The other night I was talking to the former head of research of a giant international pharmaceutical company. I asked her three questions:
1) How did her company innovate to make better experiences for consumers?
2) What disruptive technology were they investing in?
3) Based on the changing world, would this company ever shift to being a B2C business?
I was provided much the same answer for all three questions,”We’re a heavily regulated industry, we are not allowed to have a relationship with consumers, and we’re not a technology company – that’s not our core business”. Whilst these might be the right answers politically from this persons perspective, what I heard was a recurring theme which echoes why many companies fail to grasp what disruptive innovation is and how to deal with it.
Innovation and disruption isn’t about who you are now, it’s about who you need to be or could be, as well as adapting to what is happening around you now and in the future. For the pharmaceutical companies heavy regulations do certainly exist today, but to innovate we have to ask questions like; What if we weren’t regulated? What if something came along which changed the regulations? How can we be the one that changes the need for regulations? After all, deregulation is often just a shifting of responsibility and technology will often provoke such a change. There are several reasons why this will happen one day for Pharma’s in certain areas but I’ll save that for another article. Let’s move back to innovation in general…
Innovation in large businesses used to be easier. Imagine being a CEO twenty years ago. Firstly, there was more time. Everything was slower. News took three days to get to the press. Nothing got ordered without someone licking a stamp. Companies only released finished products after years of testing and 100% of technology products were bought by nerds. You had one line of distribution, and your consumers shopped in one place. If someone released something competitive or synergistic, you went out and bought the company.
How that has changed… Today’s CEO has to wake up to find out some kid in his garage has cobbled something together with an Arduino and a 3D printer or an app that makes his company’s core business look like it will be a dead business within months. Not only that it’s front page news thanks to KickStarter, he’s raised $10m in a heartbeat and all your shareholders are already emailing and tweeting you to ask why you hadn’t come up with something like that sooner. His response will probably be to blame the IT department for not being with it, or simply say the other thing is going to fail because his company is bigger, established and more important.
So why do companies fail at innovation?
1) Your company is run by accountants not visionaries.
Probably the most common reason in tandem with (2,3,4). True innovation requires real leadership, not managers. This of course should start with the CEO, but today many CEO’s are merely over-promoted CFO’s. Glorified bookkeepers rather than game-changers. Or perhaps it is someone who was really good back in their day, but not anymore. Real innovative leaders empower and trust their staff to try and fail, whilst taking ownership in it. These leaders are hands on. Their time with the innovation team far outweighs time with the board. Innovation is as important (if not more) than this months sales figures.
2) You have a ‘blocker’ working in your company.
The blocker thinks their job is to save the company money on worthless irrelevant ideas. The blocker pulls funding and people from R&D. The blocker knows more than everyone else but never explains what. The blocker scoffs at younger people with fresh ideas and often ridicules them often with a quip about how much better a pen and paper is than any existing technology. When cornered the blocker uses the words ‘process’ and ‘policy’ whenever they can to justify themselves.
3) You can’t break old habits.
This is the biggest trick and the hardest to overcome. We are humans. Our brains process everything into patterns to make it easier for us. We are programmed at school: Do as you are told. Eat with your fork in your left hand. 2+2 is 4. We like everything to go in a box. Our lives are spent sticking to the well beaten path. Anything off the path is a distraction or dangerous. In order to innovate, we have to interrupt our normal course. We have to think laterally and to find the meta. We have to assume that what we know or the path we are on might be wrong. We have to believe that change isn’t something that happens around us, but something that has to happen within too. This is hard. But it is a must and the most important of all the points to address.
4) You think you have time to catch up or be a fast follower.
Do I really need to explain this one? These are the new rules: Yesterday, the big ate the small. Today, the fast eat the slow.
5) You are too busy.
Everyone is too busy. Because right-now is so much more important than next week, month or year isn’t it? For an innovator the thinking is in reverse. An innovator can’t handle the right-now unless the future is in check. Again this is a real difference between a leader and a manager. As Wayne Gretzky once said, “A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.”
6) You don’t have a budget.
This is the biggest of all the innovation cop-outs. Firstly, innovative thinking has a sum cost of zero. It happens on the bus, the restroom, the minutes before you fall asleep. The only problem here is that staff are either too lazy to think about doing something innovative or they think other things are more important. In reality, the cost of running a hackathon and a 24 hour think-tank with innovation professionals is probably less than the company spends on cleaning the toilets every quarter. The cost of not innovating? : Priceless.
7) You are the smartest person in the room.
The saying goes, “if you are the smartest person in the room then get out!” It’s amazing how many people think they don’t need anyone else. They already have the best people, either in house or working at their agency. The job of an innovator is to constantly pound the pavement looking for new people or things to disrupt the alreadyness*. The best companies have think tanks or labs which have a shifting constitution.
8) You don’t know what innovation is.
Whilst this sounds rather flippant, the reality is that in most organisations ‘innovation’ is akin to changing the colour of a box the product was in, or updating the POS system. The person that chose the colour lime green was promoted for their innovative thinking. Let’s be clear about this: Disruptive innovation is about paradigm change, when something is completely rethought and augmented or replaced by something totally new. It is not merely a step change. Define what innovation is, and stick to it hard.
9) It’s someone else’s job.
It scares me how many people say they are not innovative or how much they want to blame others failures. Much of being innovative is about being receptive and open. It’s not just about making choices, but finding them. We are all capable of starting the innovation process even if we don’t finish it. If you think you are highly innovative but someone else has the job you want, it’s up to you to prove otherwise. The best innovators also need to be good storytellers – your undiscovered ideas need a voice, or another person with one.
10) You will get fired for failing.
At what point in time will you get fired for not innovating and be replaced by someone that can? Sometimes the cost of doing nothing is far more than giving it a shot and failing. Tip: Just learn to fail fast and wisely.
11) You relied on the script.
Ha! There were only supposed to be ten reasons weren’t there? Well that’s the final failure of companies that fail to innovate. They relied on the rule-book, over-engineered everything, and missed a simple opportunity. Don’t get blindsided. Lesson from Spinal Tap below: Ignore the script. Dissolve the logic. Have a cheeky strategy that goes beyond. Find the dial that goes to eleven.
* Innovation vs correctness?! Just because ‘alreadyness’ it’s not in the dictionary today, that doesn’t mean it won’t in the future. Don’t worry about people correcting you, but anticipate them doing it if you can.