Back to Blog

Innovation Is The First To Go

Ryan Frederick | March 18th, 2024 | Dublin,Ohio

I’ve learned that several companies are disbanding their innovation departments to cut costs or focus on a softer-than-expected core business. I get both reasons, but the best-performing companies never take innovation to zero. A sign that a company lacks leadership and strategy is when innovation departments get axed.

It could be that the innovation operation was ineffective and not delivering value to the core business, in which case the innovation leadership’s effectiveness and value could be questioned, and a change in direction could be warranted. Still, eliminating the innovation function is a short-sighted decision that lacks forethought and vision. Companies pay a high price for overreacting and overcorrecting around their commitment and investment in innovation.

Too many companies ride the roller coaster of valuing and devaluing innovation, shutting down and then spinning back up innovation operations three years later. The companies that ride the on-again, off-again roller coaster admit to acquiescing leadership in their industry to competitors who consistently seek to define the future instead of reacting to it. Valuing innovation can’t be a thing sometimes. It is either valued, or it isn’t. When times get tough, companies that jettison innovation operations will find themselves laggards when or if things improve.

This is an interesting paradox. When a company’s core business isn’t performing as well as expected, few changes are made to it, while innovation operations fall out of favor and are defunded. The innovation department and its people become scapegoats for the company’s lack of success overall, even though they are often the furthest removed from the core business problems. The distance from the core business, even if the core business is dysfunctional, becomes the justification. The further removed you are from the core business, the more expendable you are, even if the core business isn’t working.

Everyone in a corporate innovation position knows this is always a risk, and their position is a potential casualty of poor company performance. It also reinforces why taking over or restarting an innovation operation for a company might initially seem appealing but is likely more of a red flag than green. Companies that are committed to being innovative don’t treat innovation work as a nice to have when times are good, they are understand and appreciate the value, especially when times are bad to help create a different and better future.