Why Most Companies Fail at Innovation, and What It Actually Takes to Succeed

Gary P. Pisano, a professor at Harvard Business School, argues that most
companies fail at long-term innovation not because they lack ideas, but
because they lack the organizational DNA required for sustained and
repeatable innovation. In his view, innovation is not chaos, luck, or
creativity alone. It is a systematic managerial discipline.

Pisano challenges the popular belief that large companies cannot innovate.
They can, but only when innovation is treated as a core capability rather
than a side project. According to Pisano, successful innovators build
organizations that are explicitly designed to support innovation over time.

The Foundations of Sustained Innovation

Pisano explains that companies capable of long-term innovation consistently
do three things well:

• Build strategic innovation capacity
• Design organizational systems aligned with innovation goals
• Lead with an innovation culture that tolerates tension and ambiguity

Central to this approach is Pisano’s concept of Creative Construction,
a framework that blends discipline, structure, and creativity into a coherent
system for innovation.

Innovation Strategy: Clarity Beats Inspiration

One of Pisano’s core arguments is that innovation must be tightly connected
to strategy. Innovation efforts should be guided by where a company needs
to compete, not by vague aspirations such as wanting to be disruptive.

Pisano emphasizes that effective innovation strategy requires:

• A clear innovation architecture
• Explicit priorities across incremental, radical, and architectural innovation
• Resource allocation that matches stated ambitions
• Clear trade-offs between exploiting existing businesses and exploring new ones

Without these choices, innovation efforts become scattered and unfocused,
leading to wasted resources and disappointing results.

Innovation Systems: Structure Enables Creativity

Strategy alone is not enough. Pisano argues that the organization’s internal
systems must reinforce innovation goals. Creativity flourishes when supported
by the right structures.

An effective innovation system includes:

• Talent systems designed for experimentation
• Processes that emphasize fast learning rather than slow approval cycles
• Portfolio management that balances short-term performance with long-term bets
• Incentives that reward calculated and intelligent risk-taking
• Collaboration structures that prevent silos

Pisano makes a clear distinction between disciplined innovation and
uncontrolled experimentation. Sustainable innovation requires rigor,
not freewheeling chaos.

Innovation Culture: Productive Tension, Not Comfort

Pisano challenges the myth that innovative cultures are always informal,
playful, or flat. While openness matters, truly innovative cultures are
often demanding and uncomfortable.

A real innovation culture requires:

• High levels of accountability
• Debate and intellectual friction
• Tolerance for failure paired with intolerance for incompetence
• A balance between teamwork and individual achievement
• A long-term commitment to learning

Pisano refers to these realities as the hard truths of innovation culture.
Companies that embrace this tension are far more likely to innovate
consistently and at scale.