Motley Fool Money — "How to Spot Winning Innovation"

Date: February 22, 2026
Host: The Motley Fool
Guest: Lorraine Marchand, Author, Innovation Consultant, and Corporate Leader

Episode Overview

This episode explores the fundamental principles that help companies foster and sustain innovation, featuring Lorraine Marchand, author of No Fear, No Failure: Five Principles for Sustaining Growth Through Innovation. Lorraine draws on three decades of experience and 120 executive interviews to illuminate how both investors and organizations can spot, support, and benefit from genuine innovation — and why reframing failure is at the heart of enduring success.

Key Discussion Points & Insights

The Five Cs of Innovation (02:37–08:17)

Lorraine introduces the "Five Cs" model, the framework at the core of her book for diagnosing and enabling innovation in organizations:

• Culture
  • The most effective organizations reframe failure as learning.
  • “Try, fail, learn” is a mantra for leaders in innovative environments.
  • Creating psychological safety and encouraging new ideas is critical.
• Chance
  • Investing in risk is essential; Lorraine cites Google's 70:20:10 rule as a proven approach.
  • “That 10% invested in blue-sky innovation led to 70% of the company’s growth five years later.” (03:08)
  • Investing not just financially but also in talent and training is key.
• Change
  • Leading organizations proactively manage and embrace change.
  • Practical strategies include “delete something first” before adding more to teams’ plates and avoiding crisis-driven change.
  • Legacy companies like Ecolab and Veolia thrive because of this capacity.
• Customer First
  • Real innovation revolves around deep engagement with customer needs.
  • Inside-out thinking (assuming you know what’s best) causes companies to lose their edge.
  • “One of the first telltale external signs … is when we see that they are failing to listen to the customer.” (08:54)
• Collaboration
  • Collaboration has moved from a ‘nice-to-have’ behavioral trait to a strategic imperative.
  • Integrating products, services, and functions around unified goals unleashes breakout growth.

“When you unite product with services, with functions, and with other stakeholders in the organization, all around a common set of strategic objectives … you can really achieve breakout growth.”
— Lorraine Marchand (07:34)

Legacy Companies’ Struggle – Which ‘C’ Is Hardest? (08:17–09:46)

• Customer First is the most externally visible for investors; missing customer signals is often the first sign of decline (e.g., Blockbuster, Kodak).
• Culture is “a big one,” but customer focus is most observable and often neglected.

Managing Risk: Strategic vs. Reckless (10:48–12:57)

• Many organizations fail by treating all failure as negative, rather than learning opportunities.
• Strategic Risk: Taking calculated bets on new products, markets, or technologies to drive top-line growth, knowing not all will succeed.
• Reckless Risk: Operational failures (e.g. missed deliveries, poor customer service) that harm efficiency or reputation.
• Retail investors can apply these lessons: differentiate between learning experiments and operational missteps.

“Strategic failure is when you take a chance … on a new product and we’re not exactly sure whether it is going to resonate with customers, but we have to give it a try.”
— Lorraine Marchand (11:48)

A Cautionary Tale: IBM Watson Health (12:57–15:56)

• IBM Watson Health overinvested in a single use-case partnership with MD Anderson (one customer, $62M lost).
• Key mistake: not understanding customer processes, overestimating technological readiness, and failing to confirm scalable market demand.
• “You have to have at least 100 different customer interviews in order to confirm that there's a market.” (14:42)
• Emphasizes the importance of broad, evidence-driven customer research and avoiding one-customer “echo chambers.”

Examples of Innovation Success: Nvidia (16:17–17:15)

• Nvidia's evolution with customers and customer-centric use cases has positioned it as a pivotal player in the AI infrastructure space.
• The company “invented, along with, besides, through, and with their customer” — a model for sustained innovation.

Intelligent Failure: Designing for Learning (18:12–21:16)

• Lorraine advocates designing “intelligent failures”: small, deliberate experiments aimed at maximum learning, not just financial gain.
• Learning objectives should accompany financial metrics to diversify risk and grow organizational knowledge.
• Ecolab Example: Field engineers observed customer pain points during COVID (slow-drying sanitizers), leading to rapid innovation, customer satisfaction, and scalable growth.

“If we’re not just focused on the binary outcome … but we’re allowing ourselves to say, well, we’re going to learn a lot about a new market … you can bring all those findings back into the company and they might lead you to pivot and move in new directions.”
— Lorraine Marchand (19:32)

Foresight: Trends Shaping the Next 3–5 Years (21:16–22:52)

• Excitement for innovation in space technology:
  • Efficiency, resource harvesting, logistics, drones, and anti-human trafficking surveillance.
• Quantum Computing:
  • Critical for advances in genomics, data analysis, and faster, more accurate drug discovery.

Notable Quotes & Memorable Moments

• On Culture:
  “Organizations that are most effective in growing ... reframe failure as learning.”
  – Lorraine Marchand (00:05 & 02:37)

• On Investing in Blue-Sky Ideas:
  “The 10% that the company invested in blue-sky ... resulted in 70% of the company’s growth five years later.”
  – Lorraine Marchand (03:08)

• On Customer Focus:
  “One of the first telltale external signs ... is when we see that they are failing to listen to the customer.”
  – Lorraine Marchand (08:54)

• On Strategic vs. Reckless Risk:
  “Reckless ... is not the kind of failure that we’re going to celebrate. ... Strategic failure is when you take a chance on a new market or ... product.”
  – Lorraine Marchand (11:36–11:48)

• On the Danger of One-Customer Solutions:
  “I don’t believe personally that developing a tool or solution with just one customer ... is ever going to be enough.”
  – Lorraine Marchand (15:03)

• On Learning from Failure:
  “It’s the right kind of wrong because we learn from it.”
  – Lorraine Marchand (18:37)

Timestamps for Key Segments

• Intro to Lorraine Marchand & Episode Theme — 00:05–02:01
• The Five Cs of Innovation — 02:37–08:17
• Which ‘C’ Legacy Companies Miss Most — 08:17–09:46
• Strategic vs. Reckless Risk Management — 10:48–12:57
• IBM Watson Health Cautionary Tale — 12:57–15:56
• Innovation Success Story: Nvidia — 16:17–17:15
• Intelligent Failure & Ecolab Example — 18:12–21:16
• Future Innovation Trends — 21:16–22:52

Summary Takeaway

Lorraine Marchand reframes innovation as a disciplined, evidence-driven process centered on learning — not just technical breakthroughs. For both companies and investors, the best indicators of future growth are a focus on culture, strategic experiments, true customer understanding, broad collaboration, and willingness to learn from (the right kind of) failure. Businesses ignoring these principles risk becoming the next cautionary tale, not the next Nvidia.

Recommended Action for Investors:
Spot winning innovation by looking for companies practicing the Five Cs, seeking out intelligent failure, and maintaining a real connection to customers and change — these are the firms equipped for lasting growth.