Why Innovations Fail (and How to Avoid It)

September 10, 2019

It was Tolstoy who observed, “All happy families are alike; each unhappy family is unhappy in its own way.” So, too, with the stories of failed innovation, which are all unhappy in their own ways.

Innovation enthusiasts love stories of success – we want to hear how Steve Jobs saved Apple and how Reed Hastings pivoted Netflix from distributing DVDs to streaming entertainment. These were bold innovators, catching the technology wave to deliver just what their markets wanted. All successes sound like that.

But failure, in its Tolstoy-esque way, has diverse causes. In 20 years as a technology analyst, I was pitched as many innovative ideas as any venture capitalist, both from large, established companies and from startups. Nearly all failed. What went wrong?

The most common reason: bad timing. Why aren’t we all carrying around the original personal digital assistant, the Palm Pilot, now? Because 90s consumers and businesspeople weren’t willing to adopt clunky technology, to add a device to their purses and pockets whose main purpose was to nag you to get stuff done. By the time Apple launched the iPhone in 2007, mobile phones were common and touch-screens were more capable; as a result, consumers were ready to embrace additional capability in their devices. If your innovation requires a complete shift in behavior, rather than an evolutionary modification, it’s probably too soon for it to succeed.

If an idea is fundamentally valuable, bad timing may be curable; you just have to keep at it. Microsoft’s Windows 1.0 was a total flop, the original Amazon Kindle was close to unusable, and the first Apple TV sold poorly. In all these cases, the companies persisted, adding capability, improving usability, and waiting for the market, the content, and the technology to catch up to the company’s vision. Microsoft, Amazon, and Apple could afford to keep investing over a period of years; most companies don’t have the fortitude to do that.

Launching too late is just as bad as launching too soon. Copycat products that launch into crowded markets with dominant players tend to go nowhere. This is why you’re not using a Zune (Microsoft’s iPod competitor) or Windows Phone (a product launched in 2010 and won’t even be supported after December).

Excellent content can cure the too-late curse. The streaming service Disney+ is entering a space crowded with Netflix, Hulu, and Amazon Prime Video. But with content from Disney, Marvel, Muppets, Star Wars, and Fox – and a three-years-for-the-price-of-two offer – it will find a slot in the consumer streaming market.

Even companies with good timing can get tripped up by corporate politics. It’s a major reason that big companies often get side-swiped by startups…

Even companies with good timing can get tripped up by corporate politics. It’s a major reason that big companies often get side-swiped by startups – especially when it comes to innovations that threaten their core businesses. For example, facing competition from Napster, the major labels in the music industry actually attempted to create their own digital downloading system to combat file sharing, but it was so hobbled by copyright protection that nobody wanted to use it. As the entrepreneur and business leader Enzo Torresi once said, “The reason that God was able to create the world in seven days is that he didn’t have to worry about the installed base.”

Escaping corporate politics requires a cultural and organizational shift. As Charlene Li writes in her forthcoming book The Disruption Mindset, “For most incumbent organizations, there’s just one problem: Your familiar profitable existing customers… . ‘No, no,’ executives say. ‘It’s much better and safer to stay with what you know.'” Unfortunately, the growth you are pursuing is going to come from future customers, and targeting them is likely to cause some challenging interactions with your existing markets and management priorities.

Innovation is especially difficult in industries with rigid structures. For example, despite billions of dollars of investment, the grocery delivery startup Webvan failed in 2001. It attempted to go around the massively complex food distribution system in the US and create its own food warehouses, an effort that was simply too expensive to succeed. The much-hyped Segway vehicle allowed you to zip around town, but it was too slow to be safe in the street and too bulky and annoying to ride on the sidewalk; the transportation infrastructure rejected it like a foreign body. This is also why successful innovations in the healthcare industry tends to be limited to new drugs and devices that fit existing industry structures; the network of regulations, insurers, and health care providers resists structural disruption. You can brute-force your way past regulatory challenges as Airbnb and Uber did, but you’ll be spending an awful lot of investors’ money on lawyers and lobbying and might end up shut out of some localities – which is why you can’t get an Uber in Vancouver.

Sometimes companies become enamored with technology, creating products that solve a problem people don’t actually have. The Juicero $400 internet-connected juicing machine squeezed its proprietary, expensive pouches of fruit into…well, the same kind of fruit juices a health nut could easily make with any run-of-the-mill kitchen juicer. And Google Glass was a pricey set of eyeglasses that put a version of the Web in front of your eyeballs – other than creepily recording others and making you look like a goofball, it mostly accomplished what your mobile phone already did just fine.

If you can’t deal with failure, you likely haven’t got the fortitude to reside in your company’s innovation suite. But reviewing all these patterns of failures suggests a few strategies you can use to maximize your chance of not appearing in my next article about terrible failures.

First, if your innovation starts with a technological advance, focus on functionality, rather than how to persuade consumers it’s worthwhile. Who is the target audience and what problem do they have? Can you make their lives faster, more convenient, cheaper, or safer? And how much do they need to change the way they do the job now to gain those benefits? Lots of effort combined with obscure or marginal benefits is a sure path to failure. The best products extend tools we already use, like smart phones, cars, and web browsers.

Who is the target audience and what problem do they have? Can you make their lives faster, more convenient, cheaper, or safer?

Second, analyze your timing carefully. If the surrounding tech isn’t ready, consider a delay, a limited launch, or a strategy that ramps up the marketing in version two or version three.

And finally, subvert industry structures at your own risk. A product that short circuits existing retail channels or replaces cumbersome multi-step processes is great. One that runs afoul of regulations and doesn’t take advantage of existing supply chains is a lot less likely to take off.