Need a Better Innovation Strategy? Former P&G & Gallo Executive Says Yes

by Richard Haasnoot

In our consulting work following my time in two highly disciplined and rigorous innovation cultures, P&G and E. J. Gallo, I have been continually amazed by the lack of an innovation strategy that we find with our clients. And sadly often what is called an “innovation strategy,” ends up being incomplete, and wasting time and effort and human capital.

The need for better innovation strategy represents one of the biggest gaps, and most important opportunities for executives.

I will get back to innovation strategy in just a moment, but I first want to underscore the extreme importance of doing the upfront work before launching on idea generation.  There needs to be a very, very carefully thought out vision of what success looks like. I’m not talking about defining success in deep in precise terms. In the true spirit of a vision, it is bold, expansive, and rooted in deep understandings of customers, competitors, and your business. JFK’s “putting man on the moon vision” is one of the all-time classics.  Revisit what Jim Collins in Good to Great says about the importance of a Hedgehog Concept.

My team and I have found so many times that companies committed to a path and spending six figures only to discover that it was the wrong direction and/or their vision had major thinking gaps.  The only good that comes out of a situation like this is that they fail early.

Back to innovation strategy. Having established the vision, there needs to be an overall business strategy that works hand-in-hand with an innovation strategy.  For good or bad, companies often have an overall business strategy. I say for good or bad because business strategy efforts often produce a written document that frequently just gathers dust or is not kept current in a rapidly changing world or was not well developed and thought out in the first place.

The business strategy and innovation strategy need to go hand-in-hand. These strategies cannot be developed at lower, functional levels of the organization since functional interests may be at odds with total company interests and this can torpedo innovation success. As a result, business and innovation strategies require the deep involvement of a company’s most senior leaders.

The development of an innovation strategy requires the perspectives of 1) competitors’ strengths and weaknesses along with a view about how to develop competitive advantages in your type of business,  2) the company’s strengths and capabilities that can be deployed to create those competitive advantages and 3) an intimate understanding of your customers/consumers.

In thinking about these three points, the crucial question becomes how can innovation create better value for customers? Value is the critical part of the equation. Value includes functional efficacy and efficiency. Value includes the price someone pays for the benefits delivered by the product.

Value can be created in many ways. Here are a few.  You can deliver the same performance at a better price – net, there is a value advantage. You can deliver much better performance at a relatively better price – net, this is another way to create a value advantage. You can make it more convenient which can save time, which has an economic value creating a value advantage. You can make it more reliable, which is another way of saving money relative to competition so that you create a value advantage. While all of these may sound attractive, smart business people know that for any one project you need to choose which avenue to go down. Capabilities required to develop each of these potential value advantages can be very different. You need to know your strengths and the marketplace environment to guide which choices are best and right for your business.

Just as there are many ways of creating greater value, there are many types of innovation. I plan to go into these types of innovation in a later article – there’s lots of good stuff to be said here. Choosing the right type/s of innovation that is right for you on a specific project, requires engaging multiple considerations.

Here are a few to stimulate your thinking.

  • What is the rate of technological change in your business? If the rate of change is relatively slow, then types of innovation that do not rely upon major technological improvements may be right for you – like disruptive and routine innovation.
  • What is the competitive intensity in your business? If your business is very competitive with a constant flow of innovative new products, you have some tough choices. You can be a fast follower with routine innovations but this can be very risky. You are likely to find a competitor investing in radical and/or architectural innovation that’s intended to leapfrog your products. If these types of innovations are successful, your competitor’s success could mean major losses for you.
  • What is the rate of growth in the business that you are in? If you are in a rapidly growing business, you may be able to afford radical and architectural innovation, which can be more costly. Even if you only maintain share in a rapidly growing category, there can be significant sales and profit growth.
  • How well are your customers needs currently being met? Answering this question typically requires high-quality research of both your products and those of your competitors. You can also look worldwide for products similar to yours to see if innovations in other parts of the world are fueling greater category growth because products are better meeting customer needs. In mature categories, needs are often well met, but you need to be careful. Today’s mature category can become a vibrant and explosive growth category with innovation. Just think of what Starbucks did to the coffee category – prior to their introduction Folgers and Maxwell House coffees had very flat sales.

Some of the thoughts and insights in this article are drawn from a story in the Harvard Business Review by Gary Pisano. Other thoughts and insights come from the team of experts at Innovate2Grow Experts/i2ge.com.

You can learn more on Innovation Strategy by listening to episodes P21 and P22 of the Innovation Best Practices podcast – available on iTunesStitcher, and at i2ge.com/podcast

image credit: abstractartangel
Join the innovation excellence community

Wait! Before you go…

Choose how you want the latest innovation content delivered to you:


Richard has spent most of his career in and around innovation – senior leader at Procter & Gamble and Gallo, professor at Arizona State University, author of six books, and a very successful entrepreneur in the innovation and creativity business. He’s a regular podcaster. Check out i2ge.com and bluesagecreative.com. Follow him @Innovate2Grow

Leave a Reply