London Business School released a slideshare with five mistaken beliefs business leaders have about innovation.
The five mistakes pointed out by LBS are:
- Believing the numbers;
- Believing success has been attained;
- Believing they know the competition;
- Believing that because everybody had always done it this way, it is the best way of doing things;
- Believing the customer.
Each and every one of these topics provides much “food for thought” and written analysis. On this blog post we will only analyze the first, believing the numbers.
On this blog we have already briefly analyzed the obsession companies have with short-term activities and results. Business leaders tend to focus on the short-run, thinking and acting tactically (and reactively) instead of thinking strategically for the long-run. This might ensure average or even good results on the short term but it certainly comes at a high cost: a loss of competitiveness and even risk of survival in the long-run.
This happens, among other reasons, because of the highly aggressive social-economical-cultural business environment. We see negative consequences of this behavior everywhere, from bonuses (in stock options or other financial assets) to top-management that urges risky decisions and creates misalignment between short/ long-run objectives and resource allocation, to populist politicians that tend to invest in projects with short-term results and visibility (good for their popularity) but long-term costs (bad for tax-payers and newcomer politicians).
London Business School’s criticism stems from, “Insisting too much and too soon on seeing the numbers,” (market size, payback time, ROI, etc.) and how that insistency can kill a project even before it really starts. IBM’s president Thomas Watson’s statement about computers in 1943 also shows how deadly a focus on a number can be. “It’s fair to say that few people ever wanted one of those (computers), regardless of the size of their desk,” he said. Obviously IBM rethought and reanalyzed its view (and eventually became the largest PC provider in the world).
The same focus on numbers can kill a recently launched project if the return is not as fast or as high as intended at the beginning, which is often the case with innovation. If innovation is “a new idea, device, or method” and “the act or process of introducing new ideas, devices, or methods,” then results might not come in the short-run, especially when talking about ideas or the fuzzy front-end of innovation. If the project is shut down at the first bad number there will never be positive ROI. Furthermore, this policy can even create a downward spiral as it pollutes other innovative projects within the organization. If people feel projects have a high risk of never launching or of being quickly abandoned the motivation to pursue such an endeavor becomes close to zero.
Consequently, when beginning an innovation project it is necessary to think strategically and for the long run. This is even truer if the project involves a large community of people. In this case the need for a cultural shift is frequent and, before reaching tangible results, it is mandatory to get people on board by stimulating participation and a willingness to contribute.
Therefore be sure to “fail fast, fail cheap and fail often” but remember you can only conclude you have failed after giving the project a chance to succeed.