Chasing Unicorns Over a Cliff: The Hidden Costs of Pursuing Breakthrough Innovation
I recently consulted for a company that had achieved remarkable success through thoughtful incremental innovation. By steadily growing market share, improving profitability, and building a loyal customer base, they established a profitable and growing business. Their approach was simple yet powerful: deliver differentiated products that were highly valued by customers, consistently optimize efficiency, and gradually expand their market presence. This strategy positioned them to achieve revenues between $50-$75M with an impressive 12%-18% EBITDA—a classic mid-sized CPG business capable of generating $3-$5M annually in free cash flow.
The Seduction of Breakthrough Innovation
Despite steady growth, the founder was dissatisfied—not with the company’s success, but with the methods behind it. Captivated by the glamor and allure of breakthrough innovation, they redirected resources towards disruptive ideas they thought would capture headlines and venture capital. To someone from the outside, the concepts were disconnected from the core business, often solved nonexistent problems, were technically unfeasible, or prohibitively expensive. It didn’t make sense for a company this small to take on these high-risk challenges when predictable success was waiting for them.
Financial Consequences
The negative financial impact of these speculative ventures quickly became apparent. Diverted profits resulted in stalled growth, shrinking margins, and delayed crucial investments in marketing and capital expenditures (CAPEX). Instead of building upon their solid foundation, valuable resources were lost chasing elusive breakthroughs.
The Deeper Cultural Damage
Beyond financial losses, the cultural damage was even more significant. The founder’s constant dissatisfaction with incremental success communicated a harmful message: that consistent, profitable, and meaningful work held little value to them. Employee morale deteriorated as team members struggled to meet unrealistic expectations and unsubstantiated KPIs. Talented individuals either departed voluntarily or were let go, discouraged by leadership’s relentless pursuit of unrealistic goals. Ultimately, the company didn’t just sacrifice profitability—it lost its most valuable asset: committed, talented people.
A Lesson in Strategic Alignment
Unfortunately, I could only mitigate, not fully reverse, the founder’s destructive trajectory before my engagement concluded. This experience underscored a crucial lesson: incremental innovation often provides the most reliable path to sustained success. While breakthroughs can indeed redefine markets, chasing them relentlessly without a strategic business alignment jeopardizes financial stability and company culture alike.