A Goldilocks Approach to Innovation
Wharton
professor David Robertson defines a “Third Way” of creating new products and
services.
The Power of Little Ideas:
A Low-Risk, High-Reward Approach to Innovation
by David C. Robertson with Kent Lineback, Harvard Business Review
Press, 2017
In 2008, when Nike executive Sarah Robb O’Hagan was tapped to lead
Gatorade, the sports drink’s sales were in decline and it was losing market
share to its principal rival, Powerade. She couldn’t turn to incremental
innovation: Pursuing the tried-and-tested strategy of adding flavors and
low-calorie options to the Gatorade portfolio had already run its course, and
was not yielding returns. The idea of blowing up one of PepsiCo’s billion-dollar
brands and the organization behind it in a bid for radical reinvention was too
risky.
What did Robb O’Hagan do? Taking a page from Nike’s playbook, she
refocused the company’s attention — and more meaningfully, its product
development and marketing budgets — on Gatorade’s core customers: the serious
athletes, young and old, who accounted for 46 percent of sales. Then, she began
introducing new hydration and nutrition products designed particularly for that
core group. Gatorade introduced a series of gels, bars, and protein shakes that
complemented the sports drink and drove its sales, instead of cannibalizing
demand for it.
“The innovations were
diverse, targeted a specific set of customers, and posed little strategic
risk,” writes Wharton
School professor of practice David Robertson, author, with Kent Lineback,
of The Power of Little
Ideas.
The new products also reversed Gatorade’s sales slide. By 2015, Gatorade, with
sales of US$5.6 billion, owned 78 percent of the U.S. market for sports drinks,
about four times Powerade’s 19 percent share.
·
Robertson compellingly argues that there is something missing in
the innovation tool kits of most companies. Companies may think too small, by
pursuing innovations that simply yield new and improved versions of their
existing products. Or they may think too big, seeking radical innovations that
disrupt markets or pursuing entirely new ones, so-called blue oceans. What they
are missing, says Robertson, is the just-right alternative of complementary
innovation.
Complementary innovation is distinguished by three features.
First, it consists of multiple, diverse innovations involving a central product
or service that are aimed at making it more appealing. Second, the new
innovations work together to satisfy a compelling customer proposition. And
third, the resulting family of product innovations are closely and centrally
managed.
Robertson points to Disney as a pioneer of complementary
innovation. When it got started nearly a century ago, animated films were its
core product. But Walt Disney developed a range of innovations — merchandise,
Mickey Mouse Clubs, theme parks, and television programming — all aimed at
driving more families into theaters and deepening engagement. Over time, these
innovations became significant businesses in their own right. (You may remember
longtime Disney CEO Michael Eisner talking about complementary innovation as
“synergy” back in the 1990s when he and Frank Wells rescued the company from
its extended post-Walt malaise.)
Robertson reframes another familiar success story as a tale of
complementary innovation. The conventional storyline surrounding Steve Jobs and
Apple focuses on the company’s evolution into a serial disrupter. Robertson
considers it from a slightly different angle. He views the iMac computer as the
company’s core product — the center of what Jobs called a “digital hub.”
To support iMac sales, and to give core iMac users more to do with their
computer, Jobs launched the iPod, iTunes, Apple Stores, and a variety of
software products. Only later, after the phenomenal success of the iPod and
iTunes, did the Apple story become one of disruptive innovation, he says.
The Power of Little Ideas is
chock-full of cases and core ideas — such as synergy and customer
experience — that you’ve likely heard before, but that you’ve probably
never seen framed in quite this way. And Robertson puts so much effort into
differentiating and positioning complementary innovation as the “Third Way”
that I feared it might not live up to its billing as a rare and distinct form
of innovation.
But there is undeniable value in giving this kind of innovation a
name and defining a framework for pursuing it. Robertson presents that
framework in the form of four questions whose answers require that management
make both strategic and tactical decisions.
• What is your key product?
“It should be one of
your crown jewels,” says Robertson. “A key product must be a product that is
fairly stable; that is, unlikely to change significantly in the medium term
— the next, say, three to five years.”
• What is your promise for
your key product? The author defines this as “a commitment to solve a pressing
problem or fulfill an unmet need for the customer.”
• How will you innovate
around your key product? “Here you identify the specific, tangible
innovations that fulfill the promise you’ve chosen,” writes Robertson.
• How will you deliver the
innovation? “The first step is to identify who will be responsible for
each innovation,” Robertson explains. “The second step is to decide how you
will manage these diverse people and groups, that is, what organizational roles
and practices will be necessary.”
Anyone charged with growing a company should know the answers to
these questions— no matter what kind of innovation they plan to pursue.
by Theodore
Kinni
https://www.strategy-business.com/article/A-Goldilocks-Approach-to-Innovation?gko=b7289&utm_source=itw&utm_medium=20170803&utm_campaign=resp
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