Why Companies and Government Do “Innovation Theater” Instead of Actual Innovation

This article previously appeared in the Harvard Business Review.

The type of disruption most companies and government agencies are facing is a once-in-every-few-centuries event. Disruption today is more than just changes in technology, or channel, or competitors – it’s all of them, all at once. And these forces are completely reshaping both commerce and defense.

Today, as large organizations are facing continuous disruption, they’ve recognized that their existing strategy and organizational structures aren’t nimble enough to access and mobilize the innovative talent and technology they need to meet these challenges. These organizations know they need to change but often the result has been a form of organizational Whack-A-Mole– a futile attempt at trying to swat every problem as they pop-up without understanding their root cause.

Ultimately, companies and government agencies need to stop doing this or they will fail.

We can build a mindset, culture and process to fix this – what I call an Innovation Doctrine. But first we need to step back and recognize one of the problems.


I just spent a few days with a large organization with a great history, who like most of their peers is dealing with new and rapidly evolving external threats. However, their biggest obstacle is internal. What had previously been a strength – their great management processes – now holds back their ability to respond to new challenges.

Companies Run on Process
Once upon a time every great organization was a scrappy startup willing to take risks – new ideas, new methods, new customers, targets, and mission. If they were a commercial company, they figured out product/market fit; or if a government organization, it focused on solution/mission fit. Over time as these organizations got large, they built process. By process I mean all the tools that allow companies and government to scale repeatable execution. HR processes, legal processes, financial processes, acquisition and contracting processes, security processes, product development and management processes, and types of organizational forms etc. All of these are great strategies and tools that business schools build, and consulting firms help implement.

Process is great when you live in a world where both the problem and solution are known. Process helps ensure that you can deliver solutions that scale without breaking other parts of the organization.

These processes reduce risk to an overall organization, but each layer of process reduces the ability to be agile and lean and – most importantly – responsive to new opportunities and threats.

Process Versus Product
As companies and government agencies get larger, they start to value the importance of “process” over the “product.” And by product, I mean the creation of new hardware, services, software, tools, operations, tradecraft, etc.  People who manage processes are not the same people as those who create product. Product people are often messy, hate paperwork and prefer to spend their time creating stuff rather than documenting it. Over time as organizations grow, they become risk averse. The process people dominate management, and the product people end up reporting to them.

If the company is large enough it will become a “rent-seeker” and look to the government and regulators as their first line of defense against innovative competition. They’ll use government regulation and lawsuits to keep out new entrants with more innovative business models.

The result of monopolist behavior is that innovation in that sector dies – until technology/consumer behavior passes them by.    By then the company has lost the ability to compete as an innovator.

In government agencies process versus product has gone further. Many agencies outsource product development to private contractors, leaving the government with mostly process people – who write requirements, and oversee acquisition, program management, and contracts.

However, when the government is faced with new adversaries, new threats, or new problems, both the internal process people as well as the external contractors are loath to obsolete their own systems and develop radically new solutions. For the contractors, anything new offers the real risk of losing a lucrative existing stream of revenue. For the process people, the status quo is a known and comfortable space and failure and risk-taking is considered career retarding. Metrics are used to manage process rather than creation of new capabilities, outcomes and speed to deployment. And if the contract and contractor are large enough, they put their thumb on the scale and use the political process and lobbying to maintain the status quo.

The result is that legacy systems live on as an albatross and an impediment to making the country safer and more secure.

Organizational and Innovation Theater
A competitive environment should drive a company/government agency into new forms of organization that can rapidly respond to these new threats. Instead, most organizations look to create even more process. This typically plays out in three ways:

  1. Often the first plan from leadership for innovation is hiring management consultants who bring out their 20th-century playbook. The consultants reorganize the company (surprise!), often from a functional organization into a matrixed organization. The result is organizational theater. The reorg keeps everyone busy for a year, perhaps provides new focus on new regions or targets, but in the end is an inadequate response to the need for rapid innovation for product.
  2. At the same time, companies and government agencies typically adopt innovation activities (hackathons, design thinking classes, innovation workshops, et al.) that result in innovation theater. While these activities shape, and build culture, but they don’t win wars, and they rarely deliver shippable/deployable product.
  3. Finally, companies and government agencies have realized that the processes and metrics they put in place to optimize execution (Procurement, Personnel, Security, Legal, etc.) are obstacles for innovation. Efforts to reform and recast these are well meaning, but without an overall innovation strategy it’s like building sandcastles on the beach. The result is process theater.

For most large organizations these reorgs, activities and reforms don’t increase revenue, profit or market share for companies, nor does it keep our government agencies ahead of our adversaries. One can generously describe them as innovation dead ends.

Between a Rock and A Hard Place
Today, companies and government agencies are not able to access and mobilize the innovative talent and technology they need to meet these challenges. The very processes that made them successful impede them.

Organizational redesign, innovation activities, and process reform need to be part of an overall plan.

In sum, large organizations lack shared beliefs, validated principles, tactics, techniques, procedures, organization, budget, etc. to explain how and where innovation will be applied and its relationship to the rapid delivery of new product.

We can build a mindset, culture and process to fix this.

More in future posts about Innovation Doctrine.

Lessons Learned

  • As companies and agencies get larger, they start to value the importance of process over the “content.”
  • When disruption happens, no process or process manager in the world is going to save your company/or government agency
    • It’s going to take those “product” creators
    • But they have no organization, authority, budget or resources
  • We can build a mindset, culture and process to fix this.
    • A shared set of beliefs and principles of how and where innovation will be used and rapidly delivered
  • Innovation Doctrine

Who Ever Thought? The Lean Educators Summit

It’s been almost a decade since we first started teaching the Lean Methodology. It’s remade entrepreneurship education, startup practice and innovation in companies and the government. But in all that time, we haven’t gotten a large group of educators together to talk about what it’s been like to teach Lean or the impact it’s had in their classrooms and beyond. It dawned on us that with 10 years of Lessons Learned to explore, now would be a good time.

So, for the first time ever, we’re getting all educators from all these groups together for a “share best practices” summit at my ranch – December 4th – 5th.


100,000 students, one class at a time
A few months ago with the folks at VentureWell, the non-profit that puts on the Lean LaunchPad Educator classes  mentioned, “You know we’ve trained over 800 educators at hundreds of colleges and universities around the world to teach your class…” Say what???

It still seems like yesterday that Ann Miura-Ko and I were creating a new class – the Lean LaunchPad at Stanford to teach students an alternative to how to write a business plan.

If you can’t see the video click here

I quickly did the math. 800 educators – times 15 or so students per year – times almost ten years. Wow. It’s possible that 100,000 students have gone through some form of the class.

Add that to the 5,000 or more of our nation’s best science researchers who’ve gotten out the building (in this case their labs) who’ve gone through the National Science Foundation I-Corps program, (designed to help turn our country’s best academic research into companies), or the I-Corps @ the National Institute of Health or I-Corps @ the Department of Energy. And then add another 5,000 more who’ve gone through a version of I-Corps inside the Department of Defense.

It made me think about the variants of the class we’ve created. We started Hacking for Defense and Diplomacy almost four years ago. Hacking for Defense is now supported by the National Security Innovation Network and has put hundreds of students in 24 universities through the program. Hacking for Cities and Hacking for Non-profits have followed at U.C. Berkeley. Hacking for Oceans is coming next.

Yet none of these instructors across these disciplines have met. Or shared what they’ve learned.

So lets’ do it.

Educators Sharing Best Practices
On December 4th-5th, Jerry Engel, Pete Newell and I are hosting an event at the ranch for a select group of educators that have lead the Lean Innovation movement.

We’re going to cover:

  • The effectiveness of our programs [including I-Corps and Hacking for Defense]: What we have learned so far from the data and how to make it better
  • Customer Discovery and Lean Innovation in Academic Settings vs Non-Academic Settings such as incubators and accelerators
  • Tech Commercialization: innovators vs. entrepreneurs –  motivating scientists and engineers
  • Lean Innovation in the Enterprise, Not-for-Profit and Government – what’s different
  • International: Success and Challenges of Lean Innovation and Customer Discovery in  Europe and Asia [and South America? Australia?]
  • What’s next for Lean and entrepreneurial education
  • and much more…

Lessons Learned:

  • I’m hosting the Summit of Lean Innovation Educators at my ranch in December.
  • We’re bringing together a group to capture best practices and define a vision for what lies ahead.
  • Stay tuned for what we learn
  • And if you think you should be here, click here and let us know why
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