Why Innovation Fails in Big Organizations

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Innovation and Enterprise

Large enterprises leverage their services through the value and the brand created many years earlier. It is a natural thing to do. Groups of stakeholders focus on protecting what the company has created in the past. Unfortunately, this may mean putting so many obstacles to new ideas that almost nobody is willing or able to take the company to new directions.

Root Causes of Failed Products

In enterprise companies ideas for new products usually come from key company stakeholders or customers. To plan implementation of those ideas the companies want to prioritize and put them on a kind of products roadmap. They have two reasons for that. Firstly, stakeholders want product/engineering teams to work on the most valuable ideas first. Secondly, they want to know when the products will be ready.

  • How much money will a product make?
  • How much money and time it will cost?
New product cycle as waterfall process by Marty Cagan

1. The source of ideas

Products developed in waterfall model products are usually stakeholder or client-driven. They focus around features facilitating sales. This may be not the source of best product ideas. Stakeholders rarely have enough time to dive deep into ideas of how products can solve particular problems of users. Another problem with stakeholder-driven innovation approach is the lack of team empowerment. The team is there just to implement. This is very similar to contractors, who focus on execution and (almost) never on innovation.

2. Business cases

Usually companies create their roadmaps based on business cases. Business stakeholders take ideas and ask two questions: how much money will it make and how much will it cost to build? Based on the answers the roadmap priorities are organized.

3. Product roadmaps

They mostly consist of a list of products and features often prioritized according to business cases. We just seen that early business cases are guesstimates at best. Cagan mentions two insights he calls most important problem of product. Two “inconvenient truths”.

4. Outputs vs outcomes

Entire process is project-centric. Companies usually fund, staff, and launch projects. But projects are output and products are about outcome. This results into many orphaned projects. Something got released, but if it doesn’t satisfy the goals, then why to keep working on it?

Summing up

Digital product innovation is hard. The way most enterprises think about the digital innovation seem to be sensible, however it doesn’t work that well.

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