Continuous innovation fallacy

The amount of minor innovations make up 85 % to 90 % of companies’ development portfolios, says George S. Day in HBR Dec 2007.

From 1990 to 2004 the share of major innovations in the same development portfolios dropped from 20.4 % to 11.5 %. Meanwhile the total amount of growth initiatives rose. Day describes this development as “internal traffic jams of safe, incremental innovations that delay all projects, stress organization, and fail to achieve revenue goals”.

Safe is the keyword. Incremental development projects has higher probability of success. Thus they provide short term benefits and feeling of continuous progress. They are safe way to show results. But low risk in long term creates only slow growth.

In the daily paper innovations are done – surprise, surprise – in daily bases. It is obvious that there the low share of major innovations and incremental development culture in established media companies. Our culture is based on small steps rather than huge leaps. The readers expect consistency that makes them feel comfortable and give structure to their lives.

Newspapers in general have not been good platforms for major media innovations. The reason is understandable, though not necessary acceptable. In the printed world two significant innovations of the past decades came outside of the established companies. The two print innovations were of course free ad papers and commuter traffic media.

After reading this I was thinking is there any related risks when using agile product development methods like scrum? These methods are great for our the product development as they’re flexible and fast. Yes, we’re using them also. My question is about the culture and management model.

It is clear that even though the development culture is very agile, one still can show good long term growth if systematic innovation portfolio management process is introduced. Other way, without one the agile only culture may possess a risk for the continuous innovation fallacy.

In his HBR Dec 2007 article (Paid for). Day introduces two methods: Risk matrix and R-W-W.

Picture Above used under CC lisence. Credits to jnpoulos.