Why 95% of Innovation Fails
Innovation is the lifeblood of businesses in today's rapidly changing world. It's the driving force behind new products, services, and technologies that can transform industries and drive growth.
However, the sobering reality is that the vast majority of innovations fail. According to Clayton Christensen, a renowned professor at Harvard Business School, as much as 95% of all innovations fall short of their objectives.
This staggering statistic raises a critical question: Why do so many innovative endeavours meet an untimely demise? In this post, we'll delve into the reasons behind this high failure rate and explore how businesses, both large and small, can improve their innovation success rate.
The Research Behind the 95% Failure Rate
Clayton Christensen's research on innovation is widely regarded as groundbreaking. His work focuses on disruptive innovation, which refers to innovations that create new markets or significantly alter existing ones. Christensen's studies reveal that the failure rate for disruptive innovations is exceptionally high even among large, well-established companies.
One of the key insights from Christensen's research is the concept of "sustaining innovation" versus "disruptive innovation." Sustaining innovations are those that improve existing products or services to meet the demands of current customers. These innovations have a higher success rate as they cater to known customer needs. In contrast, disruptive innovations introduce entirely new solutions that often initially appeal to a niche market and can disrupt established industries.
The 95% failure rate primarily pertains to disruptive innovations. These innovations face numerous challenges, including resistance from existing customers, higher uncertainty, and the need for significant resource allocation. As a result, many disruptive innovations struggle to gain traction and ultimately fail.
Major Reasons Why Innovation Fails
Understanding why innovation fails is essential for businesses navigating the complex landscape of creativity and change. Here are some of the major reasons behind innovation failures, as seen through the lens of our FORGE methodology:
1. Lack of Focus
Innovation efforts often fail when they lack alignment with the organisation's overall purpose and strategy for new launches. Without a clear focus on how innovation fits into the broader goals of the company, resources may be misallocated, and initiatives can lose their way.
2. Lack of Originality
Creating an original and unique value proposition that resonates with customers is essential for successful innovation. Without genuine differentiation for a new product or service, it’s difficult to stand out and capture attention.
3. Inadequate Results Orientation
Successful innovation requires a focus on lead indicators (for example proving Desirability, Viability, and Feasibility). Neglecting one or more of these critical factors can lead to the development of products or services that don't meet customer needs, are not financially sustainable, or are technically infeasible.
4. Insufficient Support for Growth
Innovations that gain initial traction may still fail if they lack the necessary support for scaling within an organisation. Without proper resources and strategies for growth, promising ideas can remain confined to a limited scope and traction often stalls.
5. Neglecting the Ecosystem
Innovation should not occur in isolation. Creating a customer-focused ecosystem is vital. Attempting to innovate within an internal bubble, disconnected from external market dynamics and customer feedback, can lead to solutions that miss the mark.
In conclusion, while the statistic that 95% of innovation fails is daunting, it's essential to recognise that innovation is a complex process with many moving parts.
By understanding these major reasons behind innovation failures and addressing them through the principles of our FORGE methodology, businesses can increase their innovation success rate and position themselves for long-term growth and competitiveness in the ever-evolving business landscape.
