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 / Spring 2014 / Issue 74(originally published by Booz & Company)


Scale Your Innovation Initiatives

2. Invest in areas with broad potential that provide options. When considering where to invest, leaders should ask, If my core hypothesis fails, does this investment still provide other paths? To how wide a range of industries or applications might this investment apply? What new capabilities does this investment create for the company, and to what else can they be applied?

In 1999, IBM launched its emerging business opportunities (EBO) program, an initiative within the corporate strategy group created to define and build new businesses that would later be transitioned to IBM business units. After the program proved its value, which then CEO Sam Palmisano credited with more than $15 billion in new revenues as of 2006, company leaders considered replicating the EBO program widely. IBM instead opted to concentrate on a smaller number of opportunity areas, shifting its focus to pursuing new businesses as platforms, so that multiple businesses could be spawned from the original startup. Even if the original concept fails, the capabilities and insight generated could lead to many other opportunities. Rather than seeking individual innovation opportunities in an area like analytics support for pharmaceutical trials, for example, IBM would invest in broader capabilities like healthcare informatics, applicable across the life sciences.

Only gradually did IBM find a way to replicate the program more broadly. It went further with its Smarter Planet initiatives, bringing together capabilities, technologies, and people from across the com-pany to address larger, more complex challenges faced by enterprises, municipalities, and national governments. Martin Jetter, vice president of strategy at IBM, described it this way: “The point is to organize IBM around critical challenges faced by wide groups of customers and stakeholders, applying IBM’s capabilities across the company to their solution.”

3. Recruit and support evangelists. Given the power of social media, customer evangelists are becoming increasingly potent forces for growth. The same can be true for innovation initiatives. Evangelists can be employees who have been part of, or who have engaged with, the innovation team, or people from outside the company.

Consider Lego, the iconic Danish toy company. For many years, Lego focused its new product development on serving an ever-wider group of consumers. But as the company searched for mass appeal, the enthusiasm of its lead users waned, which led to a lull in sales. In response, Lego engaged its lead users in a complete reenvisioning of its Mindstorms robot kit in 2006. Today, Lego engineers regularly work directly with Mindstorms evangelists, often engineers themselves. Giving customers such access significantly enhances their input and brand advocacy. Members of the “Lego evangelist community” actively promote Lego’s products online and off.

Evangelists can also expand an innovation initiative’s impact inside the corporation. In 2009, Kraft Foods established the Global Technology Council (GTC), a cross-company group, to identify and invest in technologies with the potential to create competitive advantage four-plus years out. Over two years, the GTC created a portfolio of investments ranging from affordable products for developing markets to cutting-edge packaging. The GTC members came from various product categories and geographies and were selected for their acumen and interest in enhancing innovation at Kraft. In addition to contributing insights, this diverse group built a sense of ownership for the GTC’s decisions, advocating for these long-term investments within their markets and functions. The group helped ensure that long-term R&D investment was protected when Kraft split into two companies in 2011.

4. Nurture internal and external ecosystems. Innovation initiatives require resources, people, and organizations in order to grow. Unfortunately, many innovation teams operate in relative isolation, removed from potentially rich environments of engaged partners. They seek input from both inside and outside the company, but they do so on an ad hoc basis. The people with whom they interact often don’t have an active interest in the team’s success.

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