-miss. More than 90% of high-potential ventures fail to meet projected targets, while roughly 75% of the products released each year bomb.1 Few established organizations remain dominant over time, as revitalization efforts fail or backfire, costing companies time and money and creating openings for competitors; even fewer generate above-average shareholder returns for more than a couple of years.
These failures are often attributed to a lack of money, talent, or luck. But we think the underlying cause is that innovation in dynamic environments — those characterized by novelty, resource constraints, and uncertainty — is rife with critical tensions. When left unaddressed or mishandled, these tensions sink teams and organizations. Until now, there has been little focus on these tensions in practice or theory, leaving leaders blind to their existence and without the rigorous approaches needed to successfully manage them.
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To address this, we conducted hundreds of interviews at organizations in diverse industries on five continents and surfaced eight questions that every innovation leader must be able to answer correctly. We’ll discuss each in turn and provide practical guidance for harnessing the tension that underlies each question.
1. Should you be flexible or disciplined when capturing growth opportunities?
A small, U.S.-based security software company received a call from a customer prospect in Germany. To capture the business and meet cash demands, the company chose to enter the German market. It subsequently entered additional overseas markets in a similar manner. “It was more like we were drawn in rather than made a conscious decision,” a company executive told us.
Seizing opportunities as they arise is consistent with the conventional wisdom that companies must move quickly in dynamic markets. But there is an underlying tension here. Acting fast leaves less time for deliberation, so companies can easily end up with an incoherent portfolio of mismatched opportunities.
References (16)
1. C. Nobel, “Why Companies Fail — and How Their Founders Can Bounce Back,” Harvard Business School Working Knowledge, March 7, 2011, https://hbswk.hbs.edu; and J. Schneider and J. Hall, “Why Most Product Launches Fail,” Harvard Business Review 89, no. 4 (April 2011): 21-23.
2. C.P. Bingham, “Oscillating Improvisation: How Entrepreneurial Firms Create Success in Foreign Market Entries Over Time,” Strategic Entrepreneurship Journal 4, no. 4 (December 2009): 321-345.
Comments (2)
Stuart Roehrl
Yaser Asgari