For three decades, I’ve traveled the international speaking circuit, helping organizations and entire industries drive profitable growth through innovation. What a privilege to have been involved in the beginnings of the Innovation Movement in the early 2000s.
During this time, I’ve spoken in more ballrooms and conference rooms and boardrooms than I care to remember, and I’ve led workshops on “Driving Growth Through Innovation” with everyone from DARPA and the Army Corps of Engineers to management teams at 200 of the 500 largest companies in the world. During this time, my contemporaries have advanced the field of innovation, improvising new tools and metrics that help organizations and their leaders increase the input, throughput, and output of fresh, value-adding ideas.
But something has happened to the field of innovation, and it’s not good.
In recent years, innovation has become a meaningless buzzword, relegated to marketing hype. Interest in breakthrough new products, services, and business models has evaporated. These days, cost-cutting, risk management, and next quarter’s earnings dominate decision-making; risk-aversion is the new mantra.
In short, innovation has become a cover for profit extraction, rather than new value creation that benefits the customer. That was the central guiding principle of the Innovation Movement: you innovate to create new customer value. And you thereby capture some of that value in the form of profits for the effort.
Look around and you’ll see the profit extraction paradigm showing up in all its forms.
When a product gets smaller while the price stays the same or even increases, that’s called something else: “shrinkflation.” This practice involves reducing the size or quantity of a product (like the number of chips in a bag or cereal in a box) while keeping the price at its previous level or increasing it slightly. Essentially, consumers are getting less for their money without a corresponding price reduction, effectively increasing the cost per unit.
Yet another supposed innovation is the subscription model. These days, everything from razor blades, software, printer ink, and even kitchen appliances is moving to the subscription model. But who really benefits?
Lost in all this “new business model” hype is that providers are not improving the actual product or service (and some of the streaming services are quietly introducing advertising). The real “innovation” is locking the customer into endless recurring payments and making it dizzyingly difficult to extract oneself from their clutches.
Another so-called innovation run amok is loyalty programs.
At their best, such programs create a win-win “stickiness” by offering perks that enhance the customer experience—free upgrades, or priority boarding, for example. At their worst, however, they force customers to “join the club” just to access basic discounts. Grocery chains are notorious for this practice: an advertised gallon of milk might cost $3.29 with a loyalty card, but a punishing $5.49 without one.
The most ridiculous example of forced loyalty comes from chains where nearly every item on the shelf is marked with two prices—one absurdly high for “non-members” and one reasonable for those who surrender their email, phone number, and purchase history. In such cases, the loyalty program isn’t about rewarding loyalty at all—it’s about penalizing anyone who won’t play along and give up their data.
The Innovation Movement has been led by luminaries like the late Clayton Christensen, of Harvard Business School, Eric von Hippel of MIT, and new products czar Thomas Kuczmarki, and many others who pioneered methods to make innovation an ongoing discipline. During the past 25 years, we’ve developed tools, metrics, and techniques that have propelled many an organization from laggard to leadership. My contemporaries and I have developed countless tools to generate ideas—the lifeblood of profitable growth and reinvention in the face of disruptive threats.
Open innovation, popularized by Procter & Gamble’s Connect and Develop program in the late ‘90s, tapped outside partners for breakthroughs and fueled at one time over half of its new products. Likewise, design thinking puts empathy, prototyping, and iteration at the center of solving complex challenges, blending creativity with rigor to deliver solutions that are both viable and human-centered.
History shows that innovation waxes and wanes, but is ultimately a driving necessity. Corporate focus on innovation tends to follow a cyclical pattern: in prosperous times, companies become complacent, trimming their innovation budgets in favor of short-term efficiencies or growth through acquisitions. Then, as markets shift and new competitors emerge, the pendulum swings back: leaders rediscover the need to grow from within. Organic growth, fueled by introducing new products, services, and business models, is the only sustainable way to endure.
Boards and CEOs will tire of paying for acquisitions that fail to deliver long-term value. They will rediscover that building the capacity to innovate—through disciplined processes, diverse teams, and customer-centric exploration—drives organic growth, strengthens resilience, and ensures longevity.