Continuous Improvements: minor improvements to current products.
Incremental Improvements: moderately difficult to develop improvements.
Big Bang Ideas: longer-term, high-risk innovations.
Peter Klein ‘68 and Harvard Business School (MBA, ‘71) founded PK Associates in late 2005, a Consumer Products focused growth management consultancy. Previously, from March, 2001 through September, 2005, he served as Senior Vice President and Corporate Officer of The Gillette Company, responsible for Strategy, Planning, Business Development and Global Marketing Resources. Prior to joining Gillette, Peter was Executive Vice President and Corporate Officer of Strategy, Business Development, Marketing Services, and Global e-Business at Nabisco Holdings Corp. (Nabisco Foods) from January 1998 through December, 2000. Peter holds two patents; in 2005, Advertising Age recognized him as one of its 10 most innovative marketers.
“Where you sit depends on where you stand!” to rephrase Miles’ Law, and how you define innovation depends on where you sit. In the context of business, most definitions of innovation focus on bringing major new goods or services to the market. At Disney, innovation is thought of as “making dreams and wishes come true”. Michael Dell, founder of Dell Computers, once said that innovation is “about taking risks and learning from failure”.
I take an organizational view on innovation. This Total Innovation perspective focuses on the process of generating both incremental and breakthrough ideas, transforming them into workable solutions that build value across the entire organization. In this view, innovation’s role within any public or private firm, whether small, medium, or large, is to deliver consumer value and customer leadership faster, better, and more completely than the competition.
This perspective on innovation certainly focuses on how new goods and services are developed, but it also acknowledges that innovation can take place across and down an entire organization – from the CEO/President to the call center, anyone and any function/department can practice and operationalize innovation.
The overall goal of innovation is to move a company to a higher level of business and financial performance and to shape an organization’s culture and behavior to create future growth.
The support for my perspective is based on my experience over 5 decades as a senior leader at several large public consumer product companies and as a growth management consultant. My experience has shown that:
- Highly innovative companies tend to grow faster,
- While senior executives aspire to lead innovative companies, it is extremely difficult because there are often significant barriers – there are no “silver bullets” to innovation,
- Companies that consistently deliver innovation have it ingrained in their culture and processes,
- Innovation does not happen overnight; if not valued and continually endorsed by senior leaders it will not happen beyond ad hoc, opportunistic efforts.
There are many different ways to classify and categorize innovations. On both sides of the desk, I ask company leaders and managers to think about innovation in terms of three forms: Continuous Improvements, Incremental Improvements(referred to as evolutionary innovations), and Big Bang Ideas (referred to as radical breakthroughs or revolutionary innovations). Below is how I define the differences between the three forms of innovation and provide examples:
- Continuous Improvements: These ideas basically help companies “tread water” by making minor improvements to current products or by replacing products coming off of the market or making minor improvements to any departments processes. Such innovations rarely drive meaningful sales and profit growth. They are often relatively simple to develop, cost less than the other two forms of innovation, and do not necessarily require senior staff to operationalize them.
- Some Successful marketing and financial examples of continuous improvements, defined as helping replace lost sales/profits from current products include: Apple’s frequent iOS updates, new flavors of Gatorade, Mountain Dew Code Red, Quaker Rice Cakes, Playtex Living Gloves with Drip-Catch Cuff, and Bayer Enteric-Coated Aspirin. In baseball terms, these are “bunt singles”.
- Incremental Improvements: In contrast, incremental improvements in baseball terms are “doubles” – moderately difficult to develop, mostly additive to sales and profits, and take longer to operationalize than continuous improvements. Examples: Instagram’s Stories feature to compete with Snapchat, Colgate Sensitive Gums Dentifrice entered a new segment, Bud Light Seltzer, Nabisco Snackwells Cookies, Green Giant Create-a-Meal.
- Big Bang Ideas: These are longer-term to develop, often requiring major development time and investment with lower odds of being both a marketing and financial success; they are “triples or homer runs” in baseball terms. Examples: Gillette’s Fusion Razor & Blades, Keurig/Green Mountain Single-Serve Coffee Makers & K-Cups, Netflix’s introduction of streaming video in 2007, Uber ride share, Tesla vehicles, and Peloton.
It is one thing to define what innovation means to you and your company or organization. However, it is also critical to inculcate and operationalize innovation within your company with sufficient success odds and with continuity over time. Companies that excel at continuous innovation address it on a variety of fronts, including a formal innovation strategy and a culture that encourages innovation plus formal processes to develop, evaluate, prioritize, and operationalize ideas that make sense and that link to business strategy, a basis-for-interest, and key success requirements. In such companies, accountability for innovation is assigned, and milestones are tracked and reported out, to continually assure that focused priorities are in place.
Defining and implementing innovation, especially Total Innovation across and down an organization requires:
- An inspiring strategic growth vision and definition of innovation that is shared throughout your company or organization (e.g., what business(es) are we in/not in, what are our core skills, etc.).
- A fully aligned innovation agenda and process owned and visibly supported by executive management and senior managers (e.g., where do we want to go, what is our desired level of innovation, what forms should we focus on).
- A decision-making model fostering collaborative cross-functional teamwork that also supports passionate champions, sometimes view internally as iconoclasts or mavericks.
- Creatively resourced, multifunctional new product/service teams.
- Willingness to take acceptable risk and sometimes see the value in “absurdity”, which can tee-up, define and drive Big Bang Ideas (i.e., do not judge initial “baby ideas” by adult criteria!).
- A well-defined, flexible, and internally communicated innovation implementation process that includes sharing successes along the way.
For an innovation framework that forces continuous assessment and decisions regarding what and why to “keep doing, change or modify doing, stop doing, or start doing” across the three forms of innovation, please await a future blog.
Peter Klein, ‘68