The Corporate Innovation Problem: Three root causes

frankmattes Advisory, Thought Leadership

This is the sixth post in our series about what we call the ‘Corporate Innovation Problem™’ and how to solve it. The series started HERE.

With this post, we show the root causes of the Corporate Innovation Problem™. We have coined this term (Note: For easier readability we skip the ™ sign in the rest of the text) for the fact that despite the investments made to build the infrastructure for the early phase of innovation, innovation results remain disappointing.

We do not think that the source of the Corporate Innovation Problem is the individual innovator. Rather, we believe that the corporate innovation problem has three root causes rooted within the organization of a firm and its innovation processes.

Root cause 1: The complexity problem

Today, companies are dispersed, geographically, by sector, by technology and culturally. R&D labs are positioned all over the globe which brings a coordination challenge and a knowledge management challenge. Because of the complexity problem,

  • the wheel is reinvented many times over
  • synergies not used fully and
  • insights that may lead to innovations not shared to the full extent.

Of course innovation is not only R&D. Effectively coordinating views from the market and operations may be essential, but this brings with it a further level of coordination challenge for innovation leaders.

Root cause 2: The integration problem

In most companies, the ‘incremental’ and the ‘radical’ Fuzzy Front-ends (FFEs) are not properly integrated into one Efficient Back-end (EBE).

The point in this argument is not that superior innovation performance these days require the separation of the FFEs for smaller / incremental / renovating innovations on the one side and for disruptive / radical / breakthrough innovations on the other side. Many companies have done this and there is a significant body of knowledge out there on how to set up and manage the innovation ‘ambidexterity’ (see e.g. HERE)

The point is that somewhere in the innovation process the incremental and the radical FFE need to be integrated into one back-end. This is because at the end of the day, the new product will be in one catalog alongside with all the existing ones, sold by one sales organization and serviced by one field maintenance unit. The interface between the FFE and the EBE is critical: however, this integration is not done properly in many companies.

The missing integration thesis is supported by two interesting facts from the Accenture study mentioned EARLIER. To further exemplify this point, executives are aggressively demanding radical innovations: Interest has nearly doubled since 2012, probably driven by the business communities’ belief that ‘disruption’ is a necessary prerequisite for growth and profitability. But 72 percent of the same Executive group state that radical innovation opportunities often languish because ‘they have no organizational home’ in which to nurture them.

Root cause 3: The systems problem

The ‘system’ of innovation is the complex fabric of leadership, KPIs, culture, innovation capabilities of staff, innovation routines, etc. There are numerous cases that hint that deficiencies in the way the system is put together stifles innovation potential.

The Corporate Innovation Problem: Focus on the ‘systems problem’

Certainly there would be value in exploring the complexity and the integration problems. We assume however, that these need to be dealt with specifically for each company, since e.g.

  • every industry sector has its own dominant innovation logic; So for instance, integration in the Process Industry differs from integration in Discrete Manufacturing, Financial Services etc. and
  • the global set-up of innovation (labs, accelerators, innovation centers, plants, …) for one company might be very different from another.

It may even be that the previous two root causes of the corporate innovation problem are not suitable for a ‘one-size-fits-it-all’ solution.

So we will focus on the third root cause, the ‘systems problem’. We feel encouraged to focus our attention here since a famous quote from Dr. Edwards Deming, the father of modern Quality Management and a great Systems Thinker, reminds us that ‘94% of the problem is in the system, six percent in the individual person‘.

Interestingly, from a system’s perspective, we see some parallels between innovation management on the one hand and quality management on the other. Both require definition of objectives (an innovation that addresses a valuable and unmet customer need respectively measurable quality criteria). Furthermore, both management concepts share a number of touchpoints, e.g. when innovation features are identified and translated into quality criteria using the QFD methodology, for example.

The relevance of focusing on the ‘systems problem’ is that we can take action to improve the system.

In the next article we show how business and innovation leaders can solve the ‘system problem’ and hence increase corporate innovation performance.

About is an international agency focused on solving the ‘Corporate Innovation Problem™’. To achieve this, we provide consulting services based on proven, best-in-class methodology which in many cases is proprietary. The services are delivered by experienced innovation management specialists and by subject-matter experts.

Please get in touch with us if you want to improve the outcomes of innovation investments.