The Innovation Illusion: Why We Get It Wrong and What to Do About It

The “Dean of Innovation” has a problem on his hands – or rather, in the boardrooms where innovation is supposed to happen. For decades, he’s been trying to get companies to focus on what truly matters when it comes to innovation, but the message just isn’t sticking. And it’s not hard to see why: we’re all speaking different languages.

When executives gather to discuss their most urgent strategic priority – say, artificial intelligence – they leave with vastly different ideas about what needs to be done. The CEO wants AI to drive growth; the CIO is focused on deploying copilots; the COO sees opportunities for automation; and the head of product wants AI-enabled offerings. Meanwhile, the CHRO is worried about how AI will reshape work. Everyone agrees that AI is the future – but they’re talking past each other.

The Problem with Innovation Jargon

We use one word, “innovation,” to describe fundamentally different kinds of work: adopting a technology, improving a process, launching a product, creating a business model, transforming an organization, or responding to a crisis. But there isn’t any alignment in what we mean by it. It’s a catch-all term that disguises the complexity and nuance required for real innovation.

As someone who’s been called the “Dean of Innovation” for nearly four decades – although the title started as a joke – I’ve worked with much of the Fortune 500, the U.S. military, and countless cultural organizations. After decades of watching companies struggle to make innovation happen, I’m convinced that almost nobody means the same thing when they use the word.

The Consequences of Innovation Illusion

The result is predictable: resources scatter, expectations conflict, and initiatives are managed with the wrong processes and measured by the wrong metrics. Most companies don’t need more innovation; they need a better way to talk about it. By failing to define what we mean by innovation, we’re setting ourselves up for failure.

Executives have been trying to define innovation for decades – incremental or radical, sustaining or disruptive, product or process. But what if we’re asking the wrong question? A better question is simpler: Innovative compared with what? Innovation is positive deviance from the norm that creates value. The same practice can be revolutionary in one company, incremental in another, and obsolete in a third.

For traditional companies with decades of legacy systems, using AI to redesign a core process may represent a major departure from the norm. But for an AI-native startup, it may be table stakes. That’s why leaders should ask two questions: What norm are we breaking? What new value are we creating, and for whom?

The Data Trap

Executives are trained to demand evidence before committing resources – good management in general, but bad when it comes to true innovation. The paradox is simple: the more genuinely novel an idea is, the less reliable the historical data becomes. A modest improvement to an existing product can usually be modeled, but what happens when a company enters a market that doesn’t yet exist or deploys technology whose capabilities and economics are changing every few months?

Consider generative AI. In late 2022, no executive could produce a credible five-year ROI model. The companies that waited for certainty didn’t reduce uncertainty; they simply learned more slowly.

Innovation as Experimentation

Innovation isn’t about proof; it’s about experimentation. Instead of asking, “Can you prove this will work?” ask, “What is the cheapest, fastest experiment that will tell us something important?” Experiments do not validate the plan; they create the knowledge from which a plan can eventually be built.

The Many Faces of Innovation

Organizations make the mistake of treating innovation as a single activity. It isn’t. UPS improving route efficiency is largely an optimization challenge, while responding to a cyberattack requires a different set of skills and timeframes altogether. Companies should recognize that innovation comes in many forms – not just about creating something new but also about transforming existing processes or adapting to changing environments.

The Path Forward

It’s time for companies to stop treating innovation as a one-size-fits-all solution. They need to start asking the right questions: How large is the departure from what we already know? How quickly must we move? How much uncertainty exists?

By acknowledging that innovation comes in many forms and requires different approaches, companies can begin to focus on what truly matters – creating new value through positive deviance from the norm. It’s a shift that will require patience, experimentation, and a willingness to learn from failure.

But it’s not too late. Companies can still choose how they approach innovation – with clarity, with purpose, or by continuing down the path of confusion and misdirection. The choice is theirs, and the consequences will be significant.