We help our customers develop breakthrough products and services within their market.
This was a question I posed when I hosted a round table discussion at a recent event, with industries ranging from FMCG, agritech, pharma, industrial and oil & gas all represented around the table. The innovation leaders participating in the discussion had described quite different approaches and experiences to breakthrough innovation. Some follow the example of Google X, keeping their breakthrough and disruptive innovations separate from their main business – they operate skunkworks. Others keep their breakthrough innovations much closer to home and make sure they deliver the transformation that is needed within their core business.
A few key differences…
Participants agreed that the approaches for breakthrough and incremental innovation need to be quite different. Some see the breakthrough innovation teams as ‘having all the fun’ while the incremental teams get to do the ‘boring’ next iteration of the same product or service, perhaps with a small number of new features to keep their customers’ interest.
However, breakthrough innovation carries with it a much higher risk of failure and hence more ideas need to be explored before a great success can be achieved. This means that there needs to be much more freedom to experiment, and often this is done more easily outside the constraint of the existing organisation structure -not least so that the core business and its brands are not adversely affected by the inevitable ‘fast failures’ along the way. We worked with a company that had increased its breakthrough innovation efforts significantly but without changing their approach. Ultimately this led toan expensive market failure because they had not adjusted their risk approach and the team had managed the project as if it was an incremental innovation.
The role of senior leadership
Against this requirement for ‘freedom’ in breakthrough innovation it may perhaps seem conflicting that participants felt that breakthrough innovation culture requires much stronger and more direct involvement from senior leadership of the organisation. We might assume this would bring with it less freedom instead of more. However, the best radical innovation companies have leadership teams that encourage and support such breakthrough teams. Much like a critical friend the leadership will be supportive in difficult times but not afraid to speak up when something is not right! This leadership behaviour is crucial to the success of such organisations for two reasons.
- Firstly, and most obviously, breakthrough innovation teams have to deal with failure more frequently – and in most societies this is still generally seen as negative. Instead, leading disruptors celebrate and reward failure within their processes – to paraphrase Amazon, “if there is no risk of failure, it’s not an [innovative] experiment”.
- Secondly, successful breakthrough innovations are often much more than just a new product or service. They disrupt a whole market by building different business models and eco-systems. Whether we look at Amazon’s Kindle, Uber’s ride-sharing or Zipcar’s Car Club, they all completely changed the dynamic in their markets; not just through technology but also through different business models and different executions. This requires strong leadership to push through and achieve, with significant investment before the big rewards can be reaped.
Making it work
One key challenge for the leadership team is that a business requires a constant stream of incremental innovation to stay relevant to its existing customers while it also needs to experiment with breakthrough innovation so it can become the disruptor, rather than the disrupted.
In my view, this can be achieved within a singular organisation but only if it is recognised that different cultures, processes and ways of working need to coexist to support the different forms of innovation that the organisation is nurturing. Hence a good solution can be to have a separate unit that is focused on breakthrough innovation to create future business success, but to make sure that people can rotate into and out of this unit flexibly. This has the advantage that more staff can be ‘infected with the innovation bug’ while making sure that risk and motivation can be managed differently for these different types of innovation.