How to Build an Innovation Engine in 90 Days

Artwork: Berndnaut Smilde, Nimbus Dumont, 2014, digital C-type print, 75 x 110 cm/125 x 184 cm, courtesy of the artist and Ronchini Gallery

Artwork: Berndnaut Smilde, Nimbus Dumont, 2014, digital C-type print, 75 x 110 cm/125 x 184 cm, courtesy of the artist and Ronchini Gallery

Here is an excerpt from an article written by Scott Anthony, David Duncan, and Pontus M.A. Siren for Harvard Business Review and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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Practically every company innovates. But few do so in an orderly, reliable way. In far too many organizations, the big breakthroughs happen despite the company. Successful innovations typically follow invisible development paths and require acts of individual heroism or a heavy dose of serendipity. Successive efforts to jump-start innovation through, say, hack-a-thons, cash prizes for inventive concepts, and on-again, off-again task forces frequently prove fruitless. Great ideas remain captive in the heads of employees, innovation initiatives take way too long, and the ideas that are developed are not necessarily the best efforts or the best fit with strategic priorities.

Most executives will freely admit that their innovation engine doesn’t hum the way they would like it to. But turning sundry innovation efforts into a function that operates consistently and at scale feels like a monumental task. And in many cases it is, requiring new organizational structures, new hires, and substantial investment, as the “innovation factory” Procter & Gamble built in the early 2000s did.

For the past decade we’ve been helping organizations around the globe strengthen their innovation capabilities, and that work has taught us that there’s an important intermediate option between ad hoc innovation and building an elaborate, large-scale innovation factory: setting up a minimum viable innovation system (MVIS).

We borrow the language for this term from the world of lean start-ups, where “minimum viable product” denotes a stripped-down functional prototype used as a starting point for developing a new offering. “Minimum viable innovation system” refers to the essential building blocks that allow a company to begin creating a reliable, strategically focused innovation function. An MVIS will ensure that good ideas are encouraged, identified, shared, reviewed, prioritized, resourced, developed, rewarded, and celebrated. But it will not require years of work, fundamental changes to the way the organization runs, or a significant reallocation of resources.

What it will require is senior management attention—most critically from some member of the top leadership team. That might be the chief executive officer or a chief innovation officer, but it doesn’t have to be. If you’re responsible for innovation in your company at the highest level, we’re talking to you. With a little help from other executives and innovation practitioners, you can set up an MVIS by completing four basic steps in no more than 90 days, with limited investment and without hiring anyone extra. And as early success builds confidence in your innovation capabilities, it will set the stage for further progress.

Day 1 to 30: Define Your Innovation Buckets

There’s no shortage of terms for innovation. Sustaining innovations, incremental innovations, continual improvement programs, organic-growth initiatives. Disruptive innovations, breakthrough innovations, new-growth initiatives, white-space and blue-ocean strategies. But strategically speaking, all innovations fall into one of two buckets. In one are innovations that extend today’s business, either by enhancing existing offerings or by improving internal operations. In the other are innovations that generate new growth by reaching new customer segments or new markets, often through new business models.

The MVIS encompasses both types of innovation, but it’s critical that everyone involved in an MVIS (or any innovation program) understand the difference between the two buckets. The failure to do so causes many companies to either discount the importance of innovations that strengthen the ongoing business or to demand too much revenue from the new-growth initiatives too early. Agreeing on what to call the two buckets is a good starting place. For the purposes of this discussion we’ll call the first one “core innovations” and the second “new-growth innovations.”

Innovation projects meant to strengthen the core should be tied to the current strategy and managed mostly within the main business’s organizational structure. (The MVIS will keep track of them, though, as you’ll see later on.) They’re the projects expected to offer rapid and substantial returns in the near future and need to be funded at scale.

Conceivably, all your current innovation projects may be core. But what of the future? Will they be enough to enable you to reach your longer-term financial targets? If your company is typical, the answer is no. There will be a gap between your growth goals and what your current operations and core innovations can generate. It’s the purpose of the new-growth innovations to fill that gap.

New-growth initiatives push the frontier of your strategy by offering new or complementary products to existing customers, moving into adjacent product or geographic markets, or developing something utterly original, perhaps delivered in a completely novel way. The larger your company’s growth gap, the further from your core those innovation efforts will likely need to be, and the longer it will take to realize substantial revenue from them.

You can work up a serviceable estimate of the size of the gap if you spend up to two weeks developing rough but honest numbers for the revenue and profits your current operations will deliver in the next five years and then compare them with your five-year goals. This will give you a basic sense of what percentage of your time, effort, and resources needs to be focused on core innovation, and what percentage on new-growth efforts, and how ambitious the latter need to be.

When your growth gap is fairly large, you may wish to subdivide your new-growth efforts so that you can map them to different possible directions for future growth. This being a minimum innovation effort, we suggest designating no more than three such categories.

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Here is a direct link to the complete article.

Scott Anthony (@ScottDAnthony) is the managing partner of the innovation and growth consulting firm Innosight. He is the author of The Little Black Book of Innovation and the HBR Single, Building a Growth Factory. His new book is The First Mile: A Launch Manual for Getting Great Ideas into the Market. David Duncan is a senior partner with the innovation and growth consulting firm Innosight. Pontus M.A. Siren is a principal in Innosight’s Singapore office.

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