Businessweek's "obstacles" to innovation

Businessweek has published it's annual Innovative Companies" article, which is supported by a survey and some assessment of the state of innovation.  It appears to demonstrate that most of the innovative firms in the US are larger, Fortune 500 firms, and that the rest of the world is rapidly overtaking the US as innovators.  There is even a statement that "innovation does not have to have anything to do with technology" which I am sure is surprising news for many of you in the innovation space.

As you can tell, I'm appreciative for the research but find it very cursory at best.  Businessweek seems to scan the horizons for large, successful firms it can talk to about innovation, and many of those that have had recent successes are likely to participate.  IBM is quoted, along with usual suspects like Starbucks, Apple, Research in Motion, Toyota, Proctor & Gamble, 3M and Nokia.  It's quite possible that all of these firms are very innovative, or quite possible they are the ones talking about their innovation work and able to get on the radar screen of Businessweek.  What's really telling is the four obstacles that were defined for innovation success.

The article lists four obstacles for innovation success:

• Slow development times
• A lack of coordination
• Poor innovation productivity and metrics
• The difficulty of getting good customer insight

Now, ask yourself this question.  How can firms that are supposedly doing so well at innovation have the first three barriers?  If innovation is really important, certainly CEOs and executives can create incentives and re-organize their operations to speed up development times of good ideas, and improve coordination across the organization.  These first two barriers are barriers for firms that AREN'T innovative, and one would hope that these barriers had been solved by innovators.  The only firm the article quotes that seems to have solved this challenge systemically is P&G.  The article mentions cross-functional teams at Southwest Airlines as if this is a new invention.  Certainly by now we understand that diverse teams with different perspectives create more valuable ideas.

Poor innovation productivity and poor metrics simply point out that few companies have a truly systematic approach for innovation.  Every idea is considered in its own right, rather than following a consistent process for generation, evaluation and selection.  Good processes and incentives will define and reinforce good metrics.  The reverse is also true.  Metrics are also difficult to define because innovation in one firm or at one time can be incremental product change, and in another firm or at another time could be disruptive customer experiences.  Given the diversity of ideas and implementations, the timeframes and the challenges these diverse ideas face, it can be very difficult to get a good handle on measurements and goals.

What's interesting to me is the last obstacle, which in my mind should have been the first mentioned.  Poor customer insight should be the first order of concern, not the last.  Too many firms still innovate from the "inside out" extending their technologies rather than confronting the consumer base and understanding their needs.  Ethnography involves interacting with customers and prospects at a level of vulnerability and qualitative assessment that too few organizations are willing to attempt.  Instead they simply double down on existing products and extensions, and existing technologies.  This obstacle, too, indicates a poor understanding and focus within these larger firms about innovation.  It's great that they are beginning to understand that customer insight is necessary - what took them so long?

My beef with reports like these is that they focus too much attention on firms that are probably marginal innovators at best, but able to gain awareness with the press.  There are so many great innovation activities underway in firms of all sizes that identifying the "best" innovators is nonsensical.  What the article points out is that even among the firms we hold up as "innovative" there is still a long way to go to embed innovation practices and capabilities that will become endemic, and managerial thinking and practice needs to adapt to a new innovation reality.

Until we understand that culture and leadership drive innovation, and innovation can and should be managed as a consistent business process which can impact all facets of the business, from products and services to business models, we face the keyhole problem, describing the contents of a room while peering through the keyhole.  Our perception of the room is framed by the narrow view we achieve through the keyhole.