I felt it when I first walked onto the site. Call it intuition, but immediately I knew something was not right. The company’s R&D group had low energy, there was little activity in the labs, and employees were defensive and territorial about their jobs and their projects. Many looked to be surfing the Web and nobody was talking shop in the cafeteria. And when I examined the R&D portfolio, I found a slew of “me-too” projects that would be too late to market to make a difference. It was an “aha” moment. It was what I call an innovation version of “Deadman Walking”.
Interestingly, this came as a complete shock to me because the company’s “public persona” was that it was doing well and there was a successful history of growth and many launches of innovative products. The company had a well-defined vision, aggressive growth targets and enthusiastically proclaimed it was the #1 company in a small market segment. However, the “feel” of the R&D group was a good “tell” of the future health of the company and a closer look at the R&D strategy, work processes and portfolio and how the R&D group worked together revealed an impending “innovation collapse”.
Warning signs of “innovation collapse” … Even though this is a hypothetical company and situation, I have drawn several aspects of it from my experiences over the years. It’s a warning sign if R&D people are not enthusiastic about their work, are isolated from others in the company, and are not engaged in collaborative teamwork or risk-taking. It’s a warning sign if the R&D portfolio is dominated by small “me-too” projects or has a track record of failed projects or has a low freshness index (% of sales from new products for the last 3 years verses total sales). It’s a warning sign when too many people cannot articulate the R&D strategy or disagree with it. It’s a warning sign if key talent has left or if technical talent is lacking or if the number of new R&D people is unusually high….R&D needs a certain core number of internal experts with historical company knowledge and memory who know how to get things done.
Hallmarks of an “innovation crescendo”… Robert Cooper and Scott Edgett in their book1, “Product Innovation and Technology Strategy”, identify four innovation strategy types: Reactor, Defender, Fast-Follower and Innovator. True Innovator companies value being first to market with disruptive new products and technologies. They respond rapidly to early indications of emerging new product opportunities. True Innovator companies make innovation a priority. The most innovative companies I have worked for had innovation teams long before they became fashionable, and encouraged the exchange of new ideas and product concepts between and across all levels of the company from R&D scientists to their marketing counterparts and vice-verse, as well as between business leaders and R&D. I remember one business leader in particular, a corporate leader with no scientific training or background, who signaled that new ideas would be valued in his organization by frequently sending me references to articles he was reading, or technologies he had come across, along with his own ideas for possible products. Similarly, prototype development and feasibility studies were encouraged and rewarded through performance management evaluations. Innovative products and prototypes were proudly displayed all around the work place, from offices to labs to meeting rooms. Posters of new launches were on the walls. Displays of new products greeted visitors in the lobby. True Innovative companies are willing to take risks in their Product Development portfolio by pursuing some “big ideas” and will rapidly change R&D direction if required. Of course, you see nothing like this at the “Deadman Walking” company.
Role of denial in “innovation collapse” … How is it that “Deadman Walking” companies end up in this place? Surely they see that their growth targets can’t be met, their R&D pipeline is disappointing, sales are leveling-off with no new products on the horizon that can make a real difference, yet they still do not alter their R&D course, even as the Marketing group’s frustrations rise. Maybe they believe that a Business Development opportunity like an acquisition or licensing deal will be the solution. Indeed, that may solve the immediate need but the systemic issues in R&D will still need addressing. For the most part, a “Deadman Walking” company continues to concentrate on the R&D equivalent of arranging deck chairs on the Titanic. How does this happen?
Pathways to “innovation crescendo” … How can you recognize an impending innovation collapse and change course? We’ll explore these questions in following blogs and address how to transform from impending innovation collapse to innovation crescendo. In particular, among other future topics, I will address the role of R&D Leadership, management of the R&D portfolio, outsourcing of R&D, the idea of “let’s throw more money at R&D” and the question: does process kill innovation?
I hope you find these topics interesting. Please leave your comments if my blog resonates with you or if you have any suggestions for future topics. Many thanks.
1. Robert G. Cooper and Scott J. Edgett, Product Innovation and Technology Strategy (Product Development Institute, 2009)
© Dennis Nelson 2012