There is in the present day a mania for innovation, with firms desperately trying to demonstrate that they are constantly delivering new ideas to the market for fear of being seen as stagnant and decaying by their investors. But at the same time, there is the fact that new products and new companies fail the majority of the time. The actual rate is hotly debated (the Pareto assumption of 80% is the most commonly cited term by those who have done no actual research, but even the most generous sources typically suggest a success rate of less than 50%).
Putting the two together, this indicates that businesses are very excited about innovating, but are not particularly good at evaluating whether a novel idea is actually any good. In spite of this, there remains the general assumption that innovation is always a good thing, and even when an innovative idea fails, “what’s the harm in trying?”
The harm in trying is that failure weakens the reputation of a company and its brands. Customers who were loyal to the brand are embarrassed by its failure and lose faith in its products in general. Prospects whose first exposure to the brand is a poor idea are disappointed by their encounter and become doubtful of the brand’s established products. In all, people have more confidence in a company that seems stagnant than one that seems desperate and incompetent.
The harm in trying is that even success can weaken the integrity of a company and its brand, particularly when new products are incongruous with the market’s conception of the brand it can cause dissonance and a loss of the brand’s strong association with its areas of core competence, to the point that the market becomes confused about what the brand means. Even brand loyalists become doubtful when the meaning of a brand is diluted by new products that suggest the company is moving in a new direction, and the future of its traditional product lines is uncertain.
The harm in trying is a great deal of wasted capital in pursuit of wild ideas. It is often pointed out that companies have become exponentially more efficient in their operations, which should result in greater revenues for the same level of expense. But where is this additional capital being used? Product prices are not declining at a corresponding rate to efficiency. Wages certainly have not increased to reward workers for this additional productivity. Investment earnings have not changed significantly in over fifty years. There seems to be a pit between the top-line revenues and bottom-line profits of a firm into which the windfall of productivity is falling, and it may well be the cost of chasing new ideas that end up wasting a great deal of capital.
I don’t mean to come off as a Luddite here, or to suggest that all innovation is bad and that we ought to collectively stop trying to evolve – but merely to point out that innovation for innovation’s sake is a bad idea. The collective “we” must pause for a moment to be clear on the goals we are trying to achieve – because while a successful innovation can deliver to the market, the workforce, and investors, not all innovation is successful, and a majority of innovations fail in a harmful way. Perhaps we need a better method of screening new ideas rather than rushing them to market? This seems the most likely culprit.