Why Innovation Teams Fail

I recently received my latest and greatest credit card with the chip. It reminded me of when our innovation team pitched the leadership of our large credit card firm on how to transform our industry with this technology.  The company was looking for an innovative approach to help take a leadership position in the U.S. credit card market. 

The capabilities and security advantages of chip technology over magnetic stripes were already being put to use throughout Europe and Asia. Along with consumer benefits, there would however, be significant cost implications. Though, it was apparent that this was where the entire industry was headed and the benefits to the customer along with a reduction in fraud were clear. Not to mention the new applications, discoveries, and innovations that could be built upon the technology. We had an opportunity to make a bold and disruptive move in the U.S. card market.  That was in 1996. More on that later.

Unless a company has integrated innovative thinking into the fabric of the organization, they may fall prey to the idea that they can set up a separate group to come up with great new ideas to deliver to the market. 

Coming up with new or groundbreaking ideas is often not the greatest challenge. Delivering the ideas into the market is where things begin to fall apart. 

Organizations may come to the realization that they lack either the culture or know-how to develop innovative products or services and successfully get them into market. They may take the easy path and decide to set up a team, give some folks a new title, or even physically locate them away from the rest of the employees and dub them the “innovation team.” 

This will often prove ineffective and may backfire on two fronts. The primary issue is not that the team won’t come up with great ideas, but they will then have to take their magnificent concepts and introduce them into the very same system and organization that admittedly stated they were not good at innovating. A study of MIT technology transfer over 16 years, found that when a large company licensed a technology from MIT and introduced it into their development systems, the idea never even got to market 80% of the time.

The second issue is one of negative cultural impact, which is exactly the opposite of what leaders would expect to happen. The concept of demonstrating their commitment to innovation must surely boost confidence in the company. But exactly how would you feel if you were not selected or even asked to participate in the innovation efforts? There is the real threat of fostering animosity from existing employees who know they have great ideas and want to contribute, but can’t or were never given the option. Or worse - ask the employees to submit their ideas, and foster excitement, only to have little feedback on what happened with their ideas and inevitably, see the tiniest percentage ever see the light of day, if that.

Back to that pitch to our CEO two decades ago. We had our challenge. We completed our research and we even had pilot programs up and running. After a good hour long presentation, the CEO, with a very thoughtful expression on his face, leaned back and said, “couldn’t we just paint a chip on the card and make believe it did something, when in actuality, it just used our same mag stripe infrastructure?” Awkward silence followed. And here we are 20 years later finally implementing the technology in the U.S. And a bit too late, as more innovative companies are already moving us beyond chip technology with mobile payment systems and enhanced security features.

Innovation is not the job of a select few. Innovation is a mindset, supported by senior leadership, with systems, education and tools that empower all employees.

Before pursuing innovation in your organization, take the time to step back and consider the entire system, not just one component, such as generating ideas. Take stock in your culture, your leadership, your commitment, and your innovation capabilities before investing in tools, teams, or titles. As in any endeavor, the time taken up front to plan and prepare, will help yield better results on the back-end, where it matters.