How long has it been since your company has had an innovation win?

For many companies, the answer is a long time.

Yet, it amazes me that nobody in the company seems to notice or wonder why.

In one company I worked in, each year the innovation group would put forth a big new project, promise it would help the company grow, roll it out with a lot of fanfare and then it would flop.

This went on for years and it never occurred to anyone to ask, is there something wrong with our approach to innovation? Should we expect a win every so often? How often? Why do we believe their current project will work when they last five have not?

It even took me awhile to catch on. It helped that I was in a unique spot to notice. I worked in the company’s pricing group. Every time their big idea missed, leadership asked us to raise prices so they could still hit their financial plan.

After a few years of this, employees started blaming prices for the company’s lackluster performance and saw the pricing group as the evil villains, even though we were just following orders.

Employees in the innovation group were also our critics and asked me to present the case for pricing to them because they wanted to better understand why it had increased so much.

It was in preparing for that presentation where it dawned on me that the lack of innovation success was a primary cause of the rising prices, because price was used to cover those.

I ended up showing a chart of the company’s revenue, earnings and number of HQ staff for the most recent year compared to 10 years before.

I made this point:

Just ten years ago the company’s revenue was much less than it is now and the HQ staff was much smaller because the company could not afford to pay all of these employees on that revenue. Many of the folks who work here now, including you all, are here because revenue has increased enough in the past ten years to afford them.

Unfortunately, the only thing that has increased revenue and enabled the company to hire all of us is that its prices are higher. There has been no growth from increasing market share or new products.

Your jobs exist to find ways to grow from increasing market share and new products. Since you haven’t done that, your jobs are being paid for by the price increases that you are concerned about instead of growth from your initiatives.

Just over the past few years your projects were supposed to deliver X in revenue. When they didn’t deliver that, leadership still wanted to meet their numbers, so they told us to raise prices to cover.

I expected a defensive backlash, but instead, a lot of folks nodded their heads and thought that was a great point.

But, it didn’t change anything. They kept promising big wins, failing and nobody questioned if anything was wrong with their approach.

It did change something for me. I learned that over reliance on price increases is a tell-tale sign that there’s something wrong with a company’s approach to innovation and nobody notices.