Large companies struggle to innovate more than do entrepreneurs and smaller organizations because of these four reasons, according to a writer in Innovate on Purpose:
- Past success
- Playing defense instead of offense
- Resource allocation and project prioritization
- Rigidity of the product development process
In fact, overly relying on past success is the top reason companies hit growth stalls.
Though it might make sense for companies to want to duplicate previous accomplishments, this approach rarely results in the same success down the road. Why? Because focusing too much on the past will prevent you from shifting tactics or strategies in response to the emergence of a low-cost competitor or changing customer preferences; as a result, you’ll miss out on revenue or new product opportunities.
To avoid this common pitfall, take a two-step approach:
- Devote more resources to transformational innovation. Many companies try to capitalize on successful products by making small improvements. While incremental innovation can lead to quick wins, it won’t pave the way for the long-term growth your company needs. Instead, you need to get your senior management on board with taking bigger, riskier bets, even if there’s a chance it will disrupt your existing business. After all, if you don’t explore the option, a smaller company might beat you to the punch and take away market share in the process.
- Learn from your failures as well as your successes. While understanding what made a project successful is important, you also need to understand why other past projects failed. Was it because of a lack of resources or did you misdiagnose a customer need? Whatever the problem was, you need to understand what happened to avoid repeating the same mistake. These lessons should also be cascaded to all staff members to demonstrate the upside to failure, helping employees see that it’s a necessary part of the product development process. If you only reward success, employees may be hesitant to go after transformational ideas because of fear of failure.
News Source: Innovate on Purpose, 26 November 2013