Innovation, research and development (R&D), and new product teams often face numerous challenges that can lead to failure. Understanding these failure modes is crucial for steering projects to success. Here are common pitfalls I see great leaders and great organizations fall into on a regular basis that, in my experience, are avoidable.
Involving Too Many Stakeholders Too Soon
One of the most common causes of failure in innovation and new product development is involving too many stakeholders too early in the process. While stakeholder input is valuable, engaging a large number of them at the outset can lead to conflicting priorities, diluted focus, and decision paralysis.
We recently completed an engagement for a large, publicly traded organization focused on AI use cases. While our technical feasibility assessment and recommended next steps are immediately actionable and focused on the client’s desired outcomes, the decision to move forward is now lost in committee. And has resulted in engaging even more stakeholders – many with opinions, few with accountability.
To avoid this, it is important to identify the key stakeholders who have the most relevant expertise and influence on the project’s success. Engage them in the initial phases to gather essential input, but keep the broader stakeholder group informed through regular updates rather than direct involvement in every decision. This approach ensures focused progress while maintaining transparency and buy-in.
“…Establish specific, measurable entry and exit criteria before launching a pilot.”
Lack of Clear Entry and Exit Criteria for Pilots
Pilots are essential for testing new ideas, but a lack of clear entry and exit criteria can doom them to failure. Without well-defined parameters, it is difficult to determine whether a pilot has been successful or when it should be concluded. This can result in prolonged pilots that drain resources without providing actionable insights.
Even as a savvy innovation services agency, we struggle with this same challenge internally. We recently spent months building a prototype for an intelligent digital tool we believed we could productize and bring to market. Our initial prototype resonated with prospects and compelled them to continue the conversation. What we ultimately discovered is that the product was ahead of its time. And that interest did not translate to investment. Had we tested the market before building, we could have saved valuable time.
To prevent this, establish specific, measurable entry and exit criteria before launching a pilot. Define what success looks like, including key performance indicators (KPIs) and timelines. This ensures that pilots are focused, efficient, and yield valuable data to inform go/no-go decisions for broader implementation.
“While IT projects and product development share some similarities, they have different objectives and methodologies.”
Confusing IT vs. Product
Another common pitfall is confusing IT initiatives with product development. While IT projects and product development share some similarities, they have different objectives and methodologies. IT projects often focus on internal systems and infrastructure, whereas product development is oriented towards creating market-facing solutions. IT is a cost center. Products are revenue-generating.
A retail company might launch an IT project to upgrade its e-commerce platform, treating it with the same processes as a product development initiative. This can lead to misaligned priorities and missed market opportunities. Instead, the company should recognize the distinct needs and goals of each type of project.
To avoid this confusion, clearly differentiate between IT and product projects from the outset. Assign dedicated teams with the appropriate expertise and methodologies for each type. Ensure that product development teams are customer-focused and market-driven, while IT teams concentrate on improving internal efficiencies and capabilities.
Building In House vs. Outsourcing Innovation
Deciding whether to build in-house or outsource innovation is a critical strategic choice that can significantly impact a project’s success. While building in-house offers control and potentially deeper integration with existing systems, it can also be resource-intensive and slower. Outsourcing, on the other hand, can bring in external expertise and speed up development but may lead to challenges in alignment and quality control.
One of our current healthcare clients hired us to build a new mobile because they realized they lacked the necessary expertise and resources to move at the speed of opportunity. Outsourcing innovation to us accelerated the project and ensured it would receive the prioritization and focus it deserved. Running the business is often at odds with innovating for the business. That’s why an outsourced innovation partner is often the best bet.
To make the right choice, assess the core competencies of your team and the specific requirements of the project. If the necessary expertise is lacking in-house, consider outsourcing parts of the project while maintaining oversight and alignment with overall strategic goals. For critical projects where control and integration are paramount, investing in building in-house capabilities might be the better option.
Conclusion
Avoiding these five common failure modes requires a strategic approach to project management in innovation, R&D, and new product development. By carefully managing stakeholder involvement, maintaining a focused and deep approach, establishing clear criteria for pilots, distinguishing between IT and product projects, and making informed decisions about in-house versus outsourced innovation, organizations can significantly improve their chances of success. Understanding these pitfalls and proactively addressing them lays the foundation for successful innovation and long-term growth.
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