Leading edge vs bleeding edge

The dangers of becoming too obsessed with innovation

Leading edge vs bleeding edge

In today’s fast-paced business environment, innovation is not just a buzzword, it’s a necessity. Every company, regardless of its size or industry, needs to innovate to stay relevant and competitive. However, the pursuit of the next big thing comes with its own risks. While innovation can drive growth and open new markets, an overemphasis on it can lead to detrimental consequences for your core business operations.

I’ve learned it the hard way. Once my steel fabrication company was successful and core operations carried on without my involvement, my focus quickly moved onto innovation. I guess I was hyped by the “Blue ocean strategy” idea, which basically means creating a new market for yourself. In theory, a disruptive idea or service allows you to explore unchartered waters, which is a great recipe for success. I had experienced this a few times in my business career, with the notable venture of making plastic screens during Covid. We were the first to offer them in the UK and it soon became a £1m turnover venture with 85% gross margins! It felt like catching the wave of the day, so no wonder the hunt for the next wave continues.

Back in the steel business, our focus became 3D printing of structural steel. We ended up buying 2 robots with specialist welding equipment, joined forces with 2 reputable UK universities, allocated internal resources, some of them full time, and spent a lot of our hard earned money on these projects. Initially the hopes were high, but as time passed by, it became more and more apparent, that this technology is still years away from being commercially viable, if at all. 

One morning I had a meeting with my accountant. We were going through the annual financial statements. He immediately noticed, that our nett margins have decreased, to which I pointed out the significant expenses going towards our R&D projects. He then sat back in his chair and said: 

“Michael, you have to be careful whether you are on the leading edge or the bleeding edge”. 

Those words immediately resonated with me, as it became crystal clear, that we were on the undesirable bleeding edge. In that moment I knew I had to address the situation, which meant some drastic internal changes and uncomfortable withdrawals from external projects.

This lesson was very valuable and served as a reminder, that being the first market disrupter is highly risky and costly. It has been proven, that the best time to implement revolutionary technology is soon after the first pioneers have bled their way through, allowing others to be on the leading edge.

To summarise, there is a fine line between the leading edge and bleeding edge. The danger lies in focusing too much on future possibilities at the expense of present realities. Here are some key risks associated with being on the bleeding edge:

Financial Strain

Pouring too much money into innovative projects that are not yet viable can deplete financial resources needed for day-to-day operations. This can lead to cash flow issues, increased debt, or even insolvency if the innovative ventures fail to deliver expected returns.

Operational Distraction

Excessive focus on innovation can divert attention from core business activities. Essential functions like customer service, sales, and supply chain management may suffer, leading to a decline in performance and customer satisfaction.

Energy and Morale

The pursuit of innovation can impede the morale of the employees and management not involved in the innovation projects, leading to burnout and feeling neglected.

Market Misalignment

Innovating for innovation’s sake can result in products or services that do not align with market needs. If the innovation is too far ahead of its time, customers may not be ready for it, leading to poor adoption and wasted resources.

Make sure you are on the leading edge and not on the bleeding edge.

Michael K Krajewski
Michael K Krajewski

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