Beyond Innovation Theatre: When Ideas Stop Performing and Start Creating Value

Are your organization's innovation efforts creating real value, or just the appearance of progress?

There is a moment in many organizations when innovation becomes a performance. The room fills with whiteboards and sticky notes, the walls are dressed in canvases and frameworks, and there is energy, optimism, and the comforting feeling that something important is happening. And yet, months later, nothing has changed. No new product in the market, no measurable value created for customers, no structural shift in how the business operates.

This is what Steve Blank, father of the Lean Startup movement, calls "innovation theatre,”  the practice of creating the appearance of innovation without achieving meaningful progress. Rita McGrath describes it as an excessive focus on ideation without the requisite focus on transforming ideas into value-creating products and services.

The Difference Between Looking Innovative and Being Innovative

Innovation theatre is not born from bad intent. In most cases, it emerges from a genuine desire to do better, to modernize, to stay relevant. But over time, the rituals of innovation can become detached from the outcomes innovation is meant to serve.

The data tells a sobering story. According to MIT research, 95% of corporate AI projects fail to create measurable returns. Approximately 90% of corporate innovation labs fail to generate significant value for their parent companies. Only 5% of AI pilot programs achieve rapid revenue acceleration. These aren't just statistics; they represent billions in wasted investment and lost opportunity.

True innovation is not about generating ideas. It is the act of turning ideas into value for customers, employees, partners, and the broader ecosystem. Invention creates novelty, but innovation creates impact.

Benefits of distinguishing between invention and innovation include:

• Clearer resource allocation toward value-creating activities
• Reduced waste on theatrical gestures that don't move the needle
• Stronger alignment between innovation efforts and business outcomes
• Greater credibility with stakeholders and investors

Why Organizations Fall Into the Theatre

At the heart of innovation theatre is often a quiet form of risk aversion. It is safer to appear innovative than to fund a pilot that might fail, easier to host a pitch competition than to disrupt an existing business model, and more comfortable to celebrate creativity than to confront the politics of change.

Consider the financial services company that spent $10 million on an innovation lab that produced dozens of prototypes and won innovation awards, while implementing exactly nothing. The lab became a tourist destination for executives showing off to board members, but the ideas never escaped what became an "expensive zoo."

Or the Chief Innovation Officer who commanded a $15 million annual budget, generating 50 unused patents, 20 unwanted prototypes, and 100 workshops that changed nothing. They eventually left to "pursue other opportunities,” corporate code for expensive failure.

Many leaders, consciously or not, invest in the symbolism of innovation rather than the structural work of transformation. The sticky note wall becomes a shield, a way to signal progress without absorbing the risk that real progress demands.

And over time, something more damaging happens: people stop believing. Talented teams pour energy into ideas that never leave the room, employees learn that "innovation" is a moment, not a mandate, and the system quietly trains itself to perform rather than to build.

Ideas Are Common. Courage and Execution Are Rare.

One of the most persistent myths in business is that organizations are "idea-poor."

In reality, most organizations are overflowing with ideas. What they lack is not imagination; it is selection, sponsorship, and stamina. The hard part of innovation is not the spark but the sequence of decisions that follow: Who owns this once the workshop ends? What budget funds the next step? Which leader is willing to attach their name and reputation to it?

When Microsoft under Satya Nadella shifted from a "know-it-all" to a "learn-it-all" culture, they didn't just run more workshops. They flattened hierarchies, embraced cloud computing, and created systems where trying, and sometimes failing, was safe. This cultural shift, tied to strategic action, revived Microsoft's innovation engine and market position.

Similarly, LEGO's transformation from near bankruptcy in 2003 to one of the world's most valuable brands wasn't achieved through innovation theatre. They invested heavily in digital transformation, acknowledged new types of customers, and blended physical and digital worlds with apps, visual recognition technology, and coding tools like LEGO Boost.

Why Culture Doesn't Change First—Behavior Does

Many organizations try to "think" their way into innovation. They launch cultural initiatives, publish values, and run inspiration sessions about being bold and experimental. But culture is not formed by what leaders say. It is formed by what the system rewards, funds, and protects.

Research shows that 85% of executives agree fear holds back innovation in their organizations, yet only 1 in 10 are actively doing anything to reduce these fears. This gap between recognition and action is where innovation theatre thrives.

People do not become innovative because they are told to be. They become innovative when they see that trying, and sometimes failing, is safe. Action precedes belief, behaviour shapes mindset, and small, visible wins change what people think is possible.

Benefits of behaviour-first cultural change include:

• Faster adoption of new ways of working
• Reduced resistance to change initiatives
• Higher employee engagement and psychological safety
• More sustainable transformation over time

Innovation Is Not a Moment—It Is a System

The myth of the lone genius still lingers in how many organizations design their innovation efforts. A lab, a department, or a "creative team" is tasked with producing the future, while the rest of the organization continues to optimize the present.

But innovation does not live in isolation. It lives in supply chains, in customer service, in partners, regulators, and frontline employees, and in the spaces where friction, workarounds, and unmet needs quietly surface.

Netflix understood this when they created their culture of "freedom and responsibility." They didn't isolate innovation in a separate department; they embedded it throughout the organization, creating a workplace where people were trusted to decide and empowered to act. This systems approach allowed them to successfully shift from DVD mailings to streaming and original content.

Harvard's Tushman and O'Reilly describe this as the "ambidextrous organization,” the ability to balance exploitation (executing the current business model for efficiency) with exploration (entering new strategic spaces for discovery). Companies like Microsoft with Office 365 managed both simultaneously: one team handled the legacy desktop product while another built the cloud subscription service.

The Political Reality No One Likes to Name

Another quiet myth is that good ideas win on merit.

In practice, innovation often fails not because it is flawed, but because it threatens something: a power structure, a budget line, a legacy process, or a personal identity built around "how things have always been done." Progress creates loss before it creates gain.

When a telecom lab developed a breakthrough service that would cannibalize traditional revenue, it was immediately killed. The innovation was sound, the customer need was real, but the political cost was too high. Leaders who want innovation to move beyond theatre must be willing to navigate these human dimensions to persuade, protect, and sometimes disrupt in ways that are as social as they are strategic.

From Performance to Practice: What Real Innovation Looks Like

Organizations that move beyond theatre tend to shift their focus in a few fundamental ways:

They stop measuring activity and start measuring impact. Not how many ideas were generated or workshops held, but how many were funded, launched, adopted, and sustained. They track revenue from new products, cost savings, market share growth, and customer adoption, the outcome metrics that executives actually care about.

They integrate innovation into the core business, not around it. Strategy, operations, and innovation stop being separate conversations. Innovation teams are embedded in core operations rather than isolated in separate buildings with separate cultures.

They treat innovation as a discipline, not an event. A continuous cycle of foresight, insight, and action, not an annual offsite. The 4I Framework offers a practical model: Intent (a clear purpose tied to business priorities), Investment (committed resources with accountability), Integration (pathways for pilots to connect with business units), and Impact (measuring outcomes, not outputs).

They design for co-creation, not control. Customers, partners, and frontline teams become contributors, not just recipients. Salesforce has cultivated a successful ecosystem of developers, partners, and users, driving growth far beyond traditional customer relationships.

Key Takeaways:

• Distinguish between invention (novelty) and innovation (value creation) to focus resources on what matters.
• Recognize that innovation theatre often stems from risk aversion, not bad intent.
• Understand that culture changes through behaviour and systems, not inspiration sessions.
• Build ambidextrous organizations that balance the exploitation of current business with the exploration of new opportunities.
• Navigate the political reality that good ideas often threaten existing power structures.
• Measure outcomes (revenue, adoption, market impact) rather than activity (ideas generated, workshops held).
• Integrate innovation into core operations rather than isolating it in separate labs or departments.

  

  Making Ideas Earn Their Place in the World

  The future is not built in workshops. It is built on decisions, investments, and the quiet courage to move from possibility to practice. Innovation is not the art of looking forward; it is the discipline of bringing something new into the world that creates value once it gets there.

If we want less theatre and more transformation, we must stop asking, "How do we look innovative?" and start asking, "What are we willing to make real?"
The organizations that will thrive in the next decade are those that move beyond the illusion of innovation theatre and commit to the hard work of genuine value creation. The question isn't whether you can afford to transform, it's whether you can afford not to.