A Simple Tool to Manage Innovation
by Ed’s chart during the sales quarterly, Dickies single decent slide, article
by Monitor group – and adapted by djk
In the band of activity at the lower left of the matrix are core innovation initiatives — efforts to make incremental changes to existing products and incremental inroads into new markets. Whether in the form of new packaging (two belts in a box, plus one value adds, XGear packaging), slight reformulations (tie plus tie bar, added belly bands, new fixtures), or added service convenience (for example, new shippers, QR codes, VIM, in-store merchandising), such innovations draw on assets the company already has in place.
At the opposite corner of the matrix are transformational initiatives, designed to create new offers — if not whole new businesses — to serve new markets and customer needs. These are the innovations that, when successful, make headlines: Think of iTunes, the Tata Nano, and the Starbucks in-store experience. These sorts of innovations, also called breakthrough, disruptive, or game changing, generally require that the company call on unfamiliar assets — for example, building capabilities to gain a deeper understanding of customers, to communicate about products that have no direct antecedents, and to develop markets that aren't yet mature.
In the middle are adjacent innovations, which can share characteristics with core and transformational innovations. An adjacent innovation involves leveraging something the company does well into a new space. Randa Seasonal Footwear is a case in point. Adjacent innovations allow a company to draw on existing capabilities but necessitate putting those capabilities to new uses. They require fresh, proprietary insight into customer needs, demand trends, market structure, competitive dynamics, technology trends, and other market variables.
The Innovation Ambition Matrix offers no inherent prescription. Its power lies in the two exercises it facilitates:
· First, it gives managers a framework for surveying all the initiatives the business has under way: How many are being pursued in each realm, and how much investment is going to each type of innovation?
· Second, it gives managers a way to discuss the right overall ambition for the company's innovation portfolio.
For one company — say, the world’s largest men’s accessories company — succeeding as a great innovator might mean investing in initiatives that tend toward the lower left, such as small extensions to existing product lines. A high-tech company might move toward the upper right, taking bigger risks on more-audacious innovations for the chance of bigger payoffs. Although this may sound obvious, few organizations think about the best level of innovation to target, and fewer still manage to achieve it.