Today, the number of impact-driven startups and scale-ups with noble intentions of improving the planet are plentiful, as are their ideas for clean alternatives to dirty technologies and innovations. But unfortunately, many of these ideas are simply reinventing what already exists, whether it be a product, supply chain or distribution system. Moreover, many are trying to reinvent all those things in parallel.

These attempts sometimes fail to consider what competitors are already doing out there and don’t take a holistic view of the existing industry. The risk is that energy and money is wasted on piecemeal solutions to bigger systemic problems.

Have you read?

How to make the UN Sustainable Development Goals a reality within 8 years

These are the 4 steps we need to make economic growth sustainable, resilient and inclusive

The innovation fallacy

In the previous century, before the rise of venture capital (VC), such ambitions died quickly and for good reasons: they were too expensive and complicated to be realistic. Fast forward a couple of decades and the rise of VC and more accessible cash is only partly why things have changed. The whole perception of innovation and what constitutes success has been skewed to a new, bizarre reality.

To list but a few of the odd characteristics of this innovation universe:

Innovation has become synonymous with “disruption,” replacing old ideas with something different. Cutting ties with past concepts works well when the old solution is broken but if it isn’t, it will lead to market failure.

As it manifests today, innovation feeds an assumption that “old” means “broken”. It overlooks how traditional solutions are often part of an intricate web of habits, relationships, infrastructure, culture and regulatory frameworks. To increase impact, some of these old systems may need upgrading but not total reinvention so readily called for by industry outsiders.

New benchmarks are mostly drawn from the digital world, which, albeit huge, is a relatively young and immature domain compared to laundry detergents or rubber tyres, for example. Metrics from digital innovation drive unrealistic expectations mostly related to the speed of scaling product creation, customer acquisition and the business model. However, bits and bytes do not scale like the kilojoules and kilograms required to improve sustainability and impact.

Success and failure have become intertwined in a zero-sum game, rather than failures guiding an innovative development towards success. Previously, one pot of money would fund a team by developing an innovative solution; now, that pot is split across parallel teams, hoping one will succeed at the expense of other initiatives. Innovation, once built on trial and error, has now been gamified into a lottery.

These points aggregate into an ugly implication at the early stages of innovation and developing new businesses: investment trumps revenue. Ask any contemporary startup founder about success and they will talk about how much money they have raised. Paying customers and their revenue become secondary, relegated to a problem for the future. This handicap runs deep in many young company cultures, which has become a problem for the present as investors change their stance towards cash flow.

Read more @WorldEconomicForum