Innovation: When It's Phony, and When It's the Real Deal

There is currently no more powerful word in the business world than "innovation." President Obama used it 11 times in his State if the Union Address. Corporations are paying all kinds of non-corporate people goodly sums of money to parachute in and tell them how to innovate. CEOs scribble the word "innovate" on their personal stationery and sleep with it under their pillows at night.

I see this all the time when writing about the auto industry. The only way for old school carmakers like Ford and General Motors to recover fled glory is to innovate. The only way for Toyota and Honda to retain their edge is to innovate. The only way for upstarts such as Hyundai and the electric-vehicle startups to make a dent is to... yes, innovate, dammit!

Innovation is, of course, a great thing and a true differentiator for successful enterprises. "Innovate or die" is a useful general principle if you plan to thrive in the 21st century.

But there are plenty of times where talking innovation constitutes a smoke screen. At its worse, empty innovation rhetoric is simply bad business.

So when do you want to avoid innovation?

When innovation is actually a distraction from running your real business. This is usually a function of business-model exhaustion. The spaghetti has been flung at the wall for years and only a few strands have stuck. Making substantial changes to the core business, which may have become fully mature, will be painful and expensive and may actually gut the company's finances. So... innovation! This turns deadly if the company starts talking about "disruptive" innovation, as if it believes it can remake itself in some radical manner and tap a reserve of market goodwill that has previously and reliably eluded it.

When the history of innovation isn't there. Plenty of companies conclude that they're innovative because:

  • Their customers tell them they are

  • They tell themselves they are
  • They decide they want to be in order to argue that they have a differentiator
  • Problem is, none of this innovation story has been objectively evaluated. It's a little bit like saying you're a good driver if a truly good driver has never judged your skills. Just as everyone thinks they're a good driver, lots of businesses fantasize that they're innovative, but there's no there there. And there never really was.

    When modest improvement is mistaken for true innovation. I'm probably unique in that I think most so-called innovation is nothing of the sort. The only innovation that really deserves the title is hardcore innovation. Hardcore innovation is just that: it has a core, and it burns hard and gemlike, to borrow a phrase from 19th century art critic Walter Pater. Vaccines. Microchips. Smokeless gunpowder. These were innovations that had a simple, undeniable premise of change at their center and forever altered the course of history.

    When innovation is a one-man show. If only one person in the organization is constantly talking the innovation talk while the rest of the employees furtively roll their eyes, then there's basically no hope. The troops on the ground are the ones who will witness evidence of innovation at its most granular. If they see one thing, but are told something else, the trust they have in the Innovation Guy is going to rapidly collapse. This is obviously made worse if the Innovation Guy is the CEO.

    When innovation is really karaoke. The only thing more demoralizing then fraudulent innovation is shamelessly copied innovation. Companies that can't innovate look to companies that can, and then try to reverse engineer innovation from their chosen example. The obvious flaw here is that the un-innovative company will invariably select a company that they want to be like, even if that company is in a completely different business. The result is imitation innovation, which functions as flattery, but lends nothing to the bottom line.

    Fundamentally, companies need to decide what business they're in and be that. Some businesses will require innovation -- true innovation -- to be successful. But the good news is that the vast majority won't. In fact, allowing talk of innovation to enter the company's daily self-reflective discourse will be a colossal distraction and in extreme cases, could spell doom. Experienced managers will run when they hear it. And smart employees will run out the door.

    And when the real deal does show up, it will be self-evident. And a company will know it when they see it because it's trained itself to avoid being seduced by the fake version.