Logic, emotion, and the decline of corporate innovation

Let’s talk for a hot second about the innovation process that goes on (or doesn’t even remotely go on) in most companies. This is a very nuanced topic, but we’ll try to address it here. I guess the easiest place to begin is this. There are, typically, three major words used in companies that almost everyone is using incorrectly.

Those three:

  • Strategy
  • Innovation
  • Entrepreneurship

“Strategy” is often confused with “operations” at most places. 

“Innovation” is usually confused with “Hey, that kinda worked for a competitor, right? Let’s do it.”

I’ll let Harvard Business Review explain the problems with how we look at entrepreneurship.

So, we’ve got these three terms. Executives love to use them. They come up breathlessly in almost every major meeting, whether it’s rank-and-file employees or shareholders.

But there’s a problem: by and large, most employees are not innovative. Managers are trained to speak about their employees at poles — i.e. “He is great!” or “He is awful, I need him out!” — and that’s a whole different confusing topic. (A little bit about that here, though.) But look, a lot of employees are drones. They come in, they do their tasks, and they leave at 4:49 pm. That’s just the way things are at a lot of companies. This isn’t necessarily a bad thing either: companies aren’t really set up to drive innovation. They’re usually set up to (a) make money, (b) provide good lives for the top people, (c) please stakeholders, and (d) not totally collapse morally or financially. That’s really about it.

All this said, however — these “key stakeholders” you need to please do want to see growth. And it stands to reason that growth is somewhat tied to innovation. So, you probably need an innovation process. How do we get there, however?

Innovation Process: Tier I of the secret sauce

Nice post here by Greg Satell called “The Most Important Thing That Great Innovators Do Differently.” Love me some Satell. He’s a guy that “gets” it in a world where many — including our breathless “thought leaders” — do not get it.

If you understand why your innovation process isn’t showing ROI, maybe you can fix it. 

Satell runs through a bunch of different examples — he researched them for his upcoming book — and he concludes (-ish) with this:

I came across dozens of stories from every conceivable industry and field and it always started with someone who came across a problem they wanted to solve. Sometimes, it happened by chance, but in most cases I found that great innovators were actively looking for problems that interested them. 

Ding, ding, and ding. Your innovation process absolutely has to be rooted in solving some type of pre-existing problem. Otherwise, you’re just creating “the Uber of cat litter,” and all that will do is create choice overload in the cat litter world. That really doesn’t help anyone, in all honesty. It just makes a bunch of cat litter sales and marketing guys screech and bellow about disruption. Not good.

So how can we have an innovation process to determine problems that need to be solved?

Let me give you one example: Instagram and how they grew. I am sure Instagram internally has problems — they got bought by Facebook, but I bet they’re terrified of Snapchat — but they have 500M active users and make some money. It began by understanding the challenges of camera photos, issues with posting them, etc. In short, Instagram attempted to solve a problem. That is an innovation process that ultimately makes you money, which is the real goal. If you’re just creating a product or service, well, that does absolutely nothing. We have tons of nonsense  being produced hourly in the world. Who needs more nonsense? I need something that will fix some issue I have. This isn’t rocket science.

Satell brings up the idea of “innovation labs,” noting:

“We regularly sit down with our clients and try to figure out what’s causing them agita, because we know that solving problems is what opens up enormous business opportunities for us,” Eric Haller, Global Head at Experian DataLabs, told me. Once they find a problem with potential, they can usually come back with a working prototype within 90 days. 

I like that idea, but there’s two problems. (1) is that usually only companies with healthy balance sheets can justify an innovation lab. (2) is that a lot of times, people issues — chest-pounding middle managers seeking relevance, in other words — get in the way of that innovation process working smoothly.

Strategy & Innovation Consultation

OK, yea. What tends to hold up innovation process concepts?

Usually it’s people. Work is an emotional place; it’s not a logical one. If there’s a real innovative idea coming down the pike, everyone wants a piece of it. If you’re tied to that idea and it starts printing the company money, that’s going to be good for you. As a result, people under-cut other people to try and get closer to the idea. (We’ve all seen some form of this.) People, back-stabbing, and politics ultimately turns the innovation process into a dumpster fire, as opposed to a revenue stream.

The other issue is vocabulary, as mentioned above. I’ve literally been in jobs where someone has said “Our innovative idea is to post to LinkedIn on Wednesdays.” Let me break this down for you:

  • That’s not innovative
  • In reality, it’s barely an idea

And yet, that was said with a straight face — and people above her nodded and smiled. Workplaces like that are meaningless. You can ask that lady, in that meeting, “Hey, have you looked at any LinkedIn best-times-to-post data?” She’ll stare at you, dumbfounded. 37 minutes after the meeting is over, you will get called into another meeting about your “lack of professionalism.” So basically, you tried to call out an idea and make it better — innovation process! — and instead, people were terrified and felt the need to discipline you. See how this is a problem? It happens to almost everyone I know or have worked with.

How can we make innovation process better?

The first step is macro. You need to realize that good ideas can come from anywhere. It has nothing to do with pay grade or anything else.

The second idea: don’t withhold information down the business chain. Sure, some things need to be proprietary. But in general, managers should be telling people “Hey, here are the issues we’re facing and what we know so far.”

I try to think about work in different ways, and I also try to call out some managerial nonsense we’ve all experienced. If that kinda sorta interests you, I do a newsletter every Thursday. Feel free to join up.

Next: understand who your customers are. Please go beyond simply “user personas” here.

Then: figure out what problems those customers have. Talk to them. Have the CEO and COO talk to them. Invert the hierarchy.

And then: figure out ways to address those problems. Iterate. Prototypes. Put people in teams to work on this stuff. When little shiny pennies pop up, don’t chase them. Not everything is “urgent.” The only real urgent thing is your customers liking your stuff and buying more of it. That’s your bonus, sucker.

In short: you improve the innovation process by contextualizing, and understanding, the customers’ problems. That’s where growth comes from. No one ever asked for Uber. Uber solved a problem that millions had. The guys became rich.

What else would you add on innovation process?



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