Technology Innovation Insights ™

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How Corporate Best Practices Inhibit Innovation

by Alex Jarett

Despite our focus on disruptive innovation deriving from new technologies, Jim Tanner, Chief Innovation Officer at Morningstar made a great case that many great corporate innovations appear obvious in hindsight, during his presentation, “Creating A Culture of Innovation.”

Don’t believe it?  Then think of innovations like bottled water, wheels and handles on luggage and all day breakfast at McDonald’s. Each of these innovations created significant new wealth by providing an innovative product or service to customers.

But are a lot of the innovations obvious?  Jim thinks so.  He points out that McDonald’s received over 100,000 tweets from customers about all-day breakfast before they added it to their menu.

And many of the newer, disruptive companies DO appear obvious once you think about it.  Take Uber.  As Jim says, “If I were in the limousine service, I would have thought of that idea.”  Or Airbnb.  “If I were in the hotel business, I would have thought of that.”

Don’t believe it?  In the book, The Innovator’s Dilemma, Clayton Christensen illustrates case after case of good companies who are well aware of what it is that is going to disrupt them and they choose not to do anything about it.  Blockbuster and Netflix is a good example,

Why is this?  According to authors Richard Farson and Ralph Keyes, in their book, “The Innovation Paradox”, great companies settle into an Innovation Paradox because many corporate best practices actually inhibit innovation.

“We have met the enemy and he is us!”  This great quote by Walt Kelly from the Pogo comic strip (derived from Commodore Perry) applies quite well to innovation, as it is our very corporate best practices, which are known as corporate goods, that are actually serving to inhibit innovation in the enterprise.

During the presentation, Jim highlighted nine different corporate practices that are known as corporate goods, but actually serve to inhibit innovation.

Here’s four of the Paradoxes that Jim reviewed with us in the presentation.

Paradox 1: Sell What We Have

A common theme to sales executives is don’t sell what what we don’t have.  Why?  So they get very good at selling what we already offer and can maximize profit.  Sounds great, right?

But typically when a sales executive asks for new innovations, he/she will hear, ““We won’t innovate unless we have a paying client.”

It’s a Catch-22 and obvious why this will inhibit the innovation that could have occurred if the sales executive was able to work closer with the more innovative client and the company responded.

Paradox 2:  Be accountable

Accountability is a corporate good!  You can’t just have people running off doing their own thing with no accountability!  Right?  Well… maybe.  We do need to account for their activities.  But the more you watch someone, the less innovative they become because they are less apt to experiment.  And experimentation leads to innovative ideas.

Paradox 3:  The Myth of the Innovative Leader

Jim blames Steve Jobs for this myth, which is the idea that the leader will come up with the big idea that will change everything.  There are two problems with this myth.

The first is that these people only make big bets because that’s all they have time for.  The second is that the people closer to the problem or the customer, are often the right people to innovate.

Paradox 4:  Victim of Success

In the book, The Innovator’s Dilemma, Clayton Christensen illustrates case after case of good companies who are well aware of what it is that is going to disrupt them and they choose not to do anything about it.  Blockbuster and Netflix is a good example,

So we have all of these barriers to innovation.  What can we do about them?

We’ll cover a list of these ideas in the final post next week!

Want to see the full presentation?  (Which I HIGHLY recommend).  Go here immediately to view.

Updated: April 18, 2017 — 6:29 pm

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