By Ignacio Margulies — Former CPO at Paisanos
There’s a statistic that’s particularly uncomfortable, especially in Latin America: 97 out of every 100 large companies do not follow good innovation practices.
This isn’t an anecdote. It’s a warning sign.
The consequence is clear: organizations that fail to innovate systematically face a real risk of disappearing. And we’re not talking about fragile startups or experimental projects, but about companies that were once leaders in their industries.
As you read this, a familiar thought may come up: “This can’t happen to my company, we’ve been leading the market for years.”
That’s where the good news and the bad news come in.
When size stops being a guarantee
The bad news is blunt. Fifty-two percent of the companies that were part of the S&P 500 in the year 2000 no longer exist.
More than half of the world’s most important companies disappeared in just over two decades.
What’s more, corporate life expectancy is shrinking at an accelerating pace: it dropped from 33 years in 1964 to 24 years in 2016, and is expected to fall to just 12 years by 2027.
Short-term risk may seem low, but long-term risk is extremely high.
The good news is that this fate is not inevitable. Companies that adopt solid innovation practices significantly increase their chances of survival and differentiation. Studies by McKinsey show that organizations that innovated even during crisis contexts achieved returns up to 30% higher than those that didn’t.
Innovation isn’t optional, it’s defensive
The key question isn’t whether to innovate, but how to do it consistently.
To answer that, it’s useful to introduce a core concept from the startup and venture capital world: the MOAT.
Originally, a moat was the ditch that protected medieval castles. In business terms, it represents the competitive advantage a company builds to defend itself against competitors, market shifts, macroeconomic forces, and new technologies.
Startups are obsessed with building their MOAT because without it, they don’t survive.
Established companies, on the other hand, often fall into a comfort zone: working models, predictable revenue, and seemingly low uncertainty. The problem is that this comfort tends to numb the ability to anticipate deep change.
Digital transformation is no longer enough
For years, talking about digital transformation was synonymous with innovation. Today, it isn’t.
Digitization is a minimum standard, not a differentiator.
If we want to create or expand our MOAT, history shows a clear pattern: continuous innovation through the design and testing of new business models, even while the current core is still performing well.
Failing to do so is a silent bet that the context won’t change. And history shows that it always does.
The three pillars of innovation that actually works
To innovate systematically (not sporadically), companies need to work across three inseparable pillars.
1. A balanced innovation portfolio
Having isolated ideas isn’t enough. Organizations need to build a diversified portfolio that combines efficiency, maintenance, and disruptive initiatives.
A classic example is Amazon.
- Efficiency initiatives improve margins (like logistics automation).
- Maintenance initiatives extend the existing model (like Kindle).
- Disruptive initiatives create entirely new businesses: Amazon Web Services represents roughly 17% of revenue, but more than 30% of profitability.
The most common mistake in large companies is focusing only on efficiency. It improves short-term numbers, but does not protect against long-term extinction risk.
2. An innovation program that delivers results
Many organizations confuse activity with impact. Running workshops, labs, or events doesn’t guarantee results.
A useful framework developed by Strategyzer classifies initiatives into four types:
- innovation theater,
- culture builders,
- value engines,
- transformation catalysts.
The real goal is to reach the last one: initiatives that generate financial results while simultaneously transforming internal culture.
At Paisanos, we often map all existing activities to decide what to stop, what to scale, and what to add. Innovating also means deciding what to stop doing.
3. A culture that enables innovation
One of the most common mistakes is assuming that innovation means “breaking the rules.”
If 92% of new ideas fail and only those who challenge the system are rewarded, sustained innovation becomes statistically impossible.
The alternative is to build a culture where innovation is part of the rules, not the exception.
That means identifying cultural blockers, designing enablers, and (above all) having real commitment from the C-level. Without executive sponsorship, results don’t materialize.
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Innovating in LATAM: a real opportunity
At Paisanos, we believe innovation is a key lever for transforming Latin America.
That’s why, in addition to supporting companies in implementing innovation programs, we actively work on generating applied knowledge around topics such as:
- ambidextrous organizations,
- return vs. performance in innovation portfolios,
- metrics for financial teams,
- innovation sprints to validate new businesses.
Innovation isn’t a trend. It’s a structural decision about how to survive and grow in an increasingly uncertain context.
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To better understand how to innovate without falling into “innovation theater”
When corporate innovation comes up, a few recurring questions tend to surface. Here are the most common ones.
Does innovation mean taking unnecessary risks?
No. Structured innovation reduces long-term risk by allowing companies to experiment in controlled environments before the market forces change upon them.
Is innovation only for startups?
No. Established companies have more resources, data, and capabilities. The challenge is activating those assets without getting trapped by inertia.
Is digital transformation still innovation?
Not today. It’s a baseline requirement. Innovation begins when new business models are designed and tested, not when existing ones are simply digitized.
Can the impact of innovation be measured?
Yes. There are clear metrics and frameworks to evaluate portfolios, returns, and learning, especially when innovation is managed as a system.
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