Making the most of 'Eureka!' moments
All this week, innovation author and strategy guru Rowan Gibson answers pressing questions about the best ways to approach innovation. He will provide case studies of some of the world’s top brands, and he’ll share some tips that you can apply to your business immediately to bring measurable value to your innovation efforts. Follow along through the week, and weigh in with your comments at the bottom of each post.
What is the best way to organize/prepare for breakthrough innovation efforts, as it seems to require a distinct approach?
You’re right. Companies are generally not bad at implementing incremental ideas — which are essentially about improving existing things — because these opportunities tend to fit quite neatly into the organization’s existing business unit infrastructure.
But breakthrough ideas — radical, game-changing opportunities — represent a departure from the norms inside a company, and usually inside the industry as a whole. That’s why it’s often really hard for a firm to organize itself around a disruptive new idea — particularly if it will potentially cannibalize the existing business.
Blockbuster, the once-dominant movie rental company, fell into this trap. Basically, the company has missed every breakthrough opportunity in the movie rental business over the last decade — Redbox-style automated kiosks, online rentals, streaming video, you name it. Just last month, inevitably, Blockbuster declared Chapter 11.
Blockbuster's in-store kiosk: Too little, too late?
Why did this happen? It happened because the company’s primary innovation focus has been on making incremental improvements to its traditional business model, which is based on high street stores, rather than on organizing itself around disruptive new opportunities like the Web. And so along came Netflix and the rest is history.
The fact is, in most companies breakthrough innovation opportunities require new and distinct business structures. P&G, for example, has special teams at the corporate level that address white-space opportunities. These teams have been especially useful for breaking down the walls between very strong business units (which have traditionally tended to be quite defensive of their turf), and for building bridges between different kinds of competencies inside the organization in order to create innovative new product solutions.
Representatives from all of P&G’s business units also meet regularly in a “global-technology council” to address opportunities that transcend boundaries and call for collective know-how. Once an interesting idea surfaces from one of these groups or from outside the company, P&G has systematic mechanisms for abbreviating the communication channel to top management and for building cross-functional teams around new ideas.
These mechanisms get senior management, all the way up to the CEO, interfacing with innovators, removing barriers, shaking loose resources, advancing people’s projects, helping them turn nascent ideas into businesses, as well as thinking about which sector to transfer a particular new business to, and what kinds of capabilities that sector might need to acquire quickly so that the handover doesn’t lose the company any time.
IBM is another company that has introduced new organizational structures to address breakthrough opportunities. Some years ago, it created a set of new venture groups — called Emerging Business Opportunities (EBOs) — that pursue breakthrough opportunities that don’t fit neatly into the company’s existing business units. So far, the EBOs have collectively contributed tens of billions of dollars in annual revenue to IBM’s growth — and EBO revenue has been growing at the rate of more than 40 percent a year.
Rowan Gibson is a global business strategist, a bestselling author and an expert on radical innovation. He is also one of the world’s most in-demand public speakers, and you may catch one of his seminars live Tuesday, Nov. 30 at Imaginatik's Innovation Leaders Forum in Chicago. Rowan’s books have been translated into over 20 languages. His latest book, Innovation to the Core, is published by Harvard Business School Press. He may be contacted at email@example.com.