Companies Don’t Innovate, Markets Do

companies don't innovate markets do

Illustration by Christian Laborin

One of the reasons big companies can’t innovate is they grow inert and can’t match the dynamism of the market. Markets are dynamic, companies are not. It’s very hard for companies to match the velocity, variance and selection of markets. As a business leader, a good question to ask yourself is: Are we changing as fast as the world is changing?

The most common answer is no.

Still, there are some who believe they are but really aren’t. There have been many times I’ve sat down with business leaders to talk about their strategy and how innovation fits in. The narrative they tell themselves is their strategy works because they’re the first ones in the market to do so and so things. It’s a common narrative, their logic says the sole reason for their success is they’re great and so are their products.

It’s not that simple.

The truth is it’s not just about you, rather it’s about market readiness: the timing.

For example, (client of mine) Grupo Premier owns around 40 different brand dealerships across Mexico. For their Hyundai dealership in Tijuana, over 40% of their car sales originate through social media; in this case Facebook. But this is not the case for they Hyundai dealership in Culiacan, and their other brand dealerships in Tijuana and across Mexico.

So, is Tijuana an anomaly?

No. Context matters. It could be that the people in Tijuana engage through social media more than elsewhere and are more keen to doing business through social channels. It could also be that people here have more affinity towards that specific brand. It could be many things. But one thing is certain: the cars they sell or their cool marketing campaign are not what’s generating demand; otherwise demand would be happening everywhere regardless of location and context.

3 forces necessary for innovation to happen

There are three forces necessary for innovation to take place: market, structure and ability.

First, the market needs to be ready to embrace your new idea; this has to do with timing. Second, there has to be a structure in place for any new idea to be produced and percolate through a market. Third, you have to be able to execute on the idea.

Most companies focus on structure and ability because that is something they can control. But, the most important factor that determines the success of any idea is timing; and it applies not just to startups but to large enterprises.

This is the reason diffusion is the most challenging part of innovation; it’s what determines the outcome.


Bottom line: You may have a great new idea and a great team behind it, but the idea itself isn’t what matters. Nothing will happen unless the market is ready to adopt it.


Also published on Medium.

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