Poor Understanding of True Customer Needs
Failing companies display split between marketing and R&D viewpoints as
new product developers lack deep understanding of
customers needs and
insights into product usage patterns.
These companies are not able to move forward on the
innovation front until
they change their approach to innovation and narrow that divide.
Innovation Is Not Institutionalized
Building innovation should be a structured, manageable and measurable
endeavor. It requires an institutionalized
innovation system. Yet, in
failing companies, innovation process looks like a dice game largely
dependent of luck. As a result, innovation is managed in ways that increase
risk and decrease payback.
Weak Entrepreneurial Skills of Project Leaders
Innovation is 1% of invention and 99% of
entrepreneurial action. Traditional
project management approaches are impractical in a
environment characterized by a complex set of uncertainties on multiple
dimensions and requiring experimental and entrepreneurial approaches. A
radical innovation project cannot succeed if its manager lacks
entrepreneurial leadership skills.
“Established business is the main obstacle to entrepreneurship,“ warned
companies don’t encourage entrepreneurial approaches, don’t have tolerance
to mistakes, and don’t create conditions by which employees can
entrepreneurs. It is essential to insulate new ventures from the main
business and the corporate bureaucracy that would kill them otherwise.
Risk Averse Culture
Successful companies reduce risk and maximize returns in a
balanced way. In failing companies, aversion to risk impedes management from
venturing into new areas. Managers in
risk averse and sluggish companies
prefer to stick to processes, technologies, and products they are
comfortable with and concentrate on “yes, buts” rather than “what ifs”. As a
result, many great new technology, process or product concepts are killed
because of management’s fear of risk.
Poor Employee Motivation
Management fails to tear down cultures of bureaucracy, interference, and
lack of autonomy, and to generate the right climate that encourages
rule-breaking, and individualism. Employees are not
rewarded properly when they generate innovative ideas or achieve stretch
goals set for them.