Editor’s Note: Although there may be a pandemic-related slowdown, there’s no stopping new product development. To better help readers with corporate innovation strategy, Prepared Foods turned to leaders at the Eureka! Ranch and the Innovation Engineering Institute, Cincinnati. Founded in 1986, Eureka! Ranch has become a global think tank and innovation training company.
In the second of four installments, authors Doug Hall, PhD, and Maggie Nichols look a new holistic, whole-business approach to core and “leap” innovation activities.
When doing Core innovation (sometimes referred to as Evolutionary, Horizon 1 or 2 or Incremental Innovation), teams can make progress with innovation within their current work systems. After an initial Core Innovation makes it through early filters, the work is quickly compartmentalized so each silo can flip into execution mode.
The challenge of bringing the Core innovation to market is force fitting it within the current capabilities. Bending, but not breaking, existing operations, sales, finance and other established protocols.
As an organization, the greatest challenge and opportunity for Core Innovations is finding ways to do them quickly and efficiently. But the greatest challenge and opportunity for “Leap Innovations” (sometimes referred to as Transformational, Horizon 3 or Disruptive Innovation) is finding a way to make them happen at all.
As opposed to Core Innovations, Leap innovations are truly unique and require a different approach in order to be successful. This is for two primary reasons. First, Leap Innovations need to managed differently or they will be sub-optimized or destroyed using a silo-based approach. Secondly, most Leap innovations require entirely new systems in order to make them possible.
Here are two learnings:
1) Silos destroy Leap Innovations thus requiring a different system for MANAGING them.
Most Leap innovations call for not just one, but many aspects of the innovation to be different than normal. And those multitude of differences create a multitude of friction points that each group manages separately. And what one department sees as a solution to a problem could well unknowingly create a problem for another department. Translation: With Leap Innovations you can’t manage the work in the same siloed way.
Take for example, a new snack innovation. If it’s a Core innovation it might be a new flavor of an existing snack. So yes, while you may need to change ingredient sources or production elements, you’ll likely still market, sell, distribute, forecast, finance and otherwise treat the new item as any other in your lineup. It still requires work. But it doesn’t create total disruption.
A leap innovation, on the other hand, requires many parts of the innovation to be different. And each of those different parts effect other parts. The silo approach doesn’t work because it doesn’t account for the interconnectedness of each part and the trade-offs required on an ongoing basis.
A Leap snack innovation might be a totally new form made a totally different way. And those changes might then change the cost of production which changes the ROI, which then might change the appeal to the organization requiring a change in the concept to make it more appealing. And round and round the cause-and-effects go. But if you don’t have a system to manage these innovations differently you risk sub-optimizing the innovation to fit within the self-imposed constraints of the silos. Forcing a square peg into a round hole, as the old adage goes.
Instead a “whole business” management approach is required. The “whole” having three key components: 1) the company’s strategic intent and financial success standards, 2) the customer/consumer perceptions of how meaningful and unique the innovation is and 3) the practical and tactical realities of being able to deliver, market, and sell at scale.
2. Leap Innovations rarely leverage only existing capabilities requiring New Systems for MAKING them possible.
Most leap innovations won’t work using the existing capabilities of the organization. Despite the wishful thinking of company executives everywhere, the Unicorn Innovation of a fresh new idea that excites customers and doesn’t require you to change much at all - is just that. A fantasy.
Most Leap Innovations require entirely new systems to be invented in order to make them possible. New systems might be business models, routes to market, production capabilities, sourcing, speed of manufacturing…you name it.
That’s why so many Leap Innovations are the product of a “Borrow, Build or Buy” exercise. Companies often favor partnership, joint venture or acquisition to quickly get new capabilities in order to take advantage of potential market demand. But those with more experience and a longer-view favor the “build” approach, leveraging internal resources to operate autonomously - sometimes as a separate business unit outside the standard corporate governance.
Whole Business Concurrent Development is a method of innovation development in which the team seeks to “optimize the whole” for profitable business success as opposed to optimizing for each discipline, silo, or team.
Whole Business Concurrent Development shifts the paradigm for innovation development from a “baton pass relay” from department to department to a collection of rapid iterative cycles of learning. These cycles of learning are executed in hours or days not weeks, months, or years.
Whole Business Concurrent Development operates in a kind of flow-state at all times - treating the value and consequence of each variable as an independent part of an interconnected system. Instead of prioritizing work based on Gantt charts, dependent tasks or classic project management lists and deadlines, work is prioritized based on critical threats and learning.
Next Up: The practical side - How the work of Whole Business Concurrent Development gets done
