Episode 68: Death by Innovation Theatre w/Søren Nielsen

10 August, 2021 / Host: MAGNUS BILLGREN

Scaling Lessons from Ernit's Demise

Scaling a product is a daunting task, especially when faced with overwhelming customer demand and the risk of losing direction and speed. Søren Nielsen, the founder of fintech startup Ernit, experienced this firsthand when his innovative product gained widespread popularity but struggled to scale effectively. In this episode of The Productbeats Show, Nielsen shared his insights on the challenges of scaling and the dangers of falling into the trap of innovation theatre. This article delves into Nielsen's experiences and the valuable lessons he learned along the way.

The Journey of Ernit

Ernit was born out of the desire to teach children about money in a digital age. Nielsen and his co-founders developed a physical piggy bank connected to a real-time bank account and an app. The product garnered attention, winning awards, securing funding, and engaging in pilot programs with major banks. However, despite the initial success, Ernit eventually had to shut down. Nielsen reflects on the journey and examines what went wrong.

The Pitfalls of Innovation Islands

Nielsen highlights the concept of "innovation islands," which refer to isolated pockets of innovation within larger enterprises. These islands often have a distinct culture, separate from the company's mainstream operations. While they may initially seem exciting and promising, integrating these islands into the core business can pose significant challenges. Nielsen shares his experiences with encountering innovation islands and the difficulties they present when trying to align with the broader organization.

The Importance of Business Cases

One of the crucial lessons learned from Ernit's journey is the significance of developing solid business cases. Nielsen emphasizes the need to push for a business-focused approach, as it enables better communication with internal stakeholders and increases the chances of prioritization within the organization. He reflects on how Ernit's initial hesitation in creating business cases delayed progress and ultimately hindered their ability to navigate the corporate landscape effectively.

The Perils of Overdoing Pilots

Nielsen admits that Ernit fell into the trap of excessively pursuing pilot programs. While pilots can be useful for testing and gathering feedback, an overemphasis on pilots can delay the product's market entry and create a sense of perpetually being in a testing phase. Ernit engaged in multiple pilots, each with different key performance indicators (KPIs), resulting in a prolonged decision-making process. Nielsen shares his insights on the pitfalls of excessive pilot programs and the importance of knowing when to move beyond them.

Lessons Learned and Future Outlook

In his book, "Death by Innovation Theater: 10 Corporate Innovation Lessons Learned by a Startup," Nielsen delves deeper into the challenges faced by Ernit and provides a comprehensive guide on how to avoid falling into the innovation theater trap. The book offers valuable insights and practical advice for product managers and entrepreneurs navigating the complex landscape of scaling and corporate collaboration.


  • Beware of innovation theatre: Don't get caught up in the hype of customer love and focus on scalable solutions.
  • Foster customer empowerment: Encourage early customers to identify their own business cases to ensure long-term viability.
  • Approach customized pilots strategically: Challenge the need for excessive customization and evaluate the impact on scalability before committing resources.

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