Unlocking Growth in New Markets: Why Most Corporate Innovation Misses the Mark
Unlocking Growth in New Markets: Why Most Corporate Innovation Misses the Mark

Growth Strategy / Innovation / International Expansion
04. July, 2025
The Growth Imperative and Its Hidden Risks
For established companies, the pursuit of sustainable growth is a constant challenge. As core markets mature and competitive pressures intensify, business leaders are compelled to seek new opportunities beyond their traditional boundaries. Expanding into new markets, customer segments, or technologies—what many call “outside-the-core innovation”—is now a strategic necessity for organizations aiming to remain relevant and competitive.
However, the failure rate for such initiatives remains stubbornly high. Studies show that up to 90% of startups and a significant percentage of corporate innovation projects fail to achieve their intended outcomes. While the risks of entering unfamiliar territory are well recognized, the underlying causes of failure are often misunderstood. Contrary to popular belief, the greatest threat to outside-the-core innovation is not the novelty of the market or the complexity of the technology, but the hidden, untested assumptions that teams bring from their core business.
Why Most Outside-the-Core Innovation Fails
A common misconception among executives is that the further a project moves from the core business, the higher its risk of failure. While distance from the core does introduce new challenges, research and practical experience reveal a more nuanced reality. The most significant risks arise when organizations fail to recognize and rigorously test the assumptions embedded in their business models—especially those that feel routine or “safe.” In-depth case studies across multiple industries have shown that even projects perceived as “high risk” due to their distance from the core can succeed if teams systematically surface and adapt their assumptions. Conversely, projects that seem only a step or two away from the core often falter when teams underestimate the degree of change required in areas such as distribution channels, cost structure, unit margins, and operational velocity.
The Waterfall Effect of Faulty Assumptions
Hidden assumptions can create a cascade of negative effects across the business model. For example, assuming that existing sales channels will work for a new product can lead to misaligned pricing strategies, unsustainable cost structures, and ultimately, poor market adoption. Similarly, projecting legacy overhead costs onto new ventures can lock projects into uncompetitive economics before they even launch. These “waterfall effects” are rarely isolated. One false assumption can undermine multiple aspects of the business, compounding risk and making recovery difficult. The most successful organizations are those that recognize the interconnectedness of business model components and proactively test their assumptions at every stage.
The Role of Organizational Learning and Ambidextrous Leadership
To overcome the risks of hidden assumptions, organizations must embed explicit learning and adaptation into their innovation processes. This approach involves starting new ventures at a manageable scale, growing them at a pace determined by validated learning, and allowing time for false or hidden assumptions to surface and be addressed. Moreover, outside-the-core innovation demands ambidextrous leadership. Senior executives must be able to manage established businesses with discipline and efficiency while simultaneously fostering an environment of experimentation and learning for new initiatives. This dual capability is essential for navigating the inevitable setbacks and pivots that characterize successful innovation efforts.
Practical Strategies for Success in New Markets
- Systematically Challenge Assumptions
- Use structured frameworks, such as an enhanced Business Model Canvas, to map out every component of the new business. Pay particular attention to areas that seem routine, such as channels, cost structure, margins, and operational velocity.
- Treat every assumption as a hypothesis to be tested, not a fact to be accepted.
- Start Small and Scale with Learning
- Launch new initiatives at a scale that allows for rapid experimentation and adaptation.
- Allow the pace of growth to be dictated by the rate at which key assumptions are validated or refuted.
- Foster Ambidextrous Leadership
- Identify and empower leaders who can balance operational excellence in the core business with agility and openness in new ventures.
- Ensure that senior management is prepared to provide persistent support, even when early results are disappointing.
- Embed Organizational Learning
- Create feedback loops that capture lessons from both successes and failures.
- Encourage teams to view setbacks as opportunities for learning and improvement, not just as risks to be avoided.
- Prioritize Adaptation Over Perfection
- Recognize that no business model is perfect from the outset. The ability to adapt quickly to new information is a key differentiator between successful and unsuccessful projects.
- Encourage a culture where course correction is seen as a strength, not a weakness.
Turning Failure into Opportunity
Innovation failure is not necessarily a negative outcome. In fact, some of the most valuable organizational learning comes from projects that do not meet their original objectives. By treating failure as a source of insight rather than a setback, companies can refine their business models, improve their innovation capabilities, and ultimately drive better organizational performance.
Conclusion: Building a Resilient Growth Engine
Sustainable growth in new markets is within reach for organizations willing to challenge their own thinking. The real risk in outside-the-core innovation lies not in the unfamiliarity of the market, but in the comfort of old assumptions. By systematically surfacing, testing, and adapting these assumptions, leaders can transform high-risk ventures into engines of sustainable growth.
Unlock Your Next Level of Sustainable Growth
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Inna Hüessmanns, MBA
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