Innovation washing is a term for companies which are not innovative but promote themselves as such, just like green washing.
Only real innovation is open innovation – it includes many stakeholders in the process and is for many stakeholders. A lot of what is called innovation is not made for the majority of the stakeholders and is not real innovation. Figuring out a way to have less employees without adding value to customers is not an innovation. Changing the lives of millions of customers for better is an innovation.
Companies that improve their internal efficiency without providing value to customers are usually the biggest innovation washers. They promote their brands as innovative, use the word innovation excessively, but their products are stagnating. In some cases, like with BMW, VW, and Daimler, they block innovation.
If we want improvement it is important to tell the difference between real innovation and innovation washing. Companies that really innovate offer products to customers which make a real and obvious difference.