The Innovation Backlash

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Maximum Payback

Payback, a good read with straightforward advice, offers a helpful tool for managers: the cash curve. The simple S curve plots the ROI of an innovative product, measuring the size and timing of a company's investment in developing a new offering, the speed with which the product is brought to market, and the product's scale—or time it takes to achieve projected market volume. The graphic forces a company to confront risk in a disciplined fashion and, ideally, move on if an innovation's curve is heavy on the cost and potentially low on the return.

Andrew and Sirkin present the cash curve of Apple's iPod, no surprise, to illustrate maximum innovation payback. The graphic shows the company's low startup costs (because Apple didn't invent the portable digital music player, it simply redesigned it), speed to market, and ability to quickly achieve a large volume of sales. The iPod cash curve features a nearly flat line on the x-axis before the device's launch and a skyrocketing upward swing postlaunch.

Like Andrew and Sirkin, Harvard's Kanter has observed innovation practices for decades. In her Harvard Business Review article, Kanter makes clear that innovation is nothing new, despite its recent trendiness, and that this long history makes it very possible to pinpoint, and steer clear of, recurring innovation traps.

The Old Yardstick

Kanter says that the most common mistake companies make is to focus on so-called practicality, or the application of traditional corporate processes to adventurous new projects. The problem, Kanter writes in an e-mail, is that applying tried and true processes to "fledgling ideas that are still unfamiliar, undeveloped" is problematic because truly innovative pursuits are "hard to forecast or measure in traditional ways."

In other words, a company can't measure the success of a totally new product via metrics used for a previously launched item. A brand that traditionally makes and sells personal computers, for instance, shouldn't measure a radically new smartphone's progress directly against that of its previous PCs.

If there is one general nugget of advice that Kanter would distill from her essay it is that companies pursuing innovation strategies must be flexible. She writes via e-mail, "Flexibility in the treatment of ideas as they develop is certainly very important in any context. Applying one-size-fits-all thinking to new ideas is a big mistake; approaches should fit the nature of the idea."

Watch for Culture Clash

She offers BusinessWeek.com a set of basic questions that managers should ask before pursuing an adventurous new product: What kind of product is it? How familiar is it to the company, and does it call for finding partners or external alliances? And, echoing Andrew and Sirkin, will it bring returns quickly?

Kanter also advises managers to make sure there are no culture clashes between internal teams working on a company's traditional products and its new, innovative experiments. "It's important…that there are close personal connections between innovators and people involved in established activities—that they communicate often and understand one another," Kanter e-mails. "That helps innovators tap resources, including experience, that might already exist in the business. And it ensures that when it is time to fold the innovation into the flow of the mainstream business, people understand it and are ready for it."

Still, Kanter, like others tiring of the innovation buzzword, doesn't believe real business innovation will die, even if the word goes out of fashion. Indeed, the shift from innovation-speak to a focus on the principles and tools of innovation success was evident at last month's annual meeting of the World Economic Forum in Davos, Switzerland. Last year, an unprecedented 22 sessions focused on "Innovation, Creativity, and Design Strategy." This year, two series of chief executive workshops avoided the term, while focusing on inventively improving established products and processes or creating new ones.

Products and Profits

"The term has been over-used and abused of much of its meaning, with every lame brand-tweak and extension being hailed as an 'innovation,'" observes Kevin McCullagh, who recently wrote an essay, Beware the Backlash: A rising tide of disaffection towards design, as in innovative product design for the popular design Web site, Core77.

"Designers and 'innovators' have definitely been guilty of over-claiming," says McCullagh, a director of London-based product strategy consultancy Plan who has worked with Ford, Hewlett-Packard (HPQ), Nokia (NOK), Samsung, and Unilever (UL). "[But] I don't think there is much evidence of consumers getting tired of innovation. Look at the widespread hunger for a better cell-phone experience that the iPhone is tapping into."

Consumers, businesses, and designers alike might bemoan the constant repetition of "innovation" in advertising, marketing plans, boardroom meetings, and brainstorming sessions. But the quest for products designed with improved usability or fueled by fresh new technologies, true innovations, won't soon end. As experts are starting to prescribe, innovative products can continue to drive profits if pursued with ROI, rather than marketing, in mind.

Jana is the Innovation Dept. editor for BusinessWeek.