Monday, February 11, 2013

Nobody ever got fired for failing to innovate

Years ago I ran sales and marketing for a rapidly growing IT consulting organization.  We worked in the field of ERP, specifically implementing SAP.  In those days we competed with the giants - Accenture, PwC, IBM, and so on.  We won when the client wanted nimble solutions.  The giants won when they weren't willing to take the blame if something went wrong.  As the old saying goes, nobody ever got fired for choosing IBM.  The implied message is that when you work on a big hairy IT project, if you chose IBM and it went wrong, nobody is going to point the finger of blame at you.

There's what I'll call the IBM Innovation Corollary which hampers innovation.  Nobody ever got fired for failing to innovate.  Well, the actual fear of getting fired is almost non-existent anymore, what people are afraid of now is falling off the fast track, or getting shuttled to a less interesting job.  But people get reprimanded for failing to achieve a quarterly result, or allowing costs to creep up or losing a big customer.  I've never heard of anyone getting fired for failing to innovate.  I've heard a few clients complain about "sticking their neck out" to innovate, but never the reverse.

And before you point out the obvious, of course its true.  There are plenty of situations where failing to innovate is causing dramatic harm to businesses.  I know of one firm where the core business has shrunk by almost 50% over the last three years.  There has been no significant growth and no new products or innovations in almost five years.  It remains profitable by cutting, but the obvious death cycle is awakening even these long-slumbering managers to realize the urgency of innovation.  It's just that all too often you can explain away failing to innovate, but you can't explain away letting costs creep up or missing anticipated revenue targets, even if they are lower than last year.

What would it look like if people were held accountable, consistently, to innovate successfully?  What would the actions, decisions and behaviors of your executive team be if they were going to be held accountable for growth, innovation, new products, disrupting markets?  What if it were not only possible, but probable that you could get fired for failing to innovate?  Would the investments and decisions your team made change?  Absolutely.

As long as there is no downside to a lack of innovation, and rewards and recognitions are focused on short term goals, the impetus for innovation will only be in situations where everything else has been tried and has failed - innovation as a last resort.  What we need in many firms is innovation as part of the strategic plan - innovation as a first resort.  Strategic decisions have become far too complacent, corporations have allowed inertia and risk to become excuses for innovation and change.  Shareholders and employees alike should band together to demand more innovation, more growth, more disruption.  Because if you have a large piece of a lucrative market and you aren't innovating, your market will be snatched away before you know it, and when that happens, no one will care why you didn't innovate.  They'll simply find other managers or executives to grow it more effectively, because you see, the market ultimately fires executives and even companies that fail to innovate.  The average lifespan of a company in the S&P 500 is growing shorter at an accelerating rate.  New markets, new industries spring up and become accepted overnight and seem to pass into obsolescence before many of us have had a chance to use their products.  Who remembers Farmville anymore?

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posted by Jeffrey Phillips at 7:50 PM


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