Failures and breakthroughs – exposed, reflected, considered

Posts Tagged ‘umair haque

Top 16 reasons of innovation failure

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Is your company struggling with coming up and implementing innovative ideas?

Does innovation sound good for you but you still have to reap any tangible profit from those nice-looking, suggestive and “innovative” ideas that you hear from your employees, employers and read on Internet?

Do you think that innovation sounds good is but hard to capitalize on?

Before drawing any foregone conclusions and debunking anything dubbed innovative, please check whether your company’s approach to innovation is sound.

The seven deadly sins that choke out innovation in all sorts of companies and industries include:

  1. Thinking the answer is in here, rather than out there
  2. Talking about it rather than building it
  3. Executing when there is need for exploring
  4. Being smart
  5. Being impatient for the wrong things
  6. Confusing cross-functionality with diverse viewpoints
  7. Believing process will save your company

These are common in both brainstorming, analysis and execution stages of implementing innovative ideas.  Additional reasons why (supposedly) innovative ideas might fail are:

  1. Ideas don’t solve an important and relevant problem
  2. Ideas take too long to get to market or needs shift
  3. Ideas are poorly launched
  4. Understand the adoption cycle or barriers

In my previous post, a recap on Umair Haque‘s article,  following strategic factors yield failure if present during implementing and managing innovation in your company:

  1. Focusing on short-run numbers
  2. Applying surface economics
  3. Being strategy-blind
  4. Failing to see the right context
  5. Never having an ideal

Use this “innovation failure” checklist of factors to make sure your company is not trapped in or following one of the above factors.

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Written by Hayk

February 13, 2011 at 10:33 am

How Not to Manage Innovation (Umair Haque)

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Umair Haque is one of luminaries who deserves to be read and reread by all those who care for or envision a better, less consumerist and money-bogged future.

In the article below he shows his take how venture capitalists are stiffening innovation by focusing on numbers, short term goals, quick profits, etc. Read this englightening piece and look around for many examples. Below are his strategies (based on Jeremy Liew’s analysis) of Apple’s iPhone AppsStore outlining how not to manage innovation.

Focus on short-run numbers

When venture investors or middle managers act like, well, middle managers, innovation is likely to wither.

Apply surface economics

When venture investors or managers don’t look deeply at the economics of the markets and industries they are investing and competing in, the result is a hodge-podge, often unsuccessful innovation portfolio — one where potentially successful innovations are under-invested in, and almost certainly unsuccessful innovations are over-invested in.

Be strategy-blind

When venture investors or managers alike act like purely financial backers — instead of partners who acknowledge and encourage a durable, shared strategic interest — the disruptive potential of innovation is sapped.

Fail to see the right context

When investors or managers fail to place innovation in the right context, value is difficult to assess. Context is what makes numbers meaningful: it adds validity, reliability and accuracy to financial logic that is otherwise bereft of it.

Never have an ideal

The mistake isn’t particular to venture guys. It is what happens when we misapply the mechanics of finance to the art of innovation. The fallacy of inferring economic meaning from financial numbers is what’s bankrupting Sony, what eviscerated Detroit, and what, ultimately blew up the investment banks.

The full article is here.

Detroit’s 6 Mistakes and How Not to Make Them

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First Wall Street and now it seems GM and Chrysler came begging at the governments doors for additional $20+ billion dollars. What do they offer in exchange for this money? They want to give buyouts and early retirements packagesin their effort of cost cutting and layoffs. This means essentially that the two companies aim at reviving themselves the old, traditional way adding perhaps an edge of efficiency, leanness and flair of cautiousness in these new realities or do they offer a radical shift, a ideological quantum leap enabling reconstruction of an automotive industry that befits well the expectations, technological progress and strategic vision inherent in the 21st century?

GM and Chrysler so far seem to have chosen what is best characterised by Albert Einstein’s saying, “You can never solve a problem on the level on which it was created.”

Below is an illuminating piece on what (six) mistakes were made by Detroit industries during the 20th century from Umair Haque, one of visionary thinkers on this aspect. These errors, while allegedly bringing automobile industry to their knees in the 21st century, were largely paralleled, ideologically, by other mainstream industries of the 20th century.

1. Old rule: Choose evil. Industrial era business is unrepentantly and almost sociopathically evil: shifting costs onto others, while striving to internalize benefits. Detroit chose lobbying, marketing wars, and low-cost hardball – to always and everywhere try to socialize costs and privatize benefits. Never was this truer than Detroit’s lobbying against public transport throughout the 20th century. Why does public transport in the States suck? Because Detroit’s lobbying machine doesn’t.

New rule? Choose good. In the 21st century, every moral imperative is also a strategic imperative:doing good – for customers, employees, suppliers, or society – is a radical strategic choice that unlocks new pathways to innovation and growth. The opportunity cost of defending evil for Detroit was never learning how to choose good – and that’s a crucial mistake other auto players didn’t make. Tata chose to make a car that was accessible to the world’s poor. Porsche and BMW chose to invest in talent, people, and imagination. Honda and Toyota chose to invest in renewables and partnerships with the public sector. All opened new avenues to growth for an industry at the brink of extinction.

2. Old rule: Selfishness is self-interest.What’s strategic is supposed to be what’s in the firm’s self-interest. But how do we define self-interest? Consider for a second the fact that as recently as this year, Detroit’s lobbyists were hard at work, opposing stricter fuel efficiency standards. That’s 20thcentury self-interest at its finest – not authentic interest for one’s own long-run outcomes, but simply a childlike selfishness, both myopic and narrow, where cutting off the nose to spite the face is as rational as mutual nuclear annihilation.

New rule? Purpose is self-interest. The 21stcentury demands a more enlightened self-interest: one factoring in a longer timescale, fuller contingencies, and an honest and broad consideration of hidden and unintended consequences to people, society and the environment. When we understand all that, have begun to develop a purpose – a way in which we will change the world radically for the better. By confusing selfishness with self-interest, Detroit vaporized it’s own purpose – and will stay trapped in a wilderness of economic meaninglessess until it rediscovers it.

3. Old rule: Maximize destructiveness. The goal of orthodox strategy is to destroy the ability of others’ to imitate or commoditize you. And Detroit was a master of the art of destructive strategy: patenting, trademarking, and litigating; playing hardball to control distribution channels, defending brands with disproportionately steep marketing investment, and building entire new marques to gain share in key markets and segments. The point of all these tired, stale 20th century strategic moves was the same: strategy as an exercise in exclusion, isolation, and barrier-building.

New rule? Get constructive. True 21st century businesses can be judged in the blink of an eye: how intensely do they put the “co” in constructive? Can they let demand spark and fuel co-creation, can they co-produce from a pool of shared resources, are they capable of letting value activities be co-managed, are they tuned to cooperate? Detroit can’t get constructive because it’s spent the better part of a century playing the games of destructive strategy.

4. Old rule: Seek differentiation. When is a Jaguar really just a Ford? When it’s an S-Type. Under Alfred Sloan, GM famously organized itself divisionally – Pontiac, Buick, Cadillac… – for the sole purpose of differentiation. But industrial era differentiation is too often just skin-deep: the same lemons with slightly different marketing, distribution, and branding. So why pay a steep premium for a Buick if it’s just a Chevy with slightly nicer trim? Detroit discovered the hard way that in the 21st century, the concept of differentiation is increasingly stale.

New rule? Seek difference. Ultimately, the problem is simple: differentiation is about perception. Difference is about reality. People in the 21stcentury aren’t the zombified, braindead consumers of the 20th century. And so the 21st century demands not mere differentiation – a bean counters’ eye view of the world if ever there was one – but true difference. True difference is built by making different choices from the ground up – different in the very essence of the value activities that make the wheels of production and consumption spin. Porsche and BMW strove for difference – not mere differentiation – and it is that choice that is at the heart of their global leadership of the automotive sector.

5. Old rule: Seek agility. Strategy is in many ways simply the avoidance of crisis – the evasion of threat, weakness, and vulnerability. The goal of strategy as the avoidance of crisis is simple: agility. Industrial-era corporations seek agility, in other words, by insulating themselves from real-world economic pressures – that’s what Detroit did bar none, by always seeking to game the system: lobbying, marketing, and wheeling-and-dealing it’s way straight into oblivion.

New rule? Seek crisis. By insulating themselves from real-world economic pressures, boardrooms also dilute and sap incentives for innovation and renewal. Detroit wasn’t innovating because the opportunity cost of strategy as gamesmanship was, ultimately, foregoing innovation itself. In the 21stcentury, gamesmanship – and its attendant dilution of incentives – is a sure path to near terminal strategy decay. Forget Detroit – just ask big music, big pharma, or big food.

6. Old rule: Advantage happens against. Orthodox econ holds that it is through the pursuit of competitive advantage that corporations create the most value most quickly and reliably. And that’s a mistake Detroit made to the hilt. It sought a nakedly competitive advantage – against suppliers, dealers, consumers, and society alike. The result is an industry crippled by structurally antagonistic relationships with labour, buyers, suppliers, consumers, and society alike.

New rule? Advantage happens for. Competitive advantage against bears a striking resemblance to simply bullying. Bullying is easy: just as in the sandbox, any boardroom with market power can jack up margins by forcing others – buyers, suppliers, consumers, society – to bear costs. But if every corporation across the economy is playing that game, the economy’s just a game of musical chairs.

Written by Hayk

February 20, 2009 at 11:21 pm