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Doing Business

Innovation is the new black: 3 pitfalls for businesses to avoid

Nowadays, innovation seems to be the word on everyone’s lips. A quick Internet search shows that government institutions, universities, banks and everything in between are betting on innovation as the launch pad for success. Let’s be honest: Who wouldn’t be excited about innovation? Google is innovative, Silicon Valley is innovative… all companies with rapid growth seem to be! What are we waiting for?

This rationale has led us to jump on the innovation wagon, with hype fueled by managers, writers and government officials alike. Innovation has become an industry with consultants, books and gurus, and the term has become one of the most abused words in the business language (after “strategy,” of course).

There are three problems with this excessive enthusiasm.

1. “Innovation” has lost its meaning.

When everybody starts to use a term in many different contexts with very little boundaries, it starts to become meaningless. What is innovation, anyway? I bet you can get as many answers as people you ask. Everybody knows is a good thing, and that it’s important that they get into it right away, but they might get a little lost into the specifics. When the Internet first began, everyone wanted to have a website. Why? We don’t know, but everybody else is getting one!

2. We’re putting the cart before the horse.

Many of us associate innovation with having good ideas. Make that brilliant ideas. Out-of-the-box ideas. Game-changing ideas (notice the jargon?). There’s nothing wrong with ideas, but without execution, ideas are not much more than a good story to tell at a dinner party. The cult of innovation has somehow become the cult of having ideas, without much regard to how or even if those ideas could be implemented, how much it would cost and what would it mean for other decisions in the organization. This is the second problem with the innovation hype: We have focused too much on ideas, without paying attention to the roadmap that could turn them into something tangible. We somehow became so excited about being innovative that we forgot there might be a process to be so.

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It is easy to recognize a finished product like an iPhone or an electric car as innovative, but it’s not that simple to reverse-engineer the process that lead to it. We tend to look at the result instead of the process. In very unromantic terms, innovation is about solving problems, plain and simple: coming up with solutions that work better than the status quo. How an organization develops that capability has little to do with the posters on the wall or the “innovation competition” held annually. It has to do with how teams are built, what skills the members have, how the leadership empowers people to voice their opinions, and how the incentives are aligned to encourage experimentation.

All of those are organizational competencies that need to be built over time and that require having a long-term approach. Take Google as an example again: All the innovation is a result of their systematic efforts to invest not only resources but also time in building the necessary organizational competencies. When we try to skip this step, that’s problem number three.

3. We’re not willing to put in the time and money.

For economic or cultural reasons, many companies seem to have the sight set on the next quarter, some of them in the next month. As cools as it sounds, innovation can’t be implanted overnight like hair plugs. It needs to be grown. That takes time and patience.

This might sound obvious, but many companies want to get the goodies without paying their dues. That is, they want to come up with the disruptive products and services without truly investing in innovation or transforming their cultures to foster it. Taking the short-term approach, many of them are willing to hire a consultant for a two-day workshop, but are reluctant to embark on longer culture-improving processes. In the words of a director at a local media company: “I’m only interested in investing in initiatives that produce an increase in the income statement.”

Unfortunately, innovation, the process behind the shiny outcome, doesn’t produce results right away. Research and development departments in truly innovative companies spend lots of money and time in coming up with something truly disruptive. Take the folks at Apple, for example, who spends 3 percent of their sales on research and development. Most of what comes from that investment will not be monetized until years after. Companies must have the stomach and the patience to let that process take place.

Let’s all agree that innovation IS important. Let’s just not get too carried away and harness all the hype and enthusiasm so we can turn it into something meaningful. Let’s go beyond competitions and awards and headlines in our communication and let’s go back to basics: We need to get really good at solving problems and help our people do the same, even if it costs us a pretty penny.

Read other “Doing Business” columns here.

Randall Trejos works as a business developer, helping startups and medium-sized companies grow. He’s the co-director of the Founder Institute in Costa Rica and a strategy consultant at Grupo Impulso. You can follow his blog La Catapulta or contact him through LinkedIn. Stay tuned for the next edition of “Doing Business,” published twice-monthly.

 

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