Leader Analysis

When a company fails to innovate effectively, competition inevitably begins to chip away at its customers. A case in point is Six Flags, which has struggled to adapt in a leisure market increasingly crowded with alternatives. Comcast-owned Universal, for instance, is opening a family-oriented regional park in Texas featuring popular characters like Minions and SpongeBob SquarePants. Disney and Universal are investing billions into high-tech parks, while new entrants like Topgolf and Bowlero are redefining entertainment altogether. Even smaller, localized theme parks are thriving by offering accessible options. Six Flags, by contrast, has often seemed slow to innovate, losing ground as rivals find fresher ways to capture customers’ leisure time.

The First Spark of Innovation: Hunger for the Market

What Six Flags demonstrates is that the starting point of innovation is hunger—the drive to win and serve a market. Startups embody this instinct by solving unmet needs, while established firms must fight complacency and keep pursuing new customers. Without this hunger, organizations stagnate. For leaders, the first responsibility is to create a culture that prizes curiosity and market responsiveness.

Getting Closer to the Customer

Hunger alone is not enough. To translate ambition into ideas, companies must bring innovators as close as possible to their customers. Great ideas often emerge when engineers, designers, and product teams engage directly with people’s needs. The so-called “Palantir Mafia” illustrates this point. Many alumni of Palantir went on to create companies valued at more than $1 billion. Their insights often came from being embedded with clients, solving real-world problems on the ground.

As one Palantir leader explained, their approach was to hire exceptional people, put them on a plane, and embed them directly with clients. These “deployed engineers” created breakthrough solutions precisely because they worked side by side with the people they served. By contrast, companies that keep their innovators siloed rarely generate such fresh ideas. DoorDash, for example, was founded when its engineers went out into the field, talking to small business owners and discovering unmet delivery needs. Leaders must either stay in touch with customers themselves or create structures where innovators inside the company are consistently exposed to customer needs.

Crocs offers a simple but powerful illustration of the same principle. Once known only for quirky clogs, the brand thrived in China by adapting to local preferences—introducing platform Crocs to appeal to women and selling customizable “Jibbitz” accessories to meet consumers’ desire for self-expression. This success could not have been achieved from a distant headquarters in Colorado. It required people on the ground who understood the local market. The lesson is clear: innovation depends on listening to and understanding customers, wherever they are.

The Culture Challenge Inside Large Companies

Still, even when companies are close to their customers, internal culture can get in the way. Doug Field, a former Tesla executive now leading Ford’s electric vehicle program, observed that entrenched habits in large organizations often slow progress. To thrive, companies must balance respect for being “naïve” enough to try new things with respect for the practical realities of running operations. Striking this balance enables established companies to keep pace with more nimble competitors.

Motivation is another cultural challenge. In Silicon Valley, there is growing concern that large firms acquiring startups—rewarding founders while leaving employees behind—may reduce the incentive to innovate. Within established organizations, leaders need models like 3M’s, where inventors receive royalties for products that succeed in the market. By rewarding innovation directly, companies keep their talent engaged in creating new solutions.

Accepting That Innovation Is Messy

Even with the right culture and incentives, innovation rarely looks elegant. The Humanoid Robot Olympics in Beijing illustrated this vividly, with robots stumbling, malfunctioning, and taking absurdly long to complete simple tasks. Innovation often looks chaotic in its early stages. Over time, however, these messy experiments produce the breakthroughs that define industries. Companies must be willing to tolerate this “innovation mess,” even though investors sometimes punish failure in the short term. Playing it too safe only leaves room for disruption by startups unburdened by legacy culture.

Innovation Beyond Products

The scope of innovation also stretches beyond the products themselves. It extends to marketing, operations, and even identifying new markets. Today, companies are creating serialized, entertainment-style content on social media—like Little Caesars’ Pretzel Crust Island or jewelry brand Alexis Bittar’s New York-inspired series—to engage customers in fresh ways. Pharmaceutical firms, meanwhile, are exploring new uses for existing drugs, such as Novo Nordisk’s Wegovy, which recently gained FDA approval to treat a type of fatty liver disease. These examples show that innovation can emerge in how you market, how you deliver, or even how you redefine the scope of your product.

The Three Principles of Lasting Innovation

Pulling these lessons together, successful innovation requires three things:

1. Hunger for the market – the drive to win and serve customers better than anyone else.
2. Closeness to the customer – embedding innovators where real needs are discovered.
3. Support for risk-taking – rewarding creativity and tolerating the messiness of trial and error.

Companies that embody these principles are the ones that adapt, thrive, and outlast their competitors. Those that ignore them risk being left behind.