Why innovation fails
In the 1980s and '90s management theory and practice tended to be inward looking, focused on the business itself and on gaining competitiveness through incremental process efficiencies and cost cutting. Techniques of design, production and delivery were refined to the degree that companies used identical methods to produce copycat products. Their offerings were differentiated by the emotional response teased out of consumers by artful brand communications and little else (exhibit: the car industry).
Many companies are attempting to grow out of this late-industrial model but face a stubborn cultural obstacle in the continuing organisation of work in discrete departments dedicated to the accurate repetition of tasks as efficiently as possible. This is a culture of tossing signed-off artifacts over walls between one department and another. The walls, carefully constructed to conduct business as usual, obstruct strategic view, the departments are self-serving, steadfastness is rewarded, imagination is frowned upon and the end customer is held firmly at arms length.
Today many managers recognize that while this approach works well enough in the operational areas of predictable and consolidating businesses, a powerful combination of technical, social and economic factors have put service innovation at the top of the agenda and the customer at the centre of strategic thinking. The ubiquitous computer, the Internet, the mobile phone, globalization, database tools and not least a much more demanding and disloyal consumer set have shifted the nexus of change from financial structures and process design to product offerings, service quality and building stronger relationships with customers.
And here lies the problem: the old culture of repetition, introspection and incremental variation doesn't lend itself to making customer-friendly service-oriented innovations.
Moreover, products, services, marketing communications and databases have converged within very complex systems of delivery that require different professional competences to build them. The professions - technologists, process experts, interface designers and marketers - speak different languages and have different cultures. Often individual rather than group leadership of such a multi-disciplinary group creates painful problems of rivalry and misunderstanding.
And thirdly, the scope, value and profitability of the new services and products that businesses build are often poorly understood inside the organization, or by its agencies, or by its customers. A strong vision or narrative becomes an essential vehicle for describing change to internal and external audiences - a list of features and functions simply isn't adequate.
This is why so many innovation projects fail; they are managed as raw technology projects and sometimes as process change projects but rarely as a system-wide adjustment requiring balanced, open and communicative management of the key strands - technology, business processes, customer relationships and marketing. Remember, in networked products and services the communication is the product. Such projects require strong overall direction, setting out clear business principles outlining the mechanism by which value is created and which inform the long-term design management of the project.
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