The Disconnect between Innovation function and Product/Business strategy

Why do companies trail behind the product/market trends even after having a dedicated Innovation function within the company?

At an Innovation conference, there was an impressive presentation on Innovation capabilities of a top Multinational Company. On the sidelines, I asked the Innovation Head about the new product launch, and he was too happy to explain its features. He missed entirely the question as to why their product came so late in market and still not at par.

Innovation function in companies is a separate department and has a diverse mandate. They work on new ideas and engage the main machinery in implementation and go-to-market. They also provide innovation service whereby other functions seek them to solve a problem or help explore/implement an emerging technology for them.

Where organizations fail is in connecting Innovation to Business and Product strategy. Innovation function sees the shifting product and market trends which a Strategy function fails to see and appreciate. As a result, Strategy sticks with existing plans and product strategy a bit too long while the landscape changes around them. Innovation function is also considered downstream and their inputs are not taken in Strategy decision making process.

Companies which stay ahead of trends and launch disruptive products have Innovation inbuilt as part of their business and product strategy. Innovation is upstream to business and product strategy. Such companies do not have Innovation function but an Innovation platform and every function (including strategy) uses it by default.

Coming back to the discussion with the Innovation head of the top multinational company, after much prodding he replied that they did go to Product Strategy guys earlier but were not heard.