Beware of anomalies in innovation practices

Many companies, especially multinationals, like to talk about innovation. There are even some who include innovation as part of their core values; others even have innovation managers.

Innovation has two elements—novelty in the industry and commercial success. In other words, it’s about creating new value that benefits your intended market.

Here are six anomalies that companies may want to reflect on and from here, redirect their innovation practices.

Innovation managers use the “stage gate” approach but not related to innovation methodology. New products are launched but are a “catch-up” of what competition elsewhere has been doing already. They call it innovation but in reality, a catch-up, a copycat.

Rewards and promotions are based on attaining sales and profit and have nothing to do with the concept, whether it is innovative or not. They talk about x but reward performance based on y.

Companies like to see big market size or what they like to call “size of the prize” but launching a new category versus an existing category will logically show a much smaller initial market size, hence cognitive bias may kill a concept prematurely. New categories have also more unknown elements, hence entail more courageous top management since they are riskier to one’s career. Instead of visionaries, “CYA” (cover your ass) is an unspoken rule in some companies that pay lip service to innovation.

Gross margin is the starting prequalifier, which means that anything lower than a specified margin would not even make the initial cut. Companies argue that they need to realistically take normal budget for marketing and other expenses into consideration. But product innovation is just one of the many types of innovation. They are unmindful of the 10 building blocks of a business model, hence adapt everything existing in the company as default mode. The example of gross margin is what is termed “sacred cow” in the innovation world that means change everything else except this one.

Idea channel is another anomaly. Everyone within the company is encouraged to contribute to the innovation effort. An online suggestion system is created, some even with “platform” to monitor status. However, without real training on innovation, most suggestions will be limited in scope, such as cost-cutting instead of revenue maximization. This could simply be likened to having a high-tech suggestion box.

A look at the marketing mix of companies emphasizing innovation usually turn out to have creative advertising and sales promotions, courtesy of working with marketing communication agencies, with “Big Idea” as their added value. But an audit of the comparative scope of how companies compete in the marketplace reveals that innovative companies try to be different but in the same variables or logic as competitors. There is another way to compete—by being different in a truly different way. First class innovation, no less. —CONTRIBUTED