THE WIDE LENS

How can great companies do everything right—identify real customer needs, deliver excellent innovations, beat their competitors to market—and still fail? The sad truth is that many companies fail because they focus too intensely on their own innovations, and then neglect the innovation ecosystems on which their success depends. In our increasingly interdependent world, winning requires more than just delivering on your own promises. It means ensuring that a host of partners -some visible, some hidden—deliver on their promises, too.

Survey after survey lists innovation as the #1 priority for companies seeking profitable growth. But despite the excitement and hype, successful innovation remains the exception. According to a study of leading manufacturers, 50% to 70% of newly launched products the one-in-a-hundred innovation ideas that actually manage to make it to launch failed. While most observers blame these failures on either a lack of customer insight or poor execution, most successful companies already pay attention to these obvious factors. Adner shows the real problem usually lies outside the organization, in the surrounding ecosystem that determines whether a new project or service will be able to catch on. The two most important elements are co-innovators those who must produce complimentary innovations in order for a given firm's innovation to deliver its promised value and the adoption chain those who must embrace an innovation before it can be practical for end customers to buy. Adner draws examples and lessons from a wide variety of industries including healthcare, technology, publishing, and automobiles. For example: - Although Office 2007 was widely considered superior to Office 2003, Microsoft was unable to convince early installers, such as company IT departments, that the purchase price plus the time and energy needed to retrain employees was worthwhile. Initial sales fell far short of expectations. - When Nokia developed a 3G handset in the late 1990s, they were so ahead of their time that the planned digital systems on which it would operate weren't fully set up. Without this platform, the product was essentially useless. With a clear understanding of interdependencies, companies can make better choices and drastically raise their odds of success. They can concentrate on delivering only the innovations that avoid hidden blindspots. Ron Adner is a tenured professor at the Tuck School of Business at Dartmouth and a former professor of Strategic Management at INSEAD. He often teaches executive education courses and consults companies including 3M, Cisco, IBM, Microsoft, PWC, Seimens, Toshiba and more. He has been published in Forbes, The Wall Street Journal and Financial Times and is an official blogger for The Huffington Post. Having taught close to 2,000 MBA students, Adner has been awarded a "best teacher" award five times.