One of the biggest challenges company’s face today is identifying the right innovation opportunities. With so many new technologies and business models emerging, it can be difficult for companies to determine where to focus their innovation efforts and identify the right opportunities to pursue. Meanwhile, there are legitimate political and resource limitations that can prevent good organizations with smart, well-intentioned professionals from pursuing profitable business ideas. 

 

Below are several situations that prevent organizations from pursuing good business ideas and capitalizing on innovative ideas:

 

• Cannibalization: This reason is becoming less common, but it still exists by leaders that have variable compensation from existing business results. An effective way to solve this is to provide a bonus “kicker” based on profit from innovative solution.

 

• Priorities: Routine goals and current objectives occupy existing resources and limit leadership’s appetite to elevate the need for innovation. Human capital and finances are scarce and need to be used judiciously to achieve today’s KPIs. Sometimes at the expense of tomorrow’s success.

 

• Risks: True innovation is hard and unpredictable. Meanwhile, companies are responsible for turning a profit while minimizing uncertainty. Pursuing innovative ideas is often contrary to maximizing profit while reducing risk. Unfortunately, “playing it safe” is the path chosen most often that leads to limited growth.

 

• Limited Business Vision: Narrowly defining the scope of a company's mission or vision is perhaps the most common challenge. As a result, leaders miss adjacent opportunities that are right outside the scope of their current operations. 

 

Imagine if Blockbuster used a different mindset when it evaluated the opportunity to acquire Netflix. If the company disregarded their concern over cannibalizing their in-store rentals, shuffled their priorities to focus on the future of the industry, while expanding their company vision and mission. 

 

It’s often easy to write these off as simple obstacles that should have been overcome, but corporate inertia is a powerful force. The best companies find ways to mitigate these risks and transcend this mindset by implementing new processes, ideas, and teams. They constantly focus on reshaping the vision and priorities by revisiting dynamics of their markets as well as adjacent industries. 

 

But even when the stars align and executive leadership is able to overcome the common pitfalls previously mentioned, sharing information is often siloed. Teams, departments and functions often lack the means to quickly collect and analyze all of the information from cross-functional teams. 

What is missing is a systematic way to break down these silos and share information gathered during the planning process. By planning cross functionally, organizations can quickly identify the right opportunities and prioritize them with current market needs. In the end, situations that stifle innovation are overcome through clear, defensible direction that includes a market analysis, financial projection, business plan, and differentiated product requirements.