The Innovation Pillar is Collapsing

Innovation. A word so overused and abused by charlatans that it has lost its cache – and its power.

Everyone has to been seen as “innovating.” Boards press for it. Investors demand it. Employees crave it to stay current with what “cool” companies do. And therefore, everything is “innovation.”

The problem is most organizations don’t really innovate. Too many top decision-makers don’t have the stomach or permission to make long-term investments for growth. They go for shiny objects and other ephemera that appease egos, investors or employees. Too much cash from operations is tracked into bonuses, dividend payouts  or buying back shares. This compulsion pushes wealth ever upward in society, stoking more income inequality.

I know the innovation dance. In the past two decades, I’ve been an “innovation” leader in several companies. An entrepreneur in residence at Target.  A vice president for innovation at Target and Visa. A chief product officer at Rosetta Stone and Bigcommerce. A digital platform team I led at PayPal won a trade group’s “Most Innovative” award. I helped Rosetta Stone, that hadn’t developed a new product in six years, launch six products in a year. So let’s be honest with one another:

There’s more style than substance in corporate innovation today. Generic, top-down innovation paradigms are deeply flawed. Too few companies in the U.S. are driving growth, creating new jobs for the middle class, or training people.

As a result, middle-class incomes have been stagnant nearly as long as I’ve lived, and I just turned 40. I have to ask, after all this drum beating, is it now time to shed our reverence towards “innovation” for rhetoric’s sake?

I think so. We need instead to get excited about leading evolution, change, and growth in the lives of our customers and their communities. These are imperatives, competencies you build into any business designed for the long-term. Today’s innovation is clearly broken. Read the business news. Look at the archives. You can’t conclude anything else.

Well, then, evolve to what? Change to what? Grow to what? The answers come from the abundantly available and expanding universe of data.

Computing advances and related technologies are providing tools for fantastic discovery and insight from data, offering amazing possibilities for growth and innovation, strategies and investments.

Leaders of enduring businesses know they must be committed to the customer as measured by data, and not distracted by personalities, power struggles, ephemeral events, or investors. If your company does not intimately know your customer through data, and is not using that data to grow profitability, then your company will be overtaken by the companies that do. If your company is not making long-term investments in your customer, then your company will be overtaken by the companies that do.

Deep customer insights and investments are hallmarks of America’s growth outliers, the FAANGs: Facebook, Amazon, Apple, Netflix and Google. Customer data shapes their vision, and drives their approach. Since 2013, they have set the public standard.

And yet, five years on, it is alarming how quickly people in middle or senior management in major U.S. companies lose the conversation about technology, about data and committing for the long-term.

Last month I spoke at a conference for senior executives aspiring to the C-suite. It was alarming how many of those participants lacked basic understanding of mobile, web, digital, machine learning/artificial intelligence, virtual reality/augmented reality, cryptocurrencies, blockchain and more.

When I pointed out how Alibaba, Foxconn, JD.com and others measure, optimize, and automate everything they can, they were in a state of disbelief about the speed of technological change. JD.com is running entire distribution centers with only four people!

You need facts about your customer, facts about competitors, facts about market trends. Hard facts, real data, enable executives to understand the world as it is, not as they would like it to be. As data changes, and you’re paying attention, you can evolve the mission, direction, and structure of an organization in response.

Take Amazon. An intense understanding of data makes Amazon what it is. When I helped lead fraud prevention teams at Amazon a decade ago (reducing free cash flow loss by over 98 percent), every element of the entire business was measured, every week. To prepare, leaders received a 170+-page deck, with five to ten graphs on each page. Every element of the business was measured: people, inventory, servers, customer complaints, and more. Everything.

Each manager had a strict range of key performance indicators to meet. If the graphs showed you were out of range, it meant you were spending too much money or not spending enough money, or your inventory was sitting too long on shelves, or servers required too much cooling and drove up electricity costs. Every single metric of the business. Each week, we evolved with the data. You knew that if you didn’t, you soon would out of a job.

This rigorous discipline allowed Amazon to set efficiency goals to cut costs, then redeploy the savings back toward the customer: subsidized shipping, lower prices, forging into new product categories that didn’t exist. The result? Extraordinarily frugal, efficient operations – and phenomenal customer loyalty and rapid growth.

Over the past two years, as many as nine colleagues and I examined then described best practices of every functional and operating department of the fast-growing elites, the FAANGS. Legal, finance, sales & marketing, communications, and so on. We also flagged hundreds of real-time data sources, and hundreds of savvy analyses, studies, and articles from world-class experts on technology and innovation.

Everything is now organized in eight simple steps to help you improve and succeed in your mission to evolve, change, and grow your business.

We call them the 8Cs: Customer, Competition, Capabilities, Context, Core, Corollaries, Capital and Cadence.

These eight steps are what made me successful.

Here’s a quick summary:

1. You must have a deep understanding of your customer, competition, capabilities, key trends and context to assess capabilities and make future plans

2. Examine in detail your real position in the market

3. Find experts or other organizations that already have discovered and implemented solutions you need; stand on the shoulders of giants

4. Gauge funding needs for solutions and strategies to shape a risk profile to match available capital

5. Benchmark your performance against competitors, and reassess.

Repeat, repeat, repeat. The 8Cs are a continuous process.

This is an unprecedented era – a time of cascading, disruptive technologies, of widening income inequality. The pace of change in most U.S. companies is way to slow. Many people who think their jobs are safe will soon have a rude awakening. As Innov8rs readers’ know, millions of white-collar jobs will be lost to automation in the next decade.

All market realities are defined by data. Real innovation … based on real data … requires real risk-taking. Individuals and companies must move now to create and control their futures, or they may become the victims of accelerating change.


This is a guest post by West Stringfellow, founder and CEO of HowDo.com, is also a speaker and writer. He has led innovation teams at Target, Visa, PayPal, was chief product officer at Rosetta Stone and Bigcommerce, and served three years as senior product manager at Amazon.