When a company gets bigger, they develop excellent execution habits that manage and improve successful business models and value propositions. However, it’s important to not let these habits get in the way of innovation. Think of Kodak: Kodak dominated the camera industry, but failed to innovate with the rise of the digital camera, making them irrelevant. I recently read a post written by author Alexander Osterwalder, that shared 11 bad habits killing innovation in your company. Here is what he had to say:
Relying too much on the current business model: It’s hard to invent an entirely new business model, and even harder to recognize when that needs to happen. The future of many companies, the author argues, suffers at the expense of the present. Don’t disregard the present entirely, but create space in your organization to foster new business models.
Generalizing with decision-making: Many companies have a one-size-fits-all approach to decision-making, which hurts inventiveness in large organizations. Take the example of Amazon: they categorize decisions into “non-reversible” and “reversible”; the former has substantial sunk costs and requires slow and careful decisions, while the latter allows the company to experiment a bit more.
Putting more weight in opinion than evidence: Leaders have accrued plenty of knowledge over the years, but much as I don’t want to admit it, leaders don’t always know everything. That’s why companies need to interact with customers to gather information as opposed to sitting in your boardroom.
Detailed (yet untested) business plans: Established companies often ask for detailed business plans for new ideas. Detail isn’t a bad thing, but innovators need to be able to rapidly and continuously test and adapt ideas without having to navigate miles of bureaucratic red tape.
Outsourcing customer discovery and testing: Large companies often hire outside agents to do market research and customer discovery, yet that’s dangerous when trying to develop new value propositions, business models and growth agencies. For radically new ideas, internalize the hard work (at least at first) of rapid prototyping, testing, learning and deciding. While third parties can help with the process, they can’t do the work for you.
Senior leadership neglecting innovation: I can tell you from experience that being a leader is a full-time commitment and then some. It can be easy to relegate the leg work of getting out and testing ideas to underlings, yet leaders need to more than just sponsor ideas.
Focusing on competitors rather than customers: If you focus on the competition as opposed to the customer, it will limit your vision. Don’t ignore the competition, but if all you do is try to be better than the competition, then you’ll lose sight of some major opportunities.
Focusing on technology risk at the expense of other risks: All sorts of risks come with new business ideas. The company IDEO puts risk into three different categories: desirability (the risk of your customers not being attracted to your new value proposition), feasibility (technology and infrastructure risks) and viability (financial risks). The author of the article also added adaptability, the risk of a business model not being fit for evolving. Make sure you test all four types of risks.
Regarding innovation as “career-limiting”: Being an innovator is viewed as “disruptive” in many companies, and when innovations fail it’s seen as extremely harmful. Yet failure is inevitable with innovation, and in many instances offers valuable insight. By regarding innovation with prestige as opposed to revision, you’ll be able to encourage growth in your company.
Siloing innovation from execution: Companies often have a hard time getting innovation and execution to gel together, with the two departments fighting for the same resources. So try to create a culture where the two collaborate through processes and incentives.
Integrating new ideas too quickly: New ideas are often fragile, and need to be properly scaled before they’re ready to be integrated into the execution engine. Integrating a new idea before it isn’t fully “ripe” will often kill that idea.