Every few years companies decide, based on trends, that it’s in their best interest to be something. Five years ago, everyone wanted to “go green.” Three years ago, it was en vogue to stay private. Now everyone wants to get on the innovation bandwagon. It sounds like a smart move. But what if focusing on innovation isn’t right for your company? 

Understanding the Start-up Life Cycle 

As companies grow, their organizational structures and goals evolve. It’s a never-ending set of S-curves as you transition from a plateau to the next growth phase, shedding old ways and bringing to life new ones. These transitions are, paradoxically, both inevitable and reached only through a series of calculated and forced mechanisms. And they are precisely where innovation can slip in and derail your company--large or small--from reaching the next stage. 

From the small company perspective (say, 50 employees or so), the needs of your employees change dramatically during this process. What was once a start-up culture that thrived on innovation at its core must transform into a new kind of company: one whose ability to focus and perform daily activities with minimal amounts of friction becomes the more important measure of success. In many cases, innovation can confuse the core mission. As you add headcount, each new feature or market requires an exponentially complex amount of communication and planning to execute well. At this point, it may be true that eschewing innovation in favor of operational skill is the best path to growth. 

Innovation Run Amok 

For much larger organizations, the adage, “those who have mastered the rules may break them” applies. Without operational discipline, innovation can run amok and befuddle even the most sophisticated organizations. 

Consider Google, who has worked through the innovation-focus-innovation cycle over and over. Buttressed by a highly profitable core business, Google spent the last five years exploring online video, display advertising, Q&A products, patent searches, scanning the Library of Congress, daily deals, mobile operating systems, enterprise document collaboration, and innovative communication platforms like Google Wave. It has acquired more than 40 companies per year and has blossomed with innovation. 

But along the way, despite the success of many of these ventures, the company lost its core focus. Recently, CEO Larry Page has made an effort to show that Google is doing less and innovating on fewer things. He’s taking the path of making just a few big bets on the future. 

Did the diaspora of Google employees in the last few years that led to the across-the-board 10% pay increase cause the tech giant to re-evaluate where on the innovation curve it wanted to be? It may have lost some innovation-addicted employees to Facebook and Groupon, but perhaps the remaining 90% will rally around a new, intense focus and corporate alignment around a few key initiatives. 

In more recent news, Meg Whitman’s 8% employee workforce reduction at HP smacks of the same problem: 27,000 jobs lost potentially to an innovation-über-alles mentality run wild (Exhibit A: the Palm acquisition). In both cases, the same refrain is coming from the CEO: We need to do less, do it better, and get back to rampant innovation only when we’re ready. 

What’s Your Focus? 

It can be difficult for a CEO to understand, at a given moment, where on the innovation vs. focus spectrum the company sits. My experience tells me the simplest way to do this is walk around and ask as many employees as possible, “What is the company focused on right now?” Are the responses highly varied? That’s a sign it might be time to retrench and go back to being good at a few things. 

On the other hand, if your employees are able to recite the three corporate objectives in eye-rolling monotone, pat yourself on the back for simplifying the message. Then find a way to inject some innovation back into your culture!


Published on: Jun 4, 2012
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.