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Innovation is a challenging business.  Success rates for new initiatives are worse than batting averages for pitchers.  Yet with the odds against them CEO’s and CTO’s recognize innovation is their company’s lifeblood.

So what can you do to improve your batting average and success?  Innovation has many moving parts, and at its core requires a committed leadership.  Functions across the organization, including technical and commercial, have essential roles in bringing innovation to market.  Mike Vance, the former creative director for Disney, had a simple and clear definition for innovation:  he said “Innovation is the making of the new and the remaking of the old in a new way.”  Further my past P&G experiences underscore that a successful initiative must deliver for the consumer.

• Success varies significantly by the different types of innovation companies take to market.  For instance, innovation fits into three broad types: commercial, sustaining and disruptive.  Commercial innovation usually doesn’t involve product or package change and is frequently based on new consumer or shopper insights. P&G’s Bounty micro-wave safe promotion grew the brand based on understanding consumers were concerned about food contact; and that Bounty had the ability to absorb grease when consumers cooked bacon in the their microwave.

• Sustaining innovation is changing a current product or package — usually along a vector where the product already has a performance advantage the “er” (whiter, faster, softer) initiatives.  It also includes cost innovation which uses or produces products more efficiently.  The vast majority of innovations are sustaining.  Better cleaning Tide initiatives will always be around, but consumer insights can also lead to products like Tide Mountain Spring scent which capitalized on the learning that a segment of consumers were scent seekers who liked much more intense and lasting scents in their products.

• Disruptive innovation finally reinvents existing products and categories.   Swifter changed how consumers cleaned their floors.  It disrupted mops and pails—they were retired to the closet.  However, it required new technologies, new manufacturing and a new company perspective on what the business included.

• Long term success rates for businesses and especially brands can improve with a portfolio of innovation.  Just like a team can’t rely on home runs but needs a mix of doubles, bunt singles and sacrifice flies.  A portfolio lets leadership keep project learning ahead of project investment.  Typically sustaining innovation delivers solid incremental sales for business.  Disruptive innovation has the ability to deliver significant sales growth.  It also comes with the most risk and lowest success rate—home run leaders often lead the league in strike outs as well.  In fact I have often heard leadership say they’d rather buy a lottery ticket than invest in disruptive innovation.  Yet, when done well, a disruptive innovation grounded in deep consumer insight re-invigorates business. Market leading brands always have their roots in disruption.  Always fem-care brand became a global leader built on Dri-weave, a unique top sheet and “wings” construction.  Crest revolutionized toothpaste with its “look mom no cavities” product and claim—and re-revolutionized it with unique methods of tooth whitening.

• Improving success requires an active culture of learning and measuring.   Most companies have an innovation portfolio which they regularly review.  They have tools to track innovation such as stage gate processes and pre-market measures which predict consumer and retailer acceptance.  They also track new sales, financial measures such as ROI, benchmarking and R&D spending.

These same companies also strive to get better and more productive by developing organizations which do more with less.  Organizations which can adapt to new regulations, sourcing challenges and the ever present cost and competitive pressures will win.

Still, remember there are a lot of moving parts.  Achieving and delivering this balance in a timely fashion be significantly enhanced by leveraging an experienced innovation practitioner—much like a batting coach.  Someone who can step outside the activity and recognize the patterns of the good, the bad and the ugly in innovation processes.

Here’s a brief case study from earlier this year:

Background:  Execs’ at an industry leading food company were frustrated with the pace and impact of their innovations.  Their CEO and CTO felt they were too often late with new initiatives.  Increasingly some of their distribution and retailing partners were looking less to them and more to their competitors for category development.   In the last two years they had invested heavily in new R&D facilities, consumer insight rooms and a new state of the art stage gate process.  They had increased their emphasis on open innovation.  On paper they had a robust innovation portfolio; more than sufficient to deliver their business objectives.  And yet their initiatives were increasingly producing lower and lower net new sales and overall company sales growth was flat.

The CEO and CTO brought in our innovation help to analyze their innovation process.  We worked a total of six days, spread over four weeks critically assessing their innovation approach, tools and culture.  Essential to this assessment was an in-depth set of interviews of cross functional leadership and key outside suppliers.

Insight:  While this work identified several opportunities for improving their innovation approach, one cultural aspect jumped out.  Key leadership had one behavior which had unknowingly become counter productive.  As part of their new stage gate process they reviewed top projects and priorities monthly.  Frequently as a result of these portfolio reviews timing and priorities would be adjusted. However, unknown to them their key suppler had adopted a “defensive behavior” to these changes.  The supplier would wait until the same priority was given to the project for a couple of months before seriously staffing it.  The supplier said this prevented re-work and made them more cost efficient—which the innovation leadership valued.  However it dramatically slowed down time to the market for the innovation team.

Ironically, this frequency of changing priorities was not a problem for the company before they got the new stage gate process.  Historically they had only reviewed the portfolio once every six months because data was difficult to get.  Priority changes had not been tracked as robustly or shared with suppliers.  Once leadership saw the impact of their behavior they began to manage the change process more cautiously and to share changes more explicitly with the entire supply change.   Teams and suppliers were more able to predict change.  Early results show faster and more impactful initiatives.

Net: Innovation, especially disruptive innovation, will always be challenging.  However, insights and assessments from experienced innovation leaders can improve your on-base percentage.  Which anyone who has seen “Money Ball” knows is key to winning.

The author, Mike Jensen, was one of the most effective R&D leaders during his previous 34 year career with P&G.  Mike had Senior R&D roles in Global R&D, and has a strong background in New Business development as well as in acquisitions and divestitures. 

Contact Information
Call or e-mail Judd Weis, CCC President/CEO, at (513) 516-0539 or jweis@cincconsult.com or Mike Jensen at mjensen@cincconsult.com

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