Innovation trap : can your innovation strategy cripple your product development?

Abstract

Innovation is a hot topic; innovation is happening everywhere. Innovation is "romantic", reaching for the stars, against all odds, solving the problem no one thought possible. Most CEOs would not characterize survival as "romantic". Innovate or perish; the mantra, the truth, plain, stark, cold and naked. It gets worse; the environment is rapidly changing. Sophisticated customers are demanding quick responses with low cost, high quality products. What once worked with brilliant success is now failing. If innovation is happening everywhere, it is increasingly not happening here. During the past two years, a multi-vendor government project consisting of two vendors geographically segregated across three regions has seen tremendous success followed by almost total collapse. Initial program status and progress indicate near exponential trajectory: ahead of schedule, under budget and all functionality present. However, collapse was not too far off. The integration effort was a complete failure. Key schedule milestone dates were continuously missed. The gap between functionality believed completed and really completed widened. The story reads like a classic runaway project. Worse, the budget was near exhaustion. The central contribution of the analysis is the identification of the innovation trap. The innovation trap identifies conflicting corporate objectives governing the innovation strategy for new business development and the product development strategy of existing programs in the product pipeline. This study examines the innovation trap by applying System Dynamics techniques to develop a set of heuristics not only to identify collapse conditions but also how to address the problem. The goal of this study is to develop a concept for an improved organization and structure for today's high technology product companies where innovation is crucial for corporate success.