Blog for the Strategic Innovation MBA Course at Vanderbilt University
I used to work at a major financial services company. It was the most risk conscious organization I've ever encountered. Even the simplest of improvements (adding a link to an internal tool website) was incredibly difficult to implement. There was some logic to their hesitation as customer security/reliability is paramount - but it was far too extreme, limiting even changes which improved customer security/reliability. The main problem seemed to be a lack of incentives to change - why bother if it only opened your team up to failure for little gain?
I worked for a contract security services company. It was founded by its current owner in 1963 and he prided himself on doing things the same ways as 40 years before. In 2006, we still did not have direct deposit! It was a private company and every decision had to be approved by him. He created a culture of fear in which employees were afraid to present new ideas. The technology and other features of the company always stayed light years behind of current trends. Innovation and change were bad words.
I used to work for a life sciences company that prided itself on providing "innovative products to improve the human condition." Except that internally, it was very common to do things as they had always been done. For example, when someone was stuck on a procedure or test method, it was common to look back at previous batch records to figure out what was done before. We rarely spent any time discussing what would be the best way to do something. It was strange to me that an R&D facility wasn't very focused on the R or D.
Go figure!?! Probably fear of failing--
Working for an engineering company that specialized in providing OEM components to a variety of different industries, we had to deal with a lot of non-innovative companies. One company in particular, Company X, would copy another company, Company Y. Every single time Company Y would release a new product, Company X would call and ask for a quote for any components that went into that product, shortly after that they would release an identical product. Their entire business model seemed to be to copy the other company 100%.
I interned with a company that made climbing walls and playground features out of a proprietary technique that mimicked real rock better than anything else in the marketplace. The owner and staff were exceptionally innovation in their infancy but had become complacent in their size and structure. Typical situation where an owner achieves a certain lifestyle burns out on the work. I came in assessed their production, sales and marketing processes and found tons of low hanging fruit that was never acted upon. It's amazing how success will snuff out innovation in certain organizations.
A certain government agency I used to partner with. At the time I started working with this organization, they were in the midst of a "cutting edge website transformation" that they would not share with the public until the Go-Live date. Instead, they kept the old site running so I became very familiar with it. After delaying the project roll-out by ~18 months, the new website came out and the only thing that was different was the homepage (which they made look like a town map with little houses that you would click on to direct you to other parts of their site). All other pages and links were the same as before.
When I operated an event marketing company, our primary competitor was one of the oldest and most established agencies in the business. Because they had grown to be so large and serviced so many clients, they were unable to provide truly creative solutions to each of their clients. Instead, they were trying to serve their clients' creative needs by offering them a menu of services and based on events and activations they had done for other clients. Their lack of innovation and creativitiy created an opportunity for my company to demonstarte tailored creatived ideas and win clients from them.
I worked for a company that, in theory, used a shared consulting model to provide cutting edge best practices and innovative business strategies to our clients. The reality was that we basically operated as a filter - taking what other firms had done and keeping what we felt were the prime options. You cant keep that up - the Washington Post did a story on us and summed up our business model as a "Boiler Room sales approach combined with Readers Digest research." That guy should have gotten a Pulitzer for his insight.
The CEO of the company is a dictator. He would just go with what he thought. No matter how good your proposal is, he will not pick it. In the good time, the company did fine. However, when the crisis came, the employees of the company do not get used to come up with new solution because they get used to depend on the CEO. The company failed after that.
I worked in an R&D environment in the aerospace industry. We had an organization called the “technology group” who’s focus was to design and build one of a kind innovative tools to help testing. They were, in my opinion, pretty good at this part. However, I was in operations and they would come to us, say “hey we have a great new thing, can you install it tomorrow?” without any though of the work on our end to actually hook up the system and get the personnel to understand how to use it. The organization had a reputation for this type of behavior and because of that, they got more resistance when new ideas went to be implemented. They were defiantly innovative, but their execution gave the rest of the organization reason to resist.
I think that past success is often one of the biggest impediments to innovation. The first company that I worked for, an IT consulting company, designed a really great web-based reporting system. It was very innovative in 2001. Unfortunately, our largest client liked it so much that we ended up updating and maintaining it until 2009. You can imagine how much web-based technologies changed in that time period. By 2006 even, our product was laughable. But, our largest client wasn’t willing to pay for a new system and our company refused to dedicate resources to self-funded internal development, so R&D stalled. Resources were shifted from R&D to maintenance and our turnover grew – myself included. Just demonstrates the tension between steady cash flows and progress.
accounting firm. everything is standard. even if a process can be simplified, it won't be because it increases time needed by everyone to acclamate to a change, even if it is better in the long run.
The firm I used to work for wasn't terribly innovative in the way they conducted business, but I'm also not convinced they needed to be radically innovative either. So I'd rather focus my post on the whole segment of companies who make their profit by simply pirating other people's ideas and products. This practice serves to actively destroy innovation. We commonly see pirated software, media, and fashion products, but the only thing new and innovative about them is that they are made from cheap materials and therefore cost less. For these companies, the innovation is not in developing new products, but in taking existing products and finding new and 'innovative' ways to make them look similar and act similar, at a fraction of the cost. I'm all for building on successful ideas, but I think you need to somehow better the product or idea to call it innovative.
One of the least innovative firms that I have had experience with is a top technology firm. They suffered from two key problems: lack of strategy and lack of collaboration. Their key "strategy" was to beat Competitor X, but they did not have an action plan on how to execute and thus got lost in the details. Secondly, the firm was organized into silos that valued individual performance over team performance. Consequently, employees had no incentive to break out of their silos and create the next game changing idea. While this company is currently turning itself around by creating a clear, actionable strategic vision and valuing collaboration, they are now facing the challenge of instituting change in a large corporation…
A large financial services company based in the Midwest. I worked in the Corporate Marketing department for 3 years, and didn't see any new customer products or services introduced during the entire time! It took nearly a year just to get the 'innovative' idea of tracking customer satisfaction turned into a real program at the bank. A primary reason for this lack of innovation was a belief among top management that change was "too risky" within the very old and traditional banking industry. Everyone was afraid to break the mold, and those of us who wanted to push the envelope, we quickly told no.
A boutique advertising and marketing agency I worked for right out of college. The company was made up of very talented individuals that previously held high-ranking positions at larger agencies. The problem was that these individuals were of an older demographic and did not understand new trends in pop culture or technology (and had no intention of learning it). Because of the experience of these individuals and their previous successes, the company did not push back on their ideas or attempt to explore new, innovative methodologies. The youth at the company was not used to their advantage, but rather pushed aside to do the "dirty work." The company ultimately failed from this lack of curiosity and forward-thinking.
A previous company I worked for was not at all innovative due to the negativity of the employees. The middle-managment level employees had an opportunity to be innovative and do things that could change the company both internally and externally. This group of people, however, spent so much time focusing on the negative aspects of the company and complaining about what wasn't working instead of focusing on what they could do to make improvements. Overall the company stayed stagnant and never did anything innovative.
I know of a particular software company that was monopolistic for quite a while in its sector of products. I was constantly frustrated with the updates that this company made to its software. As an industry leader, with no close followers, it was able to marginally update each version that it released without offering any true radical innovation. Once competitors came in and threatened to take share, the innovation appears to have come back. For a time though, this software giant was a hopeless innovator.
I worked in the newly formed "Healthcare Innovation" group within a pharmaceutical company. The group was formed to encourage innovation, e.g. they had their own, fairly large, budget, they had buy-in from senior management, and they had a great mix of R and A type personalities. The reason innovation did not work in this environment was due to the fact that the individuals recruited to work in this innovation group came from a very conservative pharmaceutical background and maintained that mindset. Further, many of the processes and organizational constraints of the large pharma company bled into the innovation group and stifled their ability to move quickly and truly innovate.
I used to work for a company which main client was the Venezuelan oil and gas state-owned company (PDVSA). What used to be the third biggest oil company of the world, went off the list after a massive laid off in 2002, when people with +30 years in the company had to leave their job. The level of bureaucracy went to the roof, the decision making power was centralized, and employees had to follow and support government's ideology. Innovation was killed and what used to be one of the top list companies to work for in the Venezuelan market turned to be one of the last in the list.
A construction company I used to work for was very innovative in their designs/blueprints and continually changed the style of product to adapt to ever changing tastes, but they were extremely anti-innovation when it came to constructing the products and running the business. They refused to try new operating processes and usage of new technologies to run the daily business both out in the field and in the office (i.e. no email until the beginning of 2009 only faxes and hard filing). The company did not want to change what had been working for them for over fifty years for fear that it would ruin a good thing, as a result they fell behind competitors that were open to change.
I am aware of types of cell phone companies in China. They are brand-less, or in other words, they do not have a brand image at all. Their business mode is to use generic cell phone ICs and generic windows mobile OS to produce cheap cell phone. They product cycle is very fast, and there is nearly no R&D involved. However, the problem is, since there is no innovation involved, their products are just like commodities. It is hard to differentiate them from others. They could never sell their products at a premium; their products are sold at the price of commodities.
I worked for a BPO that was so focused on margins and cost reduction that they could never lift their heads up to look down the road at a future strategy and thereby innovate to get there. Their fear of risk crippled them.
The startup company I used to work for unfortunately fit this profile. We had an innovative product that had the potential to make a difference in the biopharmaceutical world. However, with capital being tight and partner opportunities always lingering on and never actually occurring, it was difficult for employees to step out of their comfort zone. We did not come up with innovative ways to get around our lack of capital and stuck to the repetitive work style we encountered on a daily basis. Senior management did not help with the cause as their lack of transparency with what the company strategy was caused a drop in motivation among employees. Unfortunately for my former company, make or break time may be approaching in the very near future.
Large financial services company - The model was prohibitive and constrained to begin with, so innovation was not top of mind but I think the bigger problem was the people. Everyone seemed so similar, unoriginal, and programmed that it was easy for the company to remain as it always operated. Innovation could have been injected in so many different areas of the business, but no one wanted to champion change or own the possible risks associated.
This anonymous company had a great company culture and was particularly collaborative. However, because individuals had been with the organization for in some cases decades there were a lot of instances where things were done a certain way because that is how they had always been done. It was difficult to challenge the status quo and as a result this stifled new ideas, new ways of thinking, and ultimately the ability to be innovative.
I think sometimes innovation is part os the strategy of companies but they can be so big that some areas of them cannot achieve it. I worked for a big company that has to present investment projects from Mexico to USA. I entered in 2006. Some managers told me that 2 years earlier they still sent people to present new projects with big paper presentations. They changed this until they bought big screens to do videoconferences. This was in 2004. I made presentations and sent them by email in high school in 1998. I think the problem is that there are companies that try to keep so low their costs that consider investments also as costs,then they don´t have them as strategic.
I worked for the small manufacturing company, which supply car parts to major motor companies. One thing I found was that even though my company wanted to innovate process or product, our client was very reluctant to accept that because they concerned about overall quality or price changes. Moreover, the approval process took a very long time, so our company couldn’t do long-term innovation, without incentives from clients. As a small manufacturer, higher employees’ turnover was also problematic. Innovation usually take a long time or require consistent human resources, but because of high turnover, our company had to stop innovation project sometimes.
The last firm I worked for before I came to b-school was full of talented consultants but innovation was severely lacking. They have been around for over 35 years but just started to hire younger associates in the last five years. The co-founder and CEO is still with the firm along with many of the first employees and they have the "we've always done it that way" attitude. The type of work we did was niche and they felt that there did not need to be change to the "old boys" network. Many of the innovative solutions we found were shot down by management and never implemented.
I worked for a large retail/restaurant company. Conservatism doesn't begin to describe the culture at the company. They have operated in the same way for 40 years, and have not changed despite obvious external, both natural and competitive, changes in the environment. Although it can be argued that for 30 years, it was very appropriate for this company to operate in this manner, management has not responded appropriately by innovating to operate within its newly changed circumstances.
A large government owned airline in one of the fastest growing emerging markets comes to mind. The company has been in the red for years together, running on government subsidies. There seems to be no attempt at innovating obsolete processes, service standards or customer acquisition or retention practices. As a result, as soon as the sector was de-regularized private airlines have been able to capture a lot of market share by differentiating themselves. The failure of the company and the colossal waste of taxpayer money can be attributed to organizational (bureaucratic) hurdles.
The least innovative organization that I have seen was a federal agency within one of the larger departments (not Defense). The highly structured hierarchy created very little innovative changes because so many "higher ups" had to sign off on a project and it took only one person to reject an idea. The slow pace of government also led to difficulty in implementing ideas in a timely fashion to make a difference.
I used to work for a company where everything was centralized. At the end one person was the decision maker and he will decide to approve or not any idea. You can imagine how this bureaucratic centralization affected the creativity and innovation of the employees.
One of the biggest US electronics firms closed all its shops in China, failed in a fastest-growing consumer market. Some just said that it was all due to serious price competition from local firms. But I think the root cause is lack of innovation. They just copied everything what they did in US market, from products setting to the whole operation processes. They did not realised that the cultural differences play a important role in buying behavior. For example, people may like sharing experiences with other buyers instead of buying it in a "private and quiet" enviroment...Without innovation in mind when doing marketing research and operation process design, success can not be copied.
My first job was at a nonprofit that had huge budgetary constraints. We only had the funding to work on specific projects that had strings attached built into the funding structure. On the meta level, this kind of organizational constraint is one of the biggest problems for nonprofits. They are so tied to funders' requirements and lack access to other sources of capital that they lack the power to test new ideas or try new techniques that might fail - but may in fact lead to a solution down the road.
I'm a bit short on experience here. My work experience consists of: making pizzas, teaching karate, and Army. Believe it or not none were terrible about innovating. The pizza place was always innovating to cut costs, the karate club was a bit ahead of the mixed martial arts curve in the 90s, and the Army always has majors and colonels with nothing better to do conducting some sort of study on how to improve things.So I will use my current and future employer: me. I'm the worst innovator I know. I've set out to pursue life as an author, okay no problem. But what have I done so far? I've started a website on blogger that is about one step above Grandma's Myspace account. I'm applying to grad schools to put my nose to the ground and follow the programs already laid out, serve the systems in place.If I see myself as a corporation I give myself an F in innovation right now. What's stopping me is probably fear--the fear that I'm not good enough to evwen worry about innovating yet. Why create an awesome website when you have no product worth seeing? That, and laziness. I just haven't set aside time or energy to do it.
In my last work before starting business school, there was no room for innovation. The main issue there was that top managers did their work and solved problem using the same methodology all times. When they do that, people tend to follow same ways of doing day to day work without even thinking on performing tasks in different ways. This company is a very traditionally corporation that does not incentivize or motivate employees to think differently. Everything we did was by the book and in the way that people have done it before. I believe that company was very close minded on creativity and they were focus only on results and almost never in improving current procedures because what we did was good enough. Even when new ideas came out, just a hand full of them were implemented, which made people stop trying to improve.
A company that made film for cameras that failed to project what demand for digital cameras would do to their business model. Although film was something they did well, the falling use of film accelerated incredibly rapidly as flash memory usage increased and costs of digital cameras decreased. Although at the time it might have been difficult to conceptualize how fast digital would take over, this company could have taken steps to envision all scenarios.
I worked for a company that was still being run by its founders about 20 years after its founding. And to be honest, the times had moved far beyond the capabilities of the founders, but they still felt that they were the most important voice in the room. They did not understand that they needed to bring in fresh perspective in order to bring their company up to modern times.
Since most of my professional experience is with tax accounting firms or healthcare providers, the better question might have been when I actually got to witness innovation within my company. In each case, if you're looking for an internal problem, it was probably cultural, but in reality the problem was the industry itself. If there is no incentive for the industry to compete, there will be no innovation. Tax accounting and healthcare are established industries competing on reputation and managing margins more than anything else. Also in both cases, their product is a service that is dependent largely on the people they staff, with delivery models that are highly resistant to change based on the training the individuals have received in their formal education.
At my company, we are pretty good at innovating customer focused products and services, but really bad at innovations concerning back office operations. There is a real fear of technology, we still back up all our data on disks and use dot matrix printers. We print every customer ticket in triplicate. I think this mainly has to do with the type of employee our industry attracts. Most only have a high school education.
I worked for a consulting company that prides itself, besides other things, on being very innovative, flexible, and of course customer oriented. But every time I aske whether we could change some internal processes or rules that affected the employees I heard "Well, you'll have to ask HR but the probably won't do it because we have done it this way since years, because our parent company doe it this way.." etc. Although some of the employees were themselves angry about some issues concerning for instance the process of recruiting, and they already had a variety of alternative solutions in mind, they knew they could probably never change it because they would have had to go through 5 hierarchical levels and really try to push it through. It's only small things but they would have made a difference for the employees.
The least innovative company I have worked for was a startup residential real estate company. The basic problem that we faced was a limited number of resources. From human, to capital, to time, we did not have the ability to innovate from a process standpoint as much as we would have liked. A lot of processes were establish based on ease of implementation from the onset, but then these were not developed any further. With a steady flow of project work, many of the poor processes became ingrained in the culture and a limited amount of time kept from addressing key problems.
Consulting operates within tight constraints that limit innovation. My previous work in healthcare consulting showed me that no matter which hospital we were in or what types of issues we were faced with, our management team was quick to say "oh, we've seen this before". Then we would proceed to look up old documents we created at past clients and tailor the document to fit the current client's issues. There were times I would lead brainstorming sessions to think of creative ways to solve the problem at hand, but it was inevitable that someone in the group would be adament about doing it a certain way because they had seen it work before. In the end, we often pushed forward with our least time-consuming option in order to be able to say we addressed the issue without using up much of our limited contracted time. It was frustrating to know that I could have innovated a more appropriate solution if only given more time and potentially more resources.
I did a short internship over one summer during high school in a bank and it was incredible how standardize all processes were, at least in the department I was working in. Every activity had its custom process. Although this could be considered good operational speaking (standard activities tend to minimize variation and different people work in similar ways), is really hard break that process to come up with better ways. First bureaucracy was big, second, top managers were considered old school and use to approach to processes in the same way, and third, there was no motivation or incentives to accomplish any improvements.
A particular financial service firm that wanted to implement proprietary technology and avoid any innovations outside that realm to keep its maintenance costs low. It had built a delivery center in india and recruited for a particular set of technologies and wanted to stick to those. What happened years later? Well, as you might imagine, turnover rate went through the roof because folks were not interested in working with legacy technologies and this impacted the firm's bottom line.