There's often excitement among employees, when corporate innovation programs are announced.

Employees see leadership making an effort to act on existing intellectual property with the intent to launch new businesses and/or create entirely new companies based on new ideas from staff members.

And, with this investment in startup development, corporations often see positive culture changes.

But large organizations end up in an Illusion of Innovation:

Hosting hackathons and idea competitions for the sake of ideation instead of actually moving forward with one or more compelling ideas generated from those sessions

Sometimes, this is due to a lack of in-house innovation resources and expertise.

Other times, it's due to disagreement on which concept(s) to move forward with.

And, oftentimes, executives simply lack the patience to see startup creation through.

There are many reasons why corporate innovation programs fail. If your organization has started one or plans to, it’s worth knowing what causes them to falter so you can avoid the same fate as other corporations.

How corporate innovation programs go from passionate fervor to complete failure

The corporate innovation lifecycle will vary from one business to another. However, the general steps include:

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• Ideation. Coming together as a team for a brain dump of problems to solve
• Selection. Narrowing down ideas through validation/analysis of concepts
• Development. Moving 1-2 strong ideas into a sprint to craft a business model
• Execution. Agreeing on an idea, and moving full speed ahead to productize
• Launch. Going to market with the concept and the instituted founding team

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Your corporate innovation program may feature just these foundational stages. Or perhaps it’s more intricate and nuanced, with 'sub-stages' that have different stakeholders. (Maybe even external ones, like interviews with existing customers or industry analysts.)

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• With successful research and development projects, you’ll see corporations advance fairly quickly from one phase to the next. That’s because they generally have the necessary resources and buy-in to move fast, experiment, collaborate, and execute on concepts.

• With unsuccessful R&D initiatives, you’ll see the opposite. Executives give the green light to proceed with R&D programs. However, they don’t clearly communicate expectations when they get going or post-launch. This leads to misalignment on goals and desired outcomes and the creation of silos.

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Without a clear map provided by their C-suite, those who own innovation programs are left digging holes in the dirt. They are likely to end up with nothing to show for months of hard work, believing they had the latitude to take their time on the initiative.

Some business leaders who champion corporate innovation programs even go so far as to make big promises about what their innovation teams will achieve (“This will deliver massive growth! We’ll penetrate X market!”).

Then, once agreed-upon concepts are explored and validated, executives often invest in temporary (and pricey) consultancy services to offer insights into the opportunity in question (e.g., where other startups went wrong, what the total addressable market is).

Despite all this investment and encouragement, senior officers and other high-level decision-makers eventually check in on the status and ROI of the ideas considered.

If they don't like what they see, they start to rethink the investment. This is especially true during down economic periods. Layoffs and hiring freezes typically occur in these times.

The first business units targeted for reductions in force are perceived cost centers. More often that not, that means team members who manage and take part in corporate innovation programs.

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‍What poorly run corporate innovation program lifecycles look like today

As is the case for the first venture creation or product enhancement proposal for just about every innovation program, stakeholders sign off on the first idea they believe is worth pursuing.

Once chosen, sprint week begins, and the team moves one critical step closer to launch. Everyone is optimistic.

But, since leadership hasn’t given their innovation teams the proper resources or connected them with proven partners — like venture builders with a lot of experience creating companies with corporations — they move slowly.

“Corporate innovation teams work tirelessly to create value for their organization,” said High Alpha Innovation General Manager Matt Brady. “But if there isn’t alignment on why they exist and what they are supposed to pursue, their efforts will be in vain.”

Matt noted how, in time, cynicism for innovation almost always grows throughout a company.

Resources are viewed as in competition with (or even in conflict with) the core business.

“The first key to success is defining a North Star for innovation that distinguishes between core, adjacent, and transformational innovation,” Matt added. “The second key is defining pathways that distinguish between unlike things. For things that are truly new and transformative, a startup is a more powerful pathway than internal incubation.”

Sluggish progress with their project(s) and a lack of support leads to diminished enthusiasm.

Meanwhile, corporate leadership remains undeterred, believing their work will yield high-performing (and, in time, highly profitable) startups. We’ll call this the “arrogance phase.”

It’s only when R&D efforts inevitably stall and deadlines are missed that executives begin to worry.

They update their boards, who have skin in the game investment-wise with the corporate innovation program, and have to relay the little (or no) headway made with their projects.

And finally, we land at the “We’ve-seen-enough” stage.

This is where the C-suite — either on their own or based on direction from the board — formally ends the program. Layoffs typically follow, and the corporation ends up back where it started.

Why corporations often see few (if any) of desired outcomes from innovation programs

You’ll notice the final stage of this lifecycle includes not only innovation team staff members leaving the organization, but, oftentimes, the CEO who championed the studio as well.

In their place eventually comes a new chief executive with their own distinctive approach, agenda, and outlook. But these leaders usually fall into the same trap as their predecessor:

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• They look back to see what initiatives the prior CEO undertook and notice that corporate innovation programs became a big priority at one point.
• They try to speak with anyone who had knowledge of said programs, but — as noted — they’ve all been let go or quit. (And any C-suite member who remains likely had limited insight into their work.)
• They think they can do a better job of implementing well-run innovation program, and pitch their proposal to fellow leaders to get their thoughts.
• They get the green light, share the news of the program, start to form their team, and schedule hackathons, among other ideation sessions.

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And so, the vicious cycle repeats itself once again.

Without structural changes to how corporations approach venture building (not to mention other innovation efforts around the main business), they just end up in the same situation as before:

Wondering why their R&D team failed to create a groundbreaking company that positioned the corporation as a trailblazing innovator

Corporate innovation, as it pertains to your core business, rightfully gets the attention it deserves to keep your organization moving in the right direction from a growth and revenue standpoint.

But failing to recognize the value of transformative corporate innovation to test new concepts and create new, novel businesses — and, ideally, with an outside venture builder guiding your program from start to finish — will leave your leadership wondering what could’ve been.