Penny-pinching innovation vs. sustainable profitability (further thoughts)

In my initial post on Innovation, I have insisted on how a successful organization comes to delaying innovative initiatives, as it may endanger its profitability, especially in the case of a new generation of managers. I have read this morning a post by Seth Godin on Seth’s blog, dealing with this same topic: “Urgency and accountability are two sides of the innovation coin“.

His blog post starts with this sentence: “As organizations and individuals succeed, it gets more difficult to innovate.”

I cannot agree more. But I believe Seth has a romantic view of the fading innovation spirit within successful organizations. “Fear of failing” is not enough to describe this. Fear of losing money would be much appropriate, even though it is highly down to earth!

People who have built successful organizations usually are entrepreneurs, highly prone to introduce breakthrough innovation, push new ideas, make swift decisions on investments. They are willing to endanger the current situation is they believe the next innovation may bring something better, another horizon.

Steve Jobs has been a very good example for this; if one only considers the recent time periods, introducing the iPhone when most of the market was dealing with mobile phone miniaturization was a change of paradigm. Once this had worked, he launched the iPad, when everyone was conjecturing about netbooks, taking again everyone wrong-foot. The fact that the visionary Steve Jobs is not here any more, combined with the public listing of Apple, implies many doubts on the possibility for Apple to keep this innovation edge on the long-term (at least when all projects stamped “initiated by Steve Jobs” will be achieved, if they ever are).

And still Steve Jobs has also failed (see this page for awesome Apple failures: http://www.oobject.com/category/12-failed-apple-products/). But he never gave up, did not have fear of losing money, when he believed there was something to win behind some concepts. And some of these failures, actually, are successes nowadays…

So, for entrepreneurs, fear of failing is not a limitation for innovation, it rather is a stimulus to do better, as they are not accountable for someone else, only for themselves and their own profits.

I believe that innovation is made much harder, when the second generation of managers inherits a profitable situation, for which they believe to be more accountable than for the entrepreneur spirit of the company. And with such an administrative management, the company will have to deal with a dwindling will to innovate, not for fear of failing, but rather for fear of jeopardizing that comfortable bottom line. So the inevitable consequences: required consensus, evaluation committee, long-term planning, short-term ROI… All those tepid decision processes that in the end conclude it is urgent not to decide.

So that is not the fear of failing, that is the fear of losing what predecessors have won. Administrators vs. entrepreneurs.

To regain an innovation spirit, you either need a looming catastrophe or a furious competition breakthrough, usually coming from a small entrepreneur, who has not only nothing to lose, but most certainly everything to win…

So my question from my previous post remains:

Is innovation still compatible with profit-making policies within such companies, especially for those that are public-listed? Or are big companies bound to innovate solely through the buyout of small innovators’ businesses?

Still looking for some answers…

One thought on “Penny-pinching innovation vs. sustainable profitability (further thoughts)”

  1. Very insightful post! I agree that the spirit of innovation is often lost in bigger companies or for reasons like budget and losing money. I try to keep innovating in my own business, but practicality of my time and money is a concern.

    Like

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