When Companies Stop Innovating

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Photo of beaker with key inside it on HRExaminer When Companies Stop Innovating Heather Bussing March 12 2014

The way to tell when a company has stopped innovating is when it starts filing lawsuits to protect the status quo.

Innovation is another one of the current buzzwords (like engagement and disruption) that means whatever the speaker thinks it means, but nobody else is sure.

All new companies start with innovation – they develop a product or service, build a business around it, and hope to make money. Young companies, especially software start-ups with lots of funding and computer engineers who love making new things do cool tricks, are rich in innovation — new ways of thinking, doing, and making.

As companies grow and hire more employees, they naturally start worrying about making money and growing what they have. They are interested in improvements and new ideas, but not complete changes to their core offerings. One main reason is success. Successful companies tend to focus on doing more of what they have been doing because it’s worked so far.

The goal becomes to make money instead of make new stuff. This is a classic place where companies that go public completely screw up. When people who don’t care what you do own your stock to make profit, the pressure is on to feed the investors and  grow the stock price. Often, it’s at the cost of the what the company does.

Facebook is a good example of how the push to make money has interfered with the original mission of the website. It has grown and gone public. Now it is focused on how to make money from companies who want to use it for marketing, and how to harvest the troves of data its users generate. Eventually, users will start feeling used and leave. Many have already.

Social media is also at a tipping point because the competition for people’s time and attention has become so loud, noisy and full of junk that people are going back to reading books and watching movies, especially now that you can do that on your phone too.

But the real way to tell when a company has stopped being open to new ideas and developing new products is when it starts filing lawsuits to protect the status quo and then hires a bunch of lawyers to manage risk.

In the last couple years, we’ve seen patent, trademark, and copyright lawsuits from most of the companies that were the hot new innovators of the early 2000s. Most of them are just trying to stake their claims to the way things work so they can make everyone else pay them for building new things based on the way things work.  It reminds me of my kids in the backseat yelling at each other to “Get off my side!” and “Stop breathing my air!”

So if you want to know when a company has lost focus on building new products and finding new ways of doing things, just look at how many IP lawsuits they have filed and what percentage of their operating budget goes to lawyers.

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