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Apr 9, 2021

Leaders are obsessed with innovation. Becoming more agile and innovative are among CEOs top priorities. Why, then, do so many companies fail to innovate?

It’s not that companies lack the vision, ideas, or resources. They’re just bad at innovation by design — that is, they’ve created cultures and processes that work well to manage predictable, profitable, and efficient operations. But that’s not how to nurture innovation. That’s not how to disrupt markets. 

So let’s look at the the key obstacles that get in the way of innovation: 

Sending Mixed Messages

I stopped counting the number of people who are frustrated because their leader is encouraging them to innovate but to also be profitable. How can you make money on a new idea that, most probably, will require many iterations before it becomes successful?

That’s the problem with mixed messages. Companies want people to create new solutions with the mindset of a manager, not of an innovator. They see everything through the lens of efficiency. 

The real culprit is “skilled incompetence,” according to Dr. Chris Argyris. He coined this term to refer to how unaware leaders use routine behavior (skill) to create consequences they don’t intend (incompetence). 

Because executives eager to innovate don’t push back or say what they think, their skills obstruct the resolution of the conflict. Thus, innovation projects never move forward. 

Ambiguous messages backfire. Rather than look for clarification, managers play ball and act as if the tension doesn’t exist. This creates a vicious cycle, what Argys calls “defensive routines,” which are actions people take to protect themselves against feelings of embarrassment or threat. In other words, people deflect away from taking responsibility with statements such as:

  • “The CEO never really meant innovation.”
  • “The CEO supports innovation only when it delivers immediate ROI.”
  • “Leadership is more concerned about quarter earnings than new technologies.”

Legendary entrepreneur Steve Blank said it best: “How do you create innovation in an organization that is designed around ‘no change,’ remembering [not to] harm your core business because that pays the bills?”

Creating a new business or solution — no matter how novel the idea — is different than running an established one. Mixed messages get companies stuck, rejecting everything that’s new because it’s too risky. Nevermind that in most companies, being tied to a failed project isn’t good for your career. 

Not Tolerating Mistakes

Most companies see errors as the end of the world. Mistakes get people into trouble. That’s why teams avoid discussing or addressing theirs. That’s what professor Amy Edmondson found in her revolutionary study of psychological safety, in which she uncovered surprising insights about mistakes. 

Edmondson found that in a hospital’s wards, a survey of nurses showed that units with superior leadership and team cohesion reported making far more errors. In other words, the best units seemed to be making the most mistakes.

Perplexed, Edmondson investigated further. She eventually discovered that it wasn’t that units with highly rated leadership and team cohesion were making more mistakes — it was simply that they felt psychologically safe to report mistakes. Nurses in these units said that  “mistakes were natural and normal to document” and that “mistakes are serious because of the toxicity of the drugs, so you are never afraid to tell the nurse manager.”

Conversely, in units where nurses rated their leaders more poorly, it wasn’t that they made fewer mistakes. It was that they did not report their errors due to fear of punishment. “The environment is unforgiving, heads will roll,” said a nurse. “You get put on trial,” said another. 

The main point is that poor leaders didn’t tolerate mistakes, thus depriving their team members of learning. And, most importantly, they didn’t prevent others from committing the same error. 

It’s important to view mistakes as stepping stones, learning opportunities to take you to better places. Just ask James Dyson, the entrepreneur and wealthiest British person. It took him 5,127 prototypes to find the right design for his bagless vacuum cleaner. 

The more you fail, the more you learn. Dyson didn’t let failure disappoint him. By adopting a trial-and-error approach, he was able to move confidently from failure to failure, becoming wiser and wiser.

Not Making Room for Innovation

Teams charged to create and implement new solutions need support and, most importantly, space. Innovation doesn’t happen in a vacuum. Experimentation requires time. Problem is, most teams are already overloaded. One of the key reasons change fails is exhaustion. As Chip and Dan Heath explain in Switch, change wears people out. 

If you want your team to innovate, start by removing some of their current workload. At Spotify, developers enjoy a “10% hack time,” blocking out that space to work on new projects. Google used to have a similar practice that enabled the development of Google Maps, Gmail, and AdSense. 

Innovation requires the room to act differently. 

You cannot expect people to complete a business plan before running an experiment. Your team should be able to talk to customers without going through your research department each time. Your IT department should create a safe environment for people to try new technologies rather than pulling the security card to say no. 

Ultimately, creativity is not innovation. Michael Dell said it best: “Ideas are a commodity. Execution of them is not.” Innovation goes beyond generating something new. It’s the practical application of creativity that turns an idea into a business. Furthermore, most companies don’t struggle to identify the next revolutionary idea; they simply fail to create a culture of innovation. 

Your culture, not lack of vision, may be your biggest barrier to innovation. 

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