The problem with innovation.

Sick of wasting resources on concepts that never work? Guess what—it’s not just you.

According to McKinsey, a whopping 94% of CEOs share a frustration with their firm’s innovation performance. This is often related to wasted resources, missed opportunities, and teams seeing their creative efforts fall flat. The core problem lies in the transition from ideation to implementation, where a lack of structure and discipline leads to stagnation.

The problem gets more complex because Leaders of Next – those navigating uncertain territories to build the next big thing – have very little place to go since most business playbooks are created for and by the people who manage the “now.” In fact, there is a lot of effort put into training teams to maintain what works and ensure that existing processes run smoothly without rocking the boat. On the contrary, there’s almost no guidance for those trying to create what’s next, leaving innovators with nowhere to turn and forcing them to rely on established methods to forge new paths, which sets them up to fail.

Traditionally, the emphasis has been placed on generating as many ideas as possible under the assumption that quantity will eventually lead to quality. Conventional wisdom suggests that by fostering a creative environment and encouraging idea-generating sessions, the right ideas will naturally rise to the top and succeed. However, the level of executive frustration and lack of innovation in organizations suggests that this approach doesn’t seem to work.

Considering the level of dissatisfaction with innovation, it is surprising that the majority of companies lack a comprehensive innovation strategy (74%, according to BCG). The abovementioned data is especially shocking since companies that adopt a systematic approach to innovation generate 50% more revenue and 80% more profit than those that do not. This highlights the clear lack of tools and know-how for teams to deal with innovation and serious capital building in a systematic way.

The need for a strong innovation system—a system designed to navigate the uncertain and uncharted territories of innovation—becomes evident. Rita McGrath’s discovery-driven development approach is instrumental in this regard. It involves testing assumptions and iterating based on findings, much like the scientific method, which is essential for reducing uncertainty and guiding ideas to fruition.

Innovation systems must also embrace the concept of welcoming uncertainty. Instead of only valuing certainty and right answers, organizations should place a premium on learning. This involves shifting from a return on investment (ROI) mindset to a Learning From Investment (LFI) approach. By valuing the lessons learned from experiments, even those that fail, organizations can better navigate the uncertainties inherent in innovation.

But here’s the deal: an Innovation System isn’t built in a day. You have to pick a place and start from there. Greg Galle emphasizes, “You can’t wait to understand everything to do something. Do one thing, understand one thing, so you can start to understand everything. You need to look for an entry point and start from there.”

“You can’t wait to understand everything to do something. Do one thing, understand one thing, so you can start to understand everything.

Jobs to be done.

Implement a Structured Process

• Adopt a framework like the Next Cycle to provide a clear roadmap for testing and validating ideas.

Foster a Culture of Execution

• Encourage a culture that values persistence and resilience in bringing ideas to life.
• Reward efforts in execution just as much as idea generation.

Develop New Metrics

• Create metrics that go beyond traditional KPIs, such as Learning From Investment (LFI), or the number of validated assumptions.

Leverage Cross-Functional Teams

• Form diverse teams to bring multiple perspectives to the table.
• Promote collaboration across departments to enhance problem-solving and creativity.

Ensure Leadership Commitment

• Leaders should provide the necessary resources and support to sustain innovation efforts.
• Assign roles and resources to implement the necessary system in place for innovation.

Next Tools for JTBDs

The Next Lab: This tool helps you manage, supervise, and execute innovation within your organization. It stops capital leakage by identifying what works, tracking projects from idea to execution, and facilitating collaborative sessions. By ensuring traceability, accountability, and effective strategic decision-making, the Next Lab streamlines your innovation efforts and accelerates the validation of ideas.