Why Innovations Fail


We all had experienced this. The boss had an exciting great idea and rallied the team to push for a big bang launch. Big marketing budget was given to deliver the product launch event. Huge cross functional task force formed with mandate to “make it happen”. Regular steering committee meetings with top managements conducted to ensure commitment right from the top. But, it failed, miserably. Like fireworks in the sky. Beautiful launches but you can see no traces of it the next morning. The market adoption failed.

What happened? Why did it fail? From my own painful experiences, there are three key reasons that cause great ideas to fail.

1. Solving the wrong problem: What is the “Jobs-to-be-done?”

We fell in love with our own idea too fast. We think we had got the next “Big Idea” that will change the world and focused all our resources to deliver the idea. We fail to spend enough time defining the “Jobs-to-be-done” (JTBD).

“Jobs-to-be-done” is an approach advocated by Harvard Business School Professor, Clay Christensen in his book, “The Innovator’s Solution.” The key is to focus on the “problem” and not the “product.” Like what Harvard Business School’s Theodore Leviit said, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!”

Before we gather the team to launch a product, we need to ensure that we are getting the problem statement right. What is the problem that we are trying to solve? What is the “Jobs-to-be-done” from the customer’s point of view? In a large organization where we have sales department that is in-charged of fronting customers, marketing department that drives marketing promotions and campaigns and product team that is responsible for product roadmap, who is the driver to define the “JTBD?” Ideally, we should establish a cross-functional team to define “JTBD”. The cross-functional team driving the innovation would be able to test the “JTBD” from different angles and through the process, align various department’s understanding of “JTBD” for the new product. This process will minimise issues in large organization where execution fails because of differences in interpretation of what the product is “hired to do.”

2. Fail to test assumptions: What needs to be right before the innovation can happen?

We are all great at creating beautiful business case that shows wonderful ROIs, IRR and whatever the   finance   department  is asking for. However, when the rubber hits the road, more often than not, our assumptions are wrong. There is no point spending huge amount of time perfecting the spreadsheet numbers. As Intuit’s founder, Scott Cook said in an interview by BusinessWeek, “For every one of our failures, we had spreadsheets that looked awesome.”

The key is to understand the assumptions and drivers behind the business case. What are the assumptions that must be right before our innovation can happen? One useful tool is the “Discovery Driven Plan” advocated by Dr. Rita McGrath. In her words, it is a “Plan to learn” where she shared systematic ways to track key milestones and assumptions behind a new venture launch. As we launch new venture or products, we track the learning and test if the original assumptions are correct. If the data shows that our original assumptions are wrong, we would know the next course of action to take.

At times, market might have shifted. For example, price erosion in the market might be higher than the original assumption due to increased competitive pressure. All these are dynamic. Hence it is critical to test the assumptions along with the tracking of key milestones. This will create a closed-loop system for the team to know when and how to change the next course of action.

3. Measuring the wrong thing: Aborting too early, too fast

In large organizations, the  finance   department  would have a set of metrics to measure the success of products or departments. These are very often the revenue, profit margin, market share and growth rates. For emerging technologies or new businesses, the metrics used to measure the success must be different from mature products and segments. If not, we will risk killing the idea too early, too fast.

The metric to measure innovation should be heavily weighted on growth momentum. That indicates the market acceptance of the idea and the growth potential of the innovation. In the initial phase, the team driving the innovation will need time to learn if the original idea hits the sweet spot of the market. Is the product meeting the “JTBD” expected by customers? The team will need time to tweak the design and business model and track the response before recommending the next steps. This defers from the execution for mature products where the momentum is already there and processes and machineries are in place to drive revenue growth.

In many instances, we would get pressure from bosses when the revenue from new innovation seems small when compared to mature products. When cost cutting pressure weights in, the new innovation maybe aborted as it will not survive the measure of “Revenue over Cost” ratio as it has not reached scale. The key is to get the metric right to ensure right decision made to either continue with the development of an innovation or to abort and fail fast and cheap.

These are three fundamentals that we need to fix to make sure we can execute our innovation strategies effectively.

Source by Geok Chwee Ong

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