Innovation expert and Chief Consulting Officer, Colin Palombo, addressed the Annual Innovation Conference at the University of Michigan, Ann Arbor on November 21, 2019. The event, hosted by Planisware, featured the Innovation Management Panel, which also included R&D Leaders from Ford, GM, Perrigo, Stryker, Tenneco and Whirlpool.
Business leaders in search of top line growth look to one of two key levers:
- Expand to new markets. This involves finding new channels, targeting new customer segments and exploring new geographies that may find value in your existing products and services. To pursue this strategy, companies leverage their mastery of their applications, intellectual property and technology to demonstrate value to new customers that are willing to experiment. Once you have ‘proof of concept’ in a new channel, market segment, or geography, tremendous marketing and sales skills are required to communicate the value proposition broadly and penetrate the market successfully.
- Expand to new solutions. This involves developing new and improved products and services to serve your existing markets. To pursue this strategy, businesses leverage their intimate knowledge of existing customers to source and/or develop new offerings that solve big problems and meet unarticulated needs. Once you have satisfied the need, tremendous technical skill is required to scale the offering beyond a ‘lead user’ customer to grow market share.
Executing against either of these strategies requires an organizational capability to create new value. Value creation involves generating visionary ideas, scoping for business potential, adding clarity through discovery, narrowing in to the winning solution(s) through experimentation and analysis, designing value proposition and building a scalable launch/ introduction. Doing this well requires the facilitation and coordination of several functional skills (internally and externally sourced), the optimization of several assets/technologies and risk management of technical, market and business failure (i.e. inability to convert the opportunity to realize return on investment and business benefit). Managing a diverse portfolio of value creation requires the ability to bring transparency and visibility to its progress, enabling alignment and flexible decision-making. Last but not least, improving this organizational capability requires openness to learning from failure and readiness to change.
Companies can build this capability, co-develop it (open innovation) or buy it (merger/acquisition), or a combination. Regardless of the growth strategy chosen and how it is acquired, what matters most to business leaders is that a robust value creation framework is in place to guide the organization to effectively execute and advance the strategy. Is there such a framework? Yes. Does it work? Yes.
In 2005, Stage-Gate International’s innovation benchmarking studies made a profound discovery involving four drivers consistently and strongly linked to overall performance when performed together, simultaneously:
- Product + Technology Strategy (setting direction)
- Portfolio Optimization (allocating resources)
- Stage-Gate® Discovery-to-Launch Process (selecting and executing)
- Culture Leadership (nurturing people)
Over the next 10 years, Stage-Gate International together with the American Productivity and Quality Center (APQC) embarked on a research journey to better understand the four drivers and their significance. Project code-named The Innovation Diamond Studies, resulted in the discovery of the Stage-Gate Innovation Performance Framework for managing and building organizational capability to deliver profitable innovation performance results. Executive’s at top performing companies use this framework as their ‘compass’ to guide and navigate the inherent complexity and sometimes chaotic process of innovation, to success.
Top performing companies are more likely to have all 4 Drivers
Clear Product + Technology Strategy
Effective Portfolio Optimization
Strong Culture and Supporting Leadership
Stage-Gate® Innovation Performance Framework®
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