successful in BI have an entire management system in tune with
that concept. In addition, Breakthrough Innovation itself requires
three distinct competencies:
• Discovery. Creating and identifying opportunities that may
have major impact in the marketplace, through the delivery of
new-to-the-world performance features or order-of-magnitude
improvement in known features.
• Incubation. Experimentation with technology and business
concepts/models simultaneously to arrive at a demonstrated
model of a new business that brings breakthrough value to the
market and consequently to the firm in a manner that aligns
with the company’s strategic vision of its future.
• Acceleration. Scale nascent businesses so they can compete
with mature businesses.
Each of these capability sets requires the innovation manage-
ment system be played out a bit differently. For example, metrics
for success in discovery will differ dramatically from metrics for
acceleration. And clearly the type of talent needed for incubation,
which requires learning and redirection, differs from skills for
discovering breakthrough opportunities (deep scientific expertise
plus wildly creative imagination) or for accelerating a business
(focused problem solving, responsiveness).
The IBM Horizons of Growth model
IBM plays this out very well, by using the Horizons of Growth
model4. Horizon 1 (H1) projects are near-term innovations—
incre-mental builds on current
platforms, typically in
response to the voice of
the customer. Horizon
3 (H3) opportunities, in
contrast, are the business-es in IBM’s future that
need investment and de-velopment now. Horizon
2 (H2) projects, between
“Innovation, to be successful
and sustained, must be
treated as a business
discipline in its own right.”
the other two, are those for whom the business model is becoming
much clearer, but that need serious investment to scale up. So IBM’s
discovery capability takes place within its highly revered research
labs and through the EBO groups’ idea jams and other methods for
opportunity recognition. H3s emanate from those discovery activities
and are worked to clarify the strategic approach that would work best,
by trying multiple experiments in many application domains, with
new partners and business models. H2s are those businesses that have
showed promise in the H3 portfolio and have experienced technical
success and a demonstrated market enthusiasm. H1s are the ongoing
new product development initiatives that are part and parcel of the
businesses’ traditional systems. Other companies in our study were
converging on somewhat similar approaches.
We have arrived at the conclusion that innovation, to be successful
and sustained, must be treated as a business discipline in its own
right. We like to draw the parallel with the marketing discipline. In
the 1940s marketing was rather underdeveloped in most compa-nies. There was a sales force but not much else. No branding, little
advertising, certainly no market research or market intelligence.
Today the marketing function is a sophisticated machine, report-ing to a Chief Marketing Officer in many companies, whose job is
to ensure that the marketing agenda for the company is clarified,
well executed, and not subjugated to a lower priority than other
functions when resources are tight. It comprises many activities
and builds a sustainable set of capabilities that the company draws
upon continuously. A company’s marketing budget may increase
and decrease as economic and competitive conditions warrant, but
it is never snuffed out completely.
Yet that has not been the case with innovation. New venture
divisions or business innovation groups are initiated, but after
several years they are often defunded completely, their portfolios,
people, and capabilities scattered to the wind. How can we expect
to develop expertise in BI under such conditions?
People must be in tune with innovation
One of the most interesting insights that arose in our last study,
in which we examined companies with a declared strategic intent to
build or improve their capability for Breakthrough Innovation, is that,
of all the elements of a management system, the people management
aspect is one of the most crucial and most challenging. Breakthrough
Innovation project leaders as well as BI-related staff members voice
frustrations at the risks of being involved in projects with a high
propensity of failure. Take a look at the box on page 14 for quotes
from executives involved with Breakthrough Innovation.
So while we are seeing an increasing number of new innova-
tion roles emerging, career paths are not yet apparent. Most of
these roles are treated as rotations for high potential leaders on
their own development path to general management. That is fine,
but if there is no way to retain people in an innovation function,
how will organizations develop the expertise in innovation they so
desperately crave? Just as marketing has become a stable part of
the organization, with career paths within it, so too must innovation
evolve. Traditionally we see that companies believe project leaders
can be promoted as the businesses that they start succeed and ramp
up. The promised reward is that they will one day become a general
manager of the project they champion. But how does this make any
sense? Given the risk and uncertainty inherent in the world of BI,
an individual may initiate a number of projects that go nowhere
before launching a success. And the failure of the venture may
have nothing to do with the individual’s capability! Additionally,
and perhaps more importantly, if the skills required for discovery,
incubation, and acceleration differ as dramatically as we suggest
they do, why then would we expect that promotion with a project
from one phase to the next would be considered a reward or would
be appropriate for the fledgling business? Venture capitalists rarely
leave the founder in charge of a growing start-up. Each phase of a
business’ life requires a different set of leadership skills.
So…we are launching the next phase of our research program.
How are companies addressing this challenge? What are the career
paths that work best to institutionalize an innovation function, so
that the people in it are rewarded well for their distinctive contri-
butions and so that the organization benefits from an increase in
expertise rather than depending on random acts of championing
behavior? Stay tuned!
Endnotes
1. Kim and Mauborgne, Blue Ocean Strategy.
2. Fast, 1978.
3. Radical Innovation: How Mature Firms can Outsmart Upstarts,
HBS Press 2000, and Grabbing Lightning: Building a Capability for
Breakthrough Innovation, Jossey Bass, 2008.
4. Baghai, Medrad; Steve Coley, and David White: The Alchemy of
Growth.
