#187 from R&D
Innovator Volume 4, Number 11
Your Organization Practice Strategic Innovation?
Associates is a strategic innovation consulting firm with offices
in San Francisco, California and Cambridge, Massachusetts. Bob Krinsky and Dan Kamas are, respectively, partner and
associate in the San Francisco office (phone 415-292-2380).
like "quality," has become an overused, catchall
buzzword of the 90’s. In
most cases, the word is used to mean "we're trying something
new" or "we're trying to take our thinking out of the
box.” Although this
widespread spirit of experimentation is laudable, the meaning of
innovation has, unfortunately, become diluted and, in many cases,
meaningless, as a result.
A scan of annual
reports from the Fortune 100 companies provides an interesting
perspective on this. While
virtually all of these organizations extol their commitment to
"innovation" and creative pursuit of "new
opportunities," only 19 managed to produce revenue gains in
excess of 15 percent and only 14 in excess of 20 percent.
In fact, 50% of the Fortune 100 experienced losses or
revenue gains of less than 5 percent. So, despite a nearly universal commitment to innovation, it
appears that only a few companies are doing it right.
Associates' work over the past decade with many Fortune 100
companies has led to the conclusion that the key factor that
separates successful companies from mediocre performers is the
extent to which these organizations have a disciplined approach to
the practice of innovation and identification of new business
companies are those that are dedicated to the practice and
implementation of strategic innovation, the type of approach that
yields quantum leaps into new markets, not incremental
steps within existing industries.
innovation is the process of creating new industries, opening new
markets, and inventing new categories.
It’s the business of envisioning your future and
innovating your way there. R&D
has to play a critical role.
How committed is
your organization to the practice of strategic innovation?
Six important things to look for are:
industry foresight, customer insight, an enabling process,
future-driven culture, growth-motivated senior management, and
corporate chameleons. We’ll
address each of these.
How sophisticated is management's understanding of its
markets and industry?
Do the key players possess an in-depth understanding of
what their future will look like; not only in the 3-5 year time
frame, but 5-10 years into the future?
Does management share a corporate strategic vision that is
compelling and competitively distinctive?
use traditional tools, such as market research, forecasting and
competitor analysis, which use the past and present to try to
predict the future. Industry
foresight, by contrast, seeks to leverage emerging trends,
industry expertise and informed speculation into a view of the
future that yields new opportunities.
companies that are driving the fastest-growing segments within
their industries: Ford in sport-utility vehicles; DSS and RCA in
direct television; Motorola in pagers and wireless telephones.
Industry foresight enabled them to understand the potential
of these segments before competitors and helped them develop
future-directed products. The
opportunity is to emulate those organizations that are presently
laying the groundwork for tomorrow's growth; companies that will
dominate future industries such as digital photography,
"smart" paper, and nutraceuticals, new families of
How creative is your understanding your customers and
Do you develop products and services around the articulated
and unarticulated needs of
Is the notion of "customer intimacy" built into
all aspects of product development, R&D and marketing?
consumer research methods only identify articulated customer
behaviors and needs. Innovative
companies, however, strive for customer insights, the underlying
customer motivations that reveal unarticulated needs and drive
ground-breaking new products.
Samsonite, we used a series of projective techniques to gain
insight into why luggage is rarely thrown away.
It was revealed that people view their luggage as a much
more than a durable container.
Many consumers have a strong emotional connection to their
luggage. It is a
treasure chest chock full of fond memories, travel adventures and
other life journeys away from home.
as a way of gathering insights, one R&D team designing new
automobiles studied people grocery shopping, then followed them to
the parking lot to observe the kinds of cars that they drove. Both the luggage and auto examples provided insights with
implications across many facets of the respective businesses.
Customer insights such as these provided R&D teams with
valuable direction in new product design and development.
Is there a process in place to enable the organization to
successfully practice strategic innovation?
Does your company commit dedicated resources to the
practice of strategic innovation?
these goals is important, but successful organizations must have
an organized process that creates high levels of alignment around
future opportunities, a critical enabler of strategic innovation.
Our work with a
Fortune 100 materials company resulted in a corporate-wide process
dedicated to the practice of strategic innovation. It harnesses talent and thinking from all departments and
levels of the company to consider the future aggressively and to
exploit growth opportunities preemptively.
Commitment to this effort is so strong that it’s
co-sponsored by the corporate directors of R&D and marketing.
Is the culture of your organization directed toward the
Do managers think aggressively about how to build and
embrace capabilities that they don’t currently possess?
Does your organization support innovation at all levels of
Do managers aggressively challenge assumptions and
boundaries of their current business?
environment can also reveal a great deal about your
organization’s culture. Hewlett-Packard's
worldwide strategy of open cubicle spaces for all employees
encourages the type of collaboration and sharing that makes
innovation possible. Companies
should use environment to their advantage, creating the right mix
of openness and efficiency to foster innovative thinking and
What do Johnson & Johnson, 3M, Motorola and
Hewlett-Packard have in common?
They are all
decentralized organizations in which senior managers are actively
involved in the pursuit of strategic innovation and new business
see themselves as integral members of the teams that are working
to create the future. Rubbermaid even goes so far as to link executive compensation
to managers' abilities to innovate and create new markets and
should also consider the track record of senior management.
Look for careers that show a history of strategic
innovation and growth rather than a path of cost-cutting and
Does your company have a proven ability to reinvent itself
to meet the changing demands of markets and consumers?
What percentage of current revenues are driven by products
or services less than five years old?
Does your company have an explicit goal of achieving a
specified percentage of future revenue growth from product lines
that don’t yet exist?
companies have the proven ability to evolve over time, shaping
their strategic and operating principles to drive future
Hewlett-Packard's heritage in test and measurement equipment,
their shift to hand-held calculators, and their present dominance
in laser printers. Black
and Decker successfully expanded from the garage to the kitchen.
Banana Republic recast itself from the "safari
wear" of the 1980s to the stylish look of their clothes
certain, and those companies that can flex their organizational
muscles in adaptive and responsive ways will be the market leaders
of the future.
considering these six factors and embracing a growth-driven
direction offers you, in R&D, the opportunity to direct
effectively the efforts of your organization.
It competitively positions your company in the marketplace
and sends a clear signal to your employees, stockholders and
analysts that your organization is committed to leading your
industry and defining, rather than following, the future.