7 modern examples of corporate innovation failures (and how to avoid them)

BLOGPOST CORPORATE INNOVATION FAILURES

Imagine a world without magnetic bank cards and ATMs. Or imagine a world without the internet and how life would be right now without it. Difficult right?

Innovation is one of the keys of our society over the last 200 years. It has come at such a blazing rate in recent decades, that it has changed our society in ways we thought were only possible in movies or dreams. Big, small, for multiple industries or for a certain niche, it comes in many ways, shapes and forms. In short, innovation is everywhere.

For every successful innovation story, there are thousands of failed ones. From new companies with a big idea, to big corporations with a new product or service. They all have one thing in common: we can learn from them. That’s why we’ve listed 7 examples of recent corporate innovations failures.

Google Stadia

The Google Stadia is shutting down in January 2023, less than 3 years after its launch. While it shouldn’t be a surprise that it happened (Google is known to quickly kill projects that don’t perform well enough), it’s still a surprise that it happened so fast. So how did we get here?

The Google Stadia is a cloud-streaming gaming console which enables users to stream games from the Google Cloud directly onto their computer. Google assumed that the price of 129$ for a console with 12 games would be enough to get players to come to them, instead of using Playstation, Xbox or Nintendo consoles. Players also needed to purchase a 9.99$ per month subscription in order to keep playing their Stadia games. It wasn’t enough to entice people to use the Stadia.

Large corporations such as Google have many ideas they can execute on, but most come from assumptions of higher ups instead of qualitative behavorial data from the target audience.

This begs the question; how could Google have avoided using so many resources, that they could have used on something else?

Had Google not only asked their target audience, but also experimented with their hypotheses, they would have had data based on their target audience’s behavior. Based on that data they could have made a better decision, which would have led to a product/service that relieved the pains of their target audience better. Or it might have led to the product/service never seeing the day of light. Both are better than what happened with Stadia.

On top of that, with failed innovations always comes some loss of face. How could Google have avoided that?

Google could have gone off-brand and created an entirely new brand which appealed more to their target audience. This helps disconnect the new idea from the already established business and the values it stands for. It also helps protect your brand. It could have simply been a case of people loving the product, but not the Google brand itself. The Steam Deck is a successful case of going off-brand in the gaming industry, especially when it isn’t part of the core business, as was the case for Google.

While the Stadia can be classified as a failure, Google did say that the cloud-streaming technology that powered Stadia could power other Google products, and that Google remains “deeply committed to gaming.” So the work they did was not entirely in vain.

Mealhero

A Belgian startup, Mealhero was a food subscription service which saw its end in 2022. Mealhero had a strong proposition when it came on the market in 2015, which was foodbox delivery with a range of readymade meals you could choose from. A bit like HelloFresh, it was great for people and families with little to no time.

The big difference with HelloFresh? With HelloFresh you cook the meal from scratch, with Mealhero you heat up your meals with the Mealhero steamer. This was a real lock-in, which people generally don’t like. The price of the steamer ranged from 299 to 649 euro, depending on the amount of meals you wanted to include with it. On top of that, the Mealhero steamer only functions when it scans the barcode of the meal you want to cook, making it obsolete now that Mealhero has stopped existing.

So why did Mealhero fail after some initial success?

While its proposition and idea fit the spirit of the times – everyone wanted to be the next Nespresso – the combination of lock-in, high cost of the steamer and it only having one use seemingly made it too much for Mealhero to be successful. The reality was that you bought a steamer with 3 timers for several hundreds of euros.

Now, the families that used the Mealhero service have steamers they can’t use because there are no labels with barcodes it can scan. The good news however is that an investor has bought the IP and will start selling labels soon, so that people can scan those to activate the steamer.

CNN+

On March 29th 2022, CNN launched its own streaming service, called CNN+, with a $300 million investment signed off by McKinsey, to become the first news-driven streaming platform. The ambition? 2 million subscribers (1% of Netflix?), high enough to justify a planned investment of $1 billion over 4 years.

On April 21st 2022 it was announced CNN+ would be discontinued, with less than 10,000 active users. How could a successful company like CNN & their executives get it so wrong in such a public way?

Well, they thought it was a no-brainer that “power users” of news content would be eager to jump the CNN+ train for in-depth background on (cable) news stories. And pay for it.

The streaming market is growing exponentially in the amount of active players, yet all these players are investing heavily in diversification of content, instead of focusing on just 1 type of content. CNN invested heavily in a fully featured solution so it would represent the full value proposition before putting it in front of a customer. The launch on March 29th was the first real consumer validation & no one questioned they just might have been wrong in their assumptions. And they were, resulting in a 300 million dollar investment going down the drain in less than a month.

How could they have avoided such a big loss of money and such a big PR-hit as well?

CNN should have researched the true dynamics of the streaming market, not just on the business side, but on the consumer expectation side as well. They should have identified all of the assumptions that are underlying to the CNN+ concept. Desirability, feasibility & viability. If these aren’t true, the platform is not worth building.

They then needed to launch a string of experiments in the market to find strong evidence for these assumptions (i.e. landing pages, dry wallet, fake platforms …). This would have replaced gut feeling with real behavioral customer data.

If only they had googled Cosmos Collective! We could have saved them $ 299.900.000 & a very public PR-hit. Because an idea is worth nothing, it’s how you execute on it that drives its innovation value. This might be the most expensive corporate innovation kill of all them… ouch!

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Theranos

Most people know the story of Elizabeth Holmes and her company Theranos by now, either through the news or through the drama mini-series The Dropout on Disney+. It’s a story of “fake it ‘til you make it” gone too far.

Imagine a world where we can just draw a teeny bit of a person’s blood, put it on a patch, stick it in a machine and it tells you which illness you have. Sounds revolutionary right? That’s what Silicon Valley thought as well. By the time Holmes was 31 years old, she was a billionaire because of venture capitalist investments, but Theranos had nothing to show for. As fast as she rose to the top, the fall was much faster.

The machine, called Edison, never worked properly. it didn’t make blood tests faster, easier and cheaper, as was promised. The tests were inconclusive or false. That was the story of Theranos in a nutshell. A lot of promises, but nothing tangible. All in all, Theranos received hundreds of millions in investments, which were all lost when Theranos inevitably went bankrupt in 2018.

Tips about Edison not working properly were ignored by company management. Instead of working on a solution to the problem, only the correct data was filtered out of the results of the test runs in the company and further evaluated. The wrong results were ignored. Holmes’ partner Balwani put critical employees under pressure. Former staff members describe the Theranos company culture as a mix of distrust, psychological pressure and lies.

The Theranos failure is a classic case of executives pushing their own agendas and not listening to their own people’s input. Had Theranos experimented more with their Edison machine and had they used their data correctly, instead of using only the data they deemed right, the world might have literally looked differently now. It’s critical to use the data from the experiments run and use them to optimize your next experiment after measuring them. Theranos didn’t and now they aren’t.

Wii U

Another entry from the gaming industry, the Wii U in itself can be classified as a failure, but for Nintendo it wasn’t. It’s actually a great case for innovation. We’ll tell you why.

The Wii U was the successor to the Wii console, which for the first time had successfully incorporated movement into home gaming with its technology. The Wii U was a handheld console with a GamePad, which had a screen, buttons and joysticks. Plus it contained the movement technology that the Wii had. But while the Wii was very successful in terms of sales, for both consoles and games, the Wii U never seemed to gain traction. Why?

The Wii U didn’t have a clear identity. Gamers were not sure of what the Wii U actually was. Was it a handheld console? Was it an accessory for the Wii? These questions weren’t answered in a clear manner. This plus the price of 299$ for what people deemed to be a special Wii controller, translated into poor sales.

The Wii U’s GamePad was its star attraction and actually had some really neat ideas. The only problem was that Nintendo didn’t fully develop these ideas. At least, not with the Wii U. More on that later.

The Wii U’s GamePad gave gamers the option to play their games on a handheld device instead of on their TV (called Off-TV Play). The Wii U’s GamePad wasn’t perfect however. It was big, pretty bulky, and wasn’t a true handheld console, because you needed to be within range of the Wii U in order to use it. The GamePad also had poor battery life and its touchscreen features were sub-par.

While the Wii U’s GamePad was a good idea, it didn’t live up to its potential. So what should they have done differently? Well, Nintendo has already given us the answer. It’s called the Nintendo Switch. A true hybrid console, with clear value propositions and effective marketing.

The DNA of the Wii U is omnipresent in the Switch, with Nintendo developing and improving the features that the Wii U had, into something spectacular.

The Wii U’s GamePad, touchscreen, and Off-TV Play paved the way for the Switch and you can see these features fully realized in Nintendo’s smash hit console. Gone was the bulky design, the need to connect to a home console to play in handheld mode, and the poor marketing.

Nintendo also made sure that everyone knew exactly what the Switch was and what it could do: it was a hybrid console that gamers could use with their TVs and as a fully dedicated handheld device. Then there are the Joy-Cons, an ingenious invention that allowed for both single-player and local-multiplayer with one set of hardware.

So in many ways, the Switch succeeded in what the Wii U was trying to do. With the Switch, Nintendo created a true hybrid console with intuitive features that really solved the pains of many gamers around the world. They gave their console a new name, listened to their target audience and learned from the data they received to create a console that solved real pains that no one did before them. That’s how innovation should be.

Juicero Press

Ever heard of the Juicero Press? It’s another idea where you needed to have a special appliance to use the product, just like Mealhero. The idea behind this was to create an easier way for consumers to make a fresh smoothie. You had to buy their device, which worked with Wi-Fi. The device allowed people to get a glass of fresh juice, from bags they received via monthly subscription. Just put the bag in the device, press the button, and enjoy.

That’s how their new kitchen appliance came on the market. Everything sounded very user-friendly, but they overlooked a few things. As soon as the product entered the market, there was already a fuss about the price, which was about $699 and the sachets you received monthly were between $5 and $8 per piece. As a result, people didn’t want a Juicero Press, resulting in a significant price drop.

If you think that the price was the killer of Juicero Press, think again. A bit after the launch, a video surfaced on the internet, showing people squeezing the bags and putting juice in their glass. No Juicero Press appliance needed. After that much ridicule, the start-up company had to shut its doors.

Why did Juicero fail? Because it failed to see the problems of its business model. The problem it aimed to solve wasn’t that big of a problem to begin with. People can make smoothies with blenders, which are cheaper and have more functionality than the Juicero Press. If the appliance you’re selling isn’t necessary to use the sachets you’re selling, then you’re just insulting the consumer. The 699$ cost of the single functionality appliance didn’t help either.

Parcify

Parcify was a startup in the package delivery space, founded in 2015. The idea was to get your package delivered whenever you wanted, wherever you wanted. Literally. Imagine sitting in a restaurant, talking about a book with someone and being able to order it on the spot and get it delivered to you in the restaurant, all within a certain timeframe. That was the promise of Parcify.

Parcify could be considered the Uber of parcel delivery, within the urban environment. It was all about convenience, but even with Bpost buying Parcify, it didn’t succeed. Why is that?

Apparently, convenience doesn’t trump everything. The cost of a fair logistical network was too high for Parcify to be a success. The same goes for companies such as Uber or Deliveroo, who are struggling with those same problems. The cost didn’t weigh up against the incremental convenience gain it offered to consumers. A company who met the same fate was Gorillas, a highly convenient grocery delivery service, which significantly reduced activities in Belgium and decided to focus more on key countries.

Conclusion

At Cosmos Collective we advocate for user- & prototype-driven innovation. What you believe to be a great idea, might not seem like a great idea to your audience. What makes it even more complex is the fact that user expectations are messy, unclear & constantly changing.

The only way to counteract this innovation reality is through experimentation. Build cheap prototypes to challenge & grow your idea. Base your investment decision on how customers interact with your prototypes. Not on how they claim they would interact with it through a survey (ex. “If we would build solution X, would you buy it?”).

Do you have an innovation idea, but not sure how to start? Don’t hesitate to contact us!

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Final note

Someone who understands that concept is Ramon Tata, CEO of TATA Communications in India, who created a yearly award for the best failed idea. It’s his way of encouraging his employees to innovate and test certain things. It’s key to (in)validate quickly and experimentation is the answer!

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