3 Innovation Failures From the Tech, Health Care, and Legal Industries

Carter Liebscher|
September 24, 2019

No matter what industry you’re in, disruption is rearing its head. Even incumbent players in established spaces like tech, health care, and law are experiencing foundational changes, forcing companies to update their business model or be left behind.

Of course, we believe that companies should address disruption with equal amounts of open-mindedness and realism. Facing disruption head-on without proper research and foresight may not bring the results you expect.

Previously, we’ve written about innovation successes in these three industries. We feel, however, that it’s equally important to look into instances of innovation shortcomings to understand the same core concept: If your company doesn’t innovate and innovate well, someone else will.

Read these three innovation failures to see if you recognize a similar lack of agility in your own organization.

Kodak: Holding Onto Past Success While Ignoring the Future

Perhaps the most well-known example of a complacent company ignoring the warning signs of disruption, Kodak went from a leader in camera and film technology in the 20th century to bankruptcy in the 21st.

The company’s mission to democratize photography was the very trend that led to its downfall. Starting in the 1980s, it was obvious that photography was moving away from film and towards digital. While many write about the company’s willful ignorance, Kodak actually recognized the digital trend. In the 1990s, the company invested $2 billion in its own line of cameras. It even acquired Ofoto, a photo sharing website, in 2001.

In reality, Kodak’s true failure was in mischaracterizing the trend: it wasn’t simply digital photography, but rather online photo sharing. The company just missed the mark with the Ofoto acquisition, a platform that was promoted for photo printing rather than sharing.

In 2012, the same year Kodak filed for bankruptcy, Facebook acquired Instagram for $1 billion, a cheaper price than Kodak’s foray into digital photography technology and a better investment in the photo-sharing trend.

CareSync: One in a Crowd of Many Digital Health Providers

Health care is a trillion dollar industry. It’s the textbook definition of an incumbent industry as it’s so entwined with policy, and yet it’s rife with foundational issues that opens spaces up for external disruptors.

Between 2011 and 2016, digital health care startups raised a total of $17.8 billion through venture capital. CareSync was one of many startups receiving this capital with the intention of changing health care operations.

Unfortunately, CareSync was unable to fill its disruptive niche completely. While the company sought the space it wanted to fill—improving patient-provider coordination via technology—there were other, more agile startups that simply did it better. Even after raising over $50 million since its inception in 2011, CareSync closed its doors in 2018 as a result of an investment backout.

CareSync’s failure can be chalked up as situational. Regardless, their story serves as a reminder that success comes from selling a service that either no other competitor offers or selling the best version of that service.

Clearspire: A Revolution in Retrospect

Looking back, Mark A. Cohen wouldn’t have done Clearspire any other way.

The company was conceived as a firm and a deliverer of legal services, using high-end technology to provide clients with deliverables, research, and workforce organization at a fixed price.

Despite its client-oriented model, Cohen admits that the main reason his disruptive company failed was that it did not listen to the market’s needs. Clearspire had the opportunity to engage and collaborate with others in the space, established and otherwise, but failed to do so. The company’s self-imposed isolation solidified its reputation as a risky startup, which resulted in financial failure.

While it seems ironic that a disruptive force should take operational advice from the very industry it’s trying to upheave, the truth is that agile companies are often trying to help these industries. For Cohen, Clearspire was a lesson in understanding what the legal space needs and wants. As he put it, he now thinks of the legal industry in terms of “the ‘we’ rather than the ‘me.'”

What Your Company Can Learn From These Failed Innovation Efforts

Put bluntly, failure and innovation go hand-in-hand. Rather than fear failure, though, organization leaders should use their own history or other companies’ stories as jumping-off points for future success. 

Do you recognize a bit of your company in these lackluster innovation efforts? We have you covered. We have a plethora of resources to accelerate innovation and empower employees at your organization. Download any of our free white papers today!

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