Every company will tell you that they innovate.
But here's how most innovation happens:
1) It's scattershot. Too many investments in different types of innovation work to cancel each other out. An organization doesn't lose its competitive advantage due to famine, it loses it due to indigestion.
2) It's undisciplined. There is no method to graduate the innovation to prime time or keep the innovation from being cannibalized by the core business. It's impossible to evolve when the product that accounts for 80% of your revenue and 100% of your operating profit soaks up 80% of your investment.
3) Everyone tries to be Apple. Innovation is focused on creating a brand new product instead of the right focus for the type of business and the maturity of its market.
4) It's #trending. "Having more AI" or "we're going to add AI to our products" because your competitors are doing it, because it's popularized on LinkedIn, Bloomberg, HBR and CNBC, because the board demands it, because it's "the way of the future" or because the Big Four are selling AI enablement is not a sufficient use case for the investment. Can it help? Yes. Should it be your core innovation strategy or should it steal from other strategies? For 90% of companies, probably not.
There are 16 different ways you can innovate in each market you serve. You must choose one or else you're wasting precious time and money (pick 1 way per value chain within your company).
Below are the forms of innovation mapped out to the product lifecycle (source: Moore, Dealing With Darwin). There is an incredible amount of optionality that you can choose from when selecting your next investment in innovation, the key is to leverage your competitive advantage wisely within the market you serve and relative to your how you produce value in that market (your value chain) -- sometimes the least appealing innovation is the right one.
