8 Things Businesses Get Wrong About Innovation

With our recent webinar on Agile product management as an enabler of product innovation, we wanted to dispel some common misconceptions about innovation. Resident innovator-consultant Jeff Steinberg outlined for us his ideas and shared his experiences with product innovation in a past Agile Amped podcast called “Creating Disruptive Innovation Inside the Enterprise.” In this episode Steinberg identifies eight misconceptions keeping many organizations from innovating at the pace of change.

1. There’s only one kind of innovation.

There’s two types of innovation, at least two types… One is sustaining innovation. These are the things that are built on top of our existing business. It is the new features that we create, it is the new market that we expand into. It is the things that help us to continue thriving with today’s business model…

Disruptive innovations are really the things that will create tomorrow’s new business, a new customer… If companies want longevity, and want to be on that S&P 500 list for many years, you’re going to have to reinvent yourself. Sometimes it even means disrupting yourself.

2. You can cram innovation into an existing industrial-age process with things like SAFe’s “Innovation and Planning sprint” and see results.

[Factory worker management is] designed to kill innovation. It’s designed for a known business model, for a known customer, and to repeat that. You certainly won’t get any innovation out of that. It’s not what it’s there for…

SAFe has become very popular… In SAFe, there’s actually something called the innovation and planning sprint. For me, it’s just insufficient. It is structured as one sprint, typically at the end of a quarter, and it’s certainly not dedicated to innovation. It’s in the title, but it’s this thing that gets sandwiched between – unfortunately, often times – hardening of the current work, or research… and planning for the next program increment. They squish all these things together and somehow expect innovation to come out of that. I think in those innovation sprints, it’s rare that [it] even happens.

3. Hackathons lead to disruptive innovations.

I love hackathons, I’m a big fan of it, but unfortunately it’s a single fixed point in time. It’s also one of those things that happens quarterly at best, and it happens for often times two days. You hear about the “ship it” days, or FedEx days, whatever it is, and it’s fun. People, they form teams on their own and they stay up all night, and they rock something out, and it’s a fantastic exercise, but it is just that.

I think it’s a creative outlet at best, and unfortunately the ideas that go into those hackathons are either on their way in, pitched, or on their way out, approved by … You can really think of it as the internal venture capital, the managers. That’s where it gets approved by, and that’s not the customer. I rarely see that working.

4. And so do innovation labs.

Then, we’ve got innovation labs. This has been another popular one. I’m guessing a lot of our enterprise listeners have some form of an innovation lab that is like some myth inside the company that the black-turtleneck people get to go into, and they come up with great ideas…

These innovation labs are designed to do one thing: to come up with innovative ideas. They’re not designed to also create new business models out of those ideas. They come up with an idea, and it gets handed off back into product development to go and execute on it. And, unfortunately, you get a lot of these “not in my backyard” syndrome, or the motivation just isn’t there. The people that it gets handed off to to build the real business out of – [it] gets handed to a product manager, and they say, “Oh well, okay. Here’s a new idea. I’ll just put this at the bottom of my very, very, very long backlog.”

Nothing comes to fruition out of that. It usually gets killed.

5. You can hire in an “innovation expert” to solve your problem.

The last one that I unfortunately see is the strategy of, “Let’s hire the expert. Let’s hire somebody from outside the company, the CEO or the CIO.” Or, “Let’s pay a lot of money to get somebody who can help, who will know somehow, I don’t know how, what tomorrow’s disruptive innovation will be.” I think that’s misled also.

6. It’s enough to have internal people – VPs, managers, executives – telling us our innovative ideas are “business viable.”

Steve Blank gives us a great phrase…: “Get out of the building. There are no facts inside of these walls.”

We have to be experimenting with potential customers, with the users, with our friends, or with the closest thing to really the early adopters as we can. What we’re going for is data-driven learning. That may be qualitative data, which you’ll often get from customer interviews, before we’ve even done an MVP. Or, it may be very quantitative data, so if you have qualitative data, go for quant. If you have quantitative, go for qual. We need to be surrounded by data, that’s where the most learning comes from, because it’s not enough to just have your opinions. We actually want to be testing behavior of people who’d be interacting with these products.

7. Innovations and learning are generally applicable, because they aren’t context-specific.

I worked for a company a number of years ago that, this was a startup, this is one of those big success startup stories. They were doing marketing in the legal space. So, how do attorneys get new business? It was basically lead generation, and they got very good at that. I mean, they were, like, printing money. Leads, they could charge a lot for ’em, the lawyers needed ’em, it was fantastic. I think we got a big head and thought, “Well, if this business model works here, it should work in any industry.” We attempted to apply that to real estate. This was before the real estate industry tanked, this is about a decade ago. I was a project manager at the time, and I was a very good project manager. I took this grand vision of our internal visionary leader, and turned it into a product, and I built a thick book of specifications that had every detail outlined in it. That took me a couple of months, and I handed it off to a design team, and they made it look pretty, and they handed it off to developers, and they spent several months developing it. Finally, they handed it off to the testing group, and – classic waterfall story.

But when we finally launched, we were very excited, only to find that nobody used it. The leads were too expensive, and the business model was just wrong… We did not need to spend a year and all that investment to learn that. We could have created some simple MVPs to test that. For me, that was a very painful experience.

8. Innovation is something that only startups can do.

We often hear of innovative startups becoming big corporations – but what about big corporations who need to innovate but have a lot more overhead? Steinberg offers:

“We need a balanced innovation portfolio management approach. There’s this concept of managing three different innovation horizons. There’s Horizon One, these are the things we’re currently doing that are working well. We have Horizon Two: tomorrow’s extension of our existing business model, an extension of our products. This is where a lot of that sustaining innovation fits in. But then we have innovation or Horizon Three. In horizon three, this is where we’re managing for disruptive innovation. We need to allocate resources to each of them, and often times I’ll hear suggestions of, say, 80% in Horizon One, and 15% in Horizon Two, and 5% in Horizon Three. I think that’s what they were saying several years ago. I would actually increase those numbers. It’s probably 10 or 15% today in Horizon Three, and 10 or 15% in Horizon Two, because the world’s changing at a more rapid rate. We need to invest more if we want to stay relevant and we want to continue to disrupt…

I got a lot of inspiration from Scott Cook, the CEO of Intuit, and that’s a company that clearly has been very successful with innovations and reinventing themselves. There’s this quote from him that I absolutely love: “You can fool yourself into thinking that you can reform the hierarchy.” Essentially, you’re just fooling yourself, and the hierarchy may be very necessary for scaling, and managing that Horizon One. And possibly for Horizon Two, also. But the hierarchy is designed to control, and that’s where trying to use that in Horizon Three goes wrong.

Keep the learning going with another blog by Jeff Steinberg “Cultivating Disruptive Innovation in the Enterprise.”

And don’t forget to check out our recent webinar “Enabling Product Innovation With Agile Product Management.”