2-Eureka

Part 2:

Why The Myth Of The "Eureka Moment" Kills Innovation - What Successful Companies Do Instead

Every Idea Is a Bad Idea—Until You Build the Right Systems Around It

We love to glorify the "eureka" moment—the creative spark, the pitch-winning concept, the breakthrough product that seems to come out of nowhere. Steve Jobs unveiling the iPhone. The Google founders scribbling PageRank on a whiteboard. Netflix pivoting from DVDs to streaming.

But here's the uncomfortable truth that these origin stories obscure: most ideas start bad. They're incomplete, unvalidated, naive, and sometimes completely unworkable. What separates failure from success isn't the brilliance of the initial idea. It's the environment and system built around it.

As Marc Randolph, co-founder of Netflix, puts it (The Diary of a CEO podcast, 2023):

"Every idea is a bad idea. You just don't know yet why it's a bad idea"

That one line captures the truth that most innovation myths ignore. Ideas may sound compelling in pitch decks and business plans, but reality has a way of exposing everything we missed—technical gaps, customer indifference, flawed assumptions, the wrong target market. The point isn't to find the perfect idea. The point is to start with something, test it systematically, and make it better.

The Dangerous Myth of the Perfect Idea

One of my favorite comedians, Tom Segura, has a bit about his cousin "Brian" that perfectly illustrates the myth of the great idea. Brian proudly calls himself an "inventor." His big breakthrough? A cell phone that drives your car. When asked how it works, Brian replies confidently, "You just press a button." No details. No plan. Just magical thinking.

So Tom fires back with his own invention: "a toilet that sends emails and makes turkey sandwiches." Brian's response? "That's an awesome invention."

The bit is hilarious—and painfully accurate. Because most ideas sound exactly like that at first: magical thinking, vague confidence, and no path to execution (Segura, 2014).

This mythology isn't just harmless entertainment. It's actively damaging to innovation efforts. It creates unrealistic expectations, paralyzes teams who wait for the "perfect" concept, and leads organizations to abandon promising ideas too quickly when they don't immediately show perfection.

The reality is that breakthrough innovations rarely emerge fully formed. They evolve through systematic pressure-testing, iteration, and support. They need the right conditions to grow from rough concepts into real-world value.

The Innovation Failure Reality

The statistics on innovation failure are sobering, but they tell an important story. In consumer-packaged goods alone, 75% to 85% of new products fail within two years (Forbes, 2024; McKinsey & Company, 2024). Clayton Christensen famously estimated that 95% of new products fail altogether (MIT Professional Education, 2024).

Yet here's the paradox: companies that invest seriously in innovation consistently outperform their peers on profitability, growth, and long-term resilience.

BusinessWeek and BCG (2006) found that the 25 most innovative companies achieved 3% higher annual stock returns than the S&P Global 1200 average. Another BCG study reported a 4.3% TSR premium over three years and a 2.6% premium over ten years for innovation leaders. Companies that diversified their revenue streams—an outcome of innovation—delivered 54% higher cumulative TSR (Stryber, as cited in Sifted, 2022). Finally, innovative design-centric companies, according to Rae (2014), outperformed the S&P 500 by more than 200% over a decade.

The difference isn't that successful companies have better ideas. It's that they've built better systems for transforming bad ideas into breakthrough innovations.

Case Study: How a "Bad" Idea Became a Global Platform

Our experience at Dig Insights perfectly illustrates this principle. The earliest version of our SaaS platform Upsiide started as a swipe-based native app—essentially Tinder for innovation research. We believed in it because we knew mobile-first research wasn't just a trend; it was becoming essential for reaching modern consumers.

But friction set in fast. We couldn't scale the user base effectively, and client feedback told us they wanted more than sleek UX—they needed traditional research capabilities, customizable outputs, and deeper analytics. The beautiful, simple interface we'd fallen in love with wasn't solving the real problem our clients faced.

We had a choice: abandon the idea or revise it based on feedback and economic realities.

We chose revision. We rebuilt Upsiide as a comprehensive SaaS platform, integrated third-party sample providers, and invested in building our own in-house technology team. We learned that the idea itself was never the limiting factor. What was missing were the foundations—the structure, people, and systematic commitment to support it through multiple iterations.

Today, Upsiide is used by global brands like Coca-Cola and Pernod Ricard. But the platform that exists now bears little resemblance to that original swipe-based app. The core insight about mobile-first research was sound, but everything else had to evolve based on real-world feedback and market demands.

This experience taught us a fundamental truth: innovation begins not with brilliance, but with belief. A belief that you're solving a worthwhile problem or fulfilling an unmet need. A belief, combined with a robust system for feedback and revision, until you find the right solution.

Why Status Quo Isn't Risk-Free

Despite the high failure rates, the reward for sustained innovation is real and measurable. As Christensen, Kaufman, and Shih (2013) note, executives often underestimate the value of innovation because they compare its projected return to the default of "doing nothing." That's the wrong benchmark.

Doing nothing doesn't mean preserving the status quo—it usually means decline. Markets evolve, customer expectations shift, competitors innovate, and technologies advance whether you participate or not. The choice isn't between innovation and safety; it's between proactive adaptation and reactive scrambling.

The conclusion is clear: doing nothing is not a safe fallback. It's a slow decline. Innovation is no longer optional—and it can't be improvised.

The Strategic Foundation: Vision and Direction

Innovation without direction is just noise. Strategy without vision is just bureaucracy. Organizations need both: a North Star to orient toward, and a systematic approach to chart a purposeful course.

Too many innovation efforts fail not because they lacked creativity, but because they lacked clarity. As Pisano (2015) writes, "The problem with innovation improvement efforts is rooted in the lack of an innovation strategy." Without clear strategic direction, teams waste energy on projects that don't align with business goals, pursue ideas that can't scale, or abandon promising concepts too early.

The Evolution of Strategic Thinking

Originally developed by McKinsey, the Three Horizons Model mapped innovation across time:

Horizon 1: Short-term improvements to the core business
Horizon 2: Medium-term adjacencies or evolving offerings
Horizon 3: Long-term disruptive bets that create new markets

This was useful—but in today’s world, the rigid sequencing of H1 to H3 doesn’t hold. Uber didn’t wait for Horizon 3. It moved immediately using available tech. The disruption that once took 10 years now takes 18 months.

A New Approach: Time-Based Horizon Forecasting

Instead of types, we now frame Horizons by timing and strategic posture:

Horizon 1 (1–2 years): Optimize core services. Watch for fast-moving threats.
Horizon 2 (3–4 years): Build new channels, bundles, and adjacencies.
Horizon 3 (5+ years): Fund transformative bets and prepare to pivot the model.

At Dig Insights, this horizon approach helped guide strategic investment decisions. In Horizon 1, we focused on automating delivery through Upsiide AI and streamlined reporting. For Horizon 2, we built dashboard-first programs and SaaS bundles. In Horizon 3, we're shifting from research vendor to AI-enabled strategic advisor.

Creating Urgency: The Burning Platform

Sometimes disruption must be forced. Companies too comfortable in Horizon 1 often avoid Horizon 3 investments—until it's too late. A "burning platform" is a real or simulated moment of existential urgency that compels transformation.

Some burning platforms come from external forces—COVID-19, regulatory shifts, new competitors entering the market. But the most strategically resilient organizations create urgency before the fire arrives. They ask uncomfortable questions: If we were starting this company today, what would we build? What would we abandon? What assumptions about our industry are no longer true?

This kind of strategic foresight requires leaders to challenge their own success and question whether current approaches will remain viable in rapidly changing markets.

Building Innovation as a Portfolio, Not a Monolith

Effective innovation strategy requires treating innovation as a portfolio of different types, each with distinct payoffs and organizational requirements. At Dig Insights, this led us to focus deliberately on four distinct innovation categories:

Process Innovation: Automating and streamlining delivery (e.g., AI-generated charts and automated reporting)
Methodological Innovation: Redesigning how insights are created (e.g., Market Simulator, new research methodologies)
Technological Innovation: Enhancing or integrating AI and digital tools (e.g., upgrading Upsiide with large language model capabilities)
Business Model Innovation: Reframing pricing and packaging (e.g., subscription-based trend reports, always-on dashboards)

Each type carried different risk profiles, required different organizational support, and delivered value on different timelines. But treating innovation as a portfolio rather than a monolith made prioritization decisions much clearer

The Ten Types of Innovation Framework

To expand strategic thinking beyond operational improvements, many organizations benefit from Doblin's Ten Types of Innovation framework (Keeley et al., 2013). This comprehensive model identifies innovation opportunities across three categories:

Configuration (How you organize):

Profit Model: How you make money (e.g., Gillette's razor-blade strategy)
Network: Who you collaborate with (e.g., Nike's athlete partnerships)
Structure: How you organize resources (e.g., Zappos' empowered teams)
Process: How you execute work (e.g., Toyota's lean manufacturing)

Offering (What you create):

Product Performance: Features or functionality (e.g., Dyson's superior suction)
Product System: Bundled products or services (e.g., Apple's ecosystem)

Experience (How customers interact):

Service: Post-sale customer support (e.g., Ritz-Carlton's guest service model)
Channel: How customers access your offering (e.g., Warby Parker's direct-to-consumer model)
Brand: What people believe about you (e.g., Red Bull's extreme sports branding)
Customer Engagement: How users interact and stay loyal (e.g., Duolingo's gamified learning)

This framework allows organizations to see not just what they're building, but how value is delivered, perceived, and sustained across the entire customer experience.

From Ideas to Systems: The Transformation Process

The most successful innovations emerge from systematic approaches that combine human creativity with disciplined methodology. This means moving beyond hoping for lightning strikes of genius to building repeatable processes for identifying, testing, and scaling breakthrough concepts.

The Learning Mindset

Perhaps most importantly, successful innovation requires embracing a learning mindset rather than a knowing mindset. Teams that approach innovation assuming they already know what customers want, how markets will respond, or which features matter most are setting themselves up for expensive failures.

Instead, the most successful innovators approach each project with genuine curiosity about what they might discover. They design experiments to test assumptions rather than confirm biases. They celebrate learning as much as they celebrate success, understanding that each "failed" experiment brings them closer to a breakthrough.

This mindset shift—from knowing to learning—is perhaps the most fundamental change organizations need to make to succeed at innovation in the modern era.

Building Systematic Capability

Innovation isn't a mysterious process that depends on random flashes of genius. It's a systematic capability that can be built, measured, and improved over time. This requires:

Clear Vision and Strategy: A North Star that aligns teams and helps prioritize opportunities while providing constraints that prevent teams from chasing every interesting idea.
Structured Ideation: Using proven frameworks like Jobs to Be Done, Design Thinking, and Systematic Inventive Thinking to solve real problems rather than hoping for inspiration. Leverage these models with AI tools to increase idea fluency.
Rapid Experimentation: Building realistic prototypes and testing them with real users, then iterating based on what you learn rather than what you hoped would be true.
Data-Informed Decisions: Combining human insight with empirical validation to reduce risk while increasing speed-to-market.
Continuous Feedback Loops: Creating systematic ways to gather and incorporate customer feedback, market signals, and usage data into ongoing development.

The goal is to fail fast and cheap rather than slow and expensive, learning your way to breakthrough innovations rather than hoping to stumble upon them.

Practical Steps: Building Your Innovation System

If you're ready to move beyond hoping for perfect ideas to building systematic innovation capability, here are the foundational steps:

Assess Your Current State: Before launching new initiatives, honestly evaluate your organization's innovation readiness. Ask the hard questions: Are senior leaders truly aligned on innovation priorities? Do teams have the psychological safety to take intelligent risks? Can you collaborate effectively across traditional silos? Is failure treated as learning or career damage? Use a structured approach like the McKinsey 7S Framework to evaluate strategy, structure, systems, shared values, style, staff, and skills. Innovation efforts built on weak foundations will collapse under pressure, no matter how brilliant the initial concepts.
Define Your Innovation Vision and Strategy: Create a clear innovation vision that both inspires and constrains. Your vision should tell teams what to say no to just as clearly as what to pursue. As Pisano (2015) emphasizes, "Because innovation cuts across functions, only senior leaders can set an innovation strategy." Map your innovation portfolio across time horizons, balancing short-term optimizations with medium-term adjacencies and long-term transformative bets. Consider which of the Ten Types of Innovation offer the greatest strategic value for your organization.
Build Systematic Processes: Replace ad hoc brainstorming with structured ideation using proven frameworks and AI tools. Implement rapid experimentation cycles that test assumptions quickly and cheaply. Create feedback loops that capture customer insights, market signals, and usage data systematically.
Embrace the Iteration Mindset: Accept that your first version will be wrong in important ways. Plan for multiple iterations based on real-world feedback. Celebrate intelligent failures that generate valuable learning. Build organizational patience for the time it takes to transform rough concepts into market-ready solutions. Remember: the goal isn't to eliminate risk—it's to take intelligent risks that generate learning and progress toward breakthrough innovations.

The Competitive Advantage of Systematic Innovation

In an era where customer expectations shift rapidly, competitive landscapes evolve constantly, and new technologies like AI emerge at accelerating pace, the ability to innovate systematically has become a core competitive advantage.

Organizations that master this capability don't just create better products—they build adaptive capacity that allows them to thrive in uncertainty. They develop organizational muscles for identifying opportunities, testing assumptions, and scaling solutions that their competitors lack.

This isn't about having more creative people or bigger R&D budgets. It's about building better systems for transforming imperfect ideas into breakthrough innovations.

The Question That Matters

Here's the question I want to leave you with: What "bad idea" is your organization sitting on right now that could become something extraordinary—if you built the right system around it?

That rough concept someone mentioned in a meeting but didn't pursue. That unconventional approach that seems promising but risky. That ambitious vision that feels too uncertain for the current environment.

The idea itself isn't the limiting factor. The limiting factor is whether your organization has built the systematic capability to take that idea and transform it into something remarkable through disciplined experimentation, continuous learning, and persistent iteration.

Innovation doesn't begin with perfect ideas. It begins with the systems and mindsets that let imperfect ones evolve into breakthroughs. The companies that understand this—and act on it—will be the ones that thrive in an increasingly uncertain and rapidly changing business environment.