When Corporate Innovation Goes Bad

Added on by Alexander Osterwalder.

From my experience only few companies have really good innovation processes and innovation metrics. They still apply the principles of execution to innovation. The result is that they end up executing ideas that should’ve been filtered out. It’s not because the people behind those products aren’t smart, or have bad ideas. It’s because the processes for radical innovation are broken.

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You may have seen this post by CB Insights on the 132 biggest product failures of all time. It’s a product innovation graveyard. The CB Insights post reminds me of a study from Simon Kucher & Partners. The study highlights that 72% of new products and services fail.

The reason for that high failure rate? Processes are optimized for managing a proven business model and value proposition rather than innovation. Companies bet on big ideas that they execute. Rather, companies should take several ideas, make many small bets, and test where they’ll go. They need to adjust these ideas based on evidence until they find a value proposition that customers want embedded in a scalable business model.

Tools like the Value Proposition Canvas, the Business Model Canvas, and methodologies like Customer Development and agile development (aka Lean Startup) help in the search of new business ideas. When applied correctly this search won’t end on the product innovation graveyard like the examples in the CB Insights report.