Last month the Wall Street Journal ran an article titled “Campbell’s Chief Looks for Splash of Innovation”. The article was an interview with Douglas Conant, CEO of Campbell Soup Co. in which he discussed Campbell’s recent successes in innovation (e.g. reduced sodium soup). But, Mr. Conant also stated that “this year we lost the innovation war in soup” (he was referring to General Mill’s Progresso light soups tied to Weight Watchers points). Now, some of us may be asking the question of whether incremental product improvement fit with what constitutes “innovation”.
Has “innovation” gotten to the same broad usage as other famously overused terms such as “solutions” to where it has lost its core meaning? Would it help the discussion about innovation to add further granularity to the term? Like the popular example about the word “snow” (whether in native Inuit Eskimo or any other languages people refer to “wet snow”, “power snow”, “fresh snow”…well you get the idea)…do we need more than one word or phrase to describe the concept of innovation?
I like the idea of leveraging a descriptive taxonomy for differentiating various types of innovation that was used in the computer industry. This model is useful when viewing the innovation challenge from a particular company’s business development challenge. Or, you could also use this vocabulary to describe new developments from an overall industry view.
Conceptually, my interpretation of this framework illustrates potential commercialization approaches based on two factors. One of those factors is the degree to which a firm has the proven, internal skills required to successful develop and bring to market a planned new offering. The other factor is to what degree this new product or service is improving on a firm’s existing well understood offering or, whether it is bringing to market a completely new offering that addresses an emerging or latent customer need. If you plot the new business development opportunity against these two axis, the farther you get from the current, core business of a firm (or industry) you get…“edge-out”, “reach-out” and “break-out” innovation.
So, what is the difference between “edge-out”, “reach-out” and “break-out” innovation? And, how could this help the development of a strategy for pursuing business growth? To start with “edge-out” innovation, I would put the Campbell soup example into this category. It is adding incremental functionality to a well-know offering. And, Campbell is using internally, well established product development, manufacturing, and go-to-market skills.
I would characterize “reach out” innovation as adding significant new functionality either to a well known offering or to a completely new product or service for a firm. And, the commercialization of this product can be accomplished using internal skills but, they are deployed in a significantly new configuration.
I view “break out” innovation as bringing to market a completely new product or service (potentially leveraging a disruptive technology) which requires new skills in order commercialize what is internally unfamiliar technology, processes and markets.
Now, back to my earlier question of how this taxonomy can assist in the development of a strategy for pursuing business growth. Well this framework obviously hinges on the ability of a firm to leverage its available skills or, whether the company will need to acquire significantly new skills. These distinct skill models will directly influence decisions related to the best approach for organizational structure, roles and responsibilities, internal processes and corporate style. I will lay out some of the potential implications in an upcoming post. In the mean time, let me know your ideas on how to better define what constitutes “innovation”.