An innovation plateau is exactly what it sounds like. Just as in geography, rather than going up, the pace or stages needed to innovate and get to another step stall. They go flat.
Innovation plateaus are normal in business. Forbes, for example, argues that Wikipedia innovated on the Encyclopedia Britannica, for example, by placing information online and crowdsourcing it rather than having authorities compile it.
Encyclopedias could theoretically use more features the digital world enables — live streaming from the Empire State Building, for example, rather than simply showing a picture. That innovation may come, but meanwhile, we are still digesting the innovations of Wikipedia. We are arguing whether its mass use is a good idea and whether relying on its information is acceptable, and if so, in which venues.
Companies that strive to innovate as part of their business strategy may think they are following the playbook of innovation. In fact, some steps that seem like part of an innovation strategy may be getting in the way of genuine innovation.
Part of the problem is that the fundamentals that fuel innovation have changed significantly since the 1970s. During that decade, companies spent 2% of the gross domestic product (GDP) on research. Today, that figure is just 0.78%.
What are the signs that a company might be at an innovation plateau? A recent Harvard Business Review points out four signs.
- Focus on low-cost reduction programs
Companies that innovate well may have cost reduction programs but they do not interfere with the business of innovation. The HBR cites Deere, the company associated with tractors, for example, as a surprisingly innovative firm. They have an entire department dedicated to imagining the future. The cost of innovation is budgeted, therefore, it does not detract from the focus.
- Focus on listening to customers
Listening to customers is a good way to define what they want, and, therefore, a path to innovation. But the invention of the iPhone and iPod were not driven by customers saying they wanted it. Neither was the personal computer. It was the dream of hobbyists. It doesn’t hurt a corporation to have a small group or person with an idea of what they want, not customers who have never seen the envisioned product.
…and may hamper genuine innovation.
- Focus on incremental improvement
Although many upper managers say they want innovation, they measure their success by the increase or decrease in portfolios. Just as with cost reduction programs, the measurement of the rise or fall has a place in organizational life. But it shouldn’t interfere with innovation.
- Focus on acquisitions
Acquisitions ranging from Facebook’s purchase of WhatsApp to Apple’s interest in Didi Chuxing are strong indicators of Facebook’s drive for continual innovation. Pharmaceutical companies are a hotbed of acquisitions as small companies innovate while the larger ones are looking for ways to fill their product pipelines.
Innovation plateaus are normal in business. But if they turn into wide plateaus, they can stall innovative growth indefinitely.