The Paradox of Innovation And Why Innovation Labs Rarely Work

The term “innovation” has lost its meaning – it is one of the most overused and abused terms in the human lexicon.

Making a few photo filters isn’t innovation. A startup with zero revenues, zero paying customers and merely a lot of buzz isn’t innovating or disrupting anything.

Real innovators are risk takers. They challenge and transform their organizations, collaborate with others, compete against themselves and stay dissatisfied. Netflix put video stores out of business by changing how people watch movies. Amazon put book stores out of business by changing how people buy books.

Unfortunately, complacency and risk-aversion severely limit the potential for innovation at most companies. Most companies, especially successful companies, simply want to find better and cheaper ways to continue doing the same things they are already doing. This approach doesn’t lead to real innovation.

Real innovation happens when a company disrupts its own culture and the culture of their industry. U.S. electric car company Tesla and U.K.’s Virgin are good, recent examples of innovative companies who didn’t just want to improve on a few things, but wanted to do something truly different.

But it turns out that real innovation doesn’t require major technological breakthroughs or market disruption. In fact, most innovation is incremental. Consider the example of Simple Sugars, a U.S. company started in 2005 by Lani Lazzari, an 11 year old with sensitive skin, looking to treat her own eczema breakouts.

Lani could not use most commercial products. She spent nine months experimenting with different formulations, and ultimately created her own all-natural skin scrubs.

Lani’s business had revenues of $13,000 when she was a high school sophomore. Lani realized that she could continue to run a part-time business as a student or she could change the culture of the business and commit to it full time. Instead of returning to school for her junior year, Lani did a year of independent study and focused full-time on her business as the business’s sole employee. She increased sales from $13,000 to $38,000 that year, without any outside funding. In 2013, Lani received an investment from entrepreneur Mark Cuban. Her business has exploded, with a seven figure annual run rate. She now employs nearly 30 people.

What inspiration can businesses draw from Lani and other examples of real innovation?

First, incremental innovation is easier to embrace and execute than building a rocket to colonize Mars. You don’t have to destroy your entire business in order to innovate. But you do have to disrupt your culture and take risks.

Second, actions speak louder than words. Too many business leaders pay lip service to innovation by creating “innovation labs”. Innovation labs rarely lead to real innovation. Such labs can help companies find better and cheaper ways to continue doing the same things they are already doing. That’s not enough. Remember Kodak? IBM? Xerox?

Real innovation requires leaders to do the unexpected – something that disrupts the cultural core of their organizations and the cultural norms in their industry. The question isn’t what can you do better or cheaper. You should be asking what can you do differently?

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William Jhung