Written By: Susan Smithfield – Corporate Finance
We are living in the age of revolutionary change. As each day passes, new technologies are mushrooming at an exponential rate. For small and big businesses, rapid innovation has become the lifeblood for survival. As new technologies continue to dominate the markets, consumers have become more enlightened and choosy. Even for corporations with huge market share and high revenue, a lack of innovation can mean a single-day plummet to the bottom of the pit. The business world has realized that in today’s environment, there is no growth without constant innovation.
The problem is no longer a lack of innovation, but how it is being done and the outcomes. With the fierce competition in the market, big corporations along with small and medium enterprises are desperately looking for ways to maintain or improve their market share. The rate at which consumers are demanding new products has made it hard for businesses to focus on the sustainability of their innovations. It is through the pressure to come up with something new that companies are developing unsustainable and often ridiculous products that are in the long run more damaging than the results of slow innovation. The repercussions of innovations gone wrong have become risks that businesses can no longer ignore.
Apple Inc, the premier smartphone manufacturer, has for long managed to remain on the top of the industry through its groundbreaking inventions. With its ever-growing market share, the company has found itself under immense pressure from consumers to innovate. The tech giant has kept the pace in innovation, but its latest product is proof of a firm that is becoming too desperate to keep up with ever-growing customer expectations. Its latest product, the iPhone 7, is a classic example of an innovation with the power to damage the existing brand image.
According to Philip Schiller, Apple’s senior vice president, the infamous features on its latest product were inspired by the “courage” to move on and do something new. This statement evidences the fact that major corporations are focusing on introducing new products in the market without conducting a market study to determine for what customers are looking. For Apple, the elimination of the headphone jack in the iPhone 7 evidences a lack of focus on consumer needs in innovations. While this new feature may be fine for people who use wireless headphones, the growing criticism shows that they are in the minority.
Samsung, the giant South Korean technology company, on the other hand, was doing just fine until recently, when its newest product, the Galaxy Note 7, started catching fire. The Note 7 crisis has wreaked havoc on the firm’s overall revenues and brand image to the point at which revenues have plummeted 40 percent, and the brand has lost its popularity by 25 percent. A recent survey by Branding Brand, an e-commerce outfit, shows that 30 percent of Galaxy Note 7 owners plan to defect to the iPhone and 8 percent to the Google Pixel. On top of losing brand reputation and market share, Samsung has been forced to recall all of its Galaxy Note 7 smartphones, leading to a loss of more than $20 billion of its market value.
While the spirit of rapid innovation is the key to the success of firms such as Samsung and Apple, it is evident that in some circumstances, it can lead to detrimental consequences. What then are the causes of innovation failure? According to innovation-consultant firm Idea Creations, one of the reasons innovations fail is the lack of a compelling vision or reason to innovate. Unveiling a new product just for the sake of appearing innovative and not to solve an existing problem is one reason many innovations are failing today. This is very evident in the smartphone industry, in which the major players have set the rules of the game requiring any worthy competitor to unveil a new product each year.
The pressure to innovate is another reason why firms roll out products before they are ready for the market. With the intensifying competition, companies fear that a delay in the launch of a product might result in loss of market share and therefore rush to keep up with other innovators. Apple and Samsung are classic cases, with the former adding bogus features on its newest product and the latter unveiling an explosive device in the name of a smartphone.
Idea Creations also identifies the failure of organizations to align their innovations with their visions or strategies. When an organization fails to see the big picture in its inventions, the chance is high that they will fail at some point. While rapid innovation is what will make a company rise to the top of its industry, it should be carried out strategically, because bad innovation can prove to be more damaging to its company than slow innovation.