Saturday, 27 October 2012

The New 6Ps of Radical Innovation for Large Companies

How do large companies pursue radical innovation? You know, the kind of new product that changes or creates a market. There is a school of thought that says large companies just can’t do it, that any new market disruption comes from an upstart startup. There are, of course, exceptions to this generalization, for example Apple.

Mostly though, large companies have an inbuilt need to pursue innovation in markets and fields with which they are already familiar, and to protect their current positions rather than disrupt or cannibalize. They don’t have the same absolute focus, passion and decision-making speed that characterize small innovative companies.

As I’ve mentioned in previous posts I’ve been working with the innovative market research agency Brainjuicer on the challenge of creating radical innovation in large companies. Other commentators have written recently about why large companies struggle with it. Amongst them were Jorge Barba and Greg Satell. Tim Kastelle wrote about why startups have the advantage. Ralph Ohr discussed evolutionary and revolutionary innovation; large companies are set up to improve the world as it is (evolution) rather than how it could be (revolution). All of these complement John Kearon’s article on marketing science causing the death of innovation.

Maxwell Wessel explained that big companies are set up to deliver profit through operational efficiency. This is not necessarily a short term problem, as long as reality matches expectations, but is dangerous in the longer term. All may not be lost; Scott Anthony wrote an article in September’s HBR Magazine entitled “The New Corporate Garage”, laying out some cogent arguments in favour of large companies playing an even greater role in the development of innovation.

It’s in that context that I’d like to propose a template that I think will help, the “6Ps of Radical Innovation”. I’ll give a summary in this blog post, and then follow up with more description in future ones.

First of all, what does “Radical Innovation” mean? In my view it is “innovation that significantly alters the dynamics of a market by changing the behaviour of users and converting them to the new offering; or enables new behaviour”. An example is movie rental. The “job to be done” in Clayton Christensen’s terms, doesn’t change; a viewer wants to rent a movie. The change in behaviour is that they don’t walk down to Blockbusters to rent a physical copy; they subscribe to Netflix and download it. Another example is apps and mobile phones. Smartphones enable new behaviour with apps that just didn’t exist before.

So here are the 6Ps, with just some of the questions to ask:

1. PERSPECTIVE – do you make space in your portfolio for bets on radical innovation? Do you talk about big innovation but ignore the resource, competence and time needed to deliver it? Do you know where you want to compete, and over which time frame? Do you stretch possibilities with Open Innovation? Is your portfolio balanced on the dimensions of time, technology and market, and stretched in terms of ambition?

2. POTENTIAL – do you still demand all the facts before launch? Do you use evolutionary criteria to assess revolutionary innovation? Do you iterate and learn fast? And then get to market fast?
3. PROTOTYPE – do you demand “right first time” before exposing innovation to customers? Or do you rapidly experiment, iterate and learn? What criteria are used to design and evaluate prototype tests? Are you able to look for behaviour change?
4. PARTITION – do you separate radical innovation with a different route to market from “business as usual”? Do you protect it from the pressure of short-term delivery? Do you give it time and space to reach payback?
5. PERSISTENCE – do you adjust your targets as you progress and learn? Do passionate people get the sustained support they need? Does your portfolio approach help you make the right bets? How quickly do you give up? Do you have the right balance between conviction and stubbornness?

6. PEOPLE – is “failure” acceptable? What’s in it for somebody to move out of a standard career path? Do you identify and support intrapreneurs? Do you recruit for diversity?
None of these stands alone. For example, an iterative use of prototypes and test markets will give much better information on the potential of radical innovation. The 6Ps should be taken as a whole.
In summary, consideration of the 6Ps will widen the view of large companies and help them to have a greater chance of successfully implementing radical innovation. I’ll add more to this over the next few weeks.

[Kevin McFarthing runs the Innovation Fixer consultancy, helping companies to improve the output and efficiency of their innovation, and to implement Open Innovation. He spent 17 years with Reckitt Benckiser in innovation leadership positions, and also has experience in life sciences.]

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