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A growth strategy model needs a complete solution. If all pieces aren't swimming in the same direction, growth will have to fight through roadblocks and black holes. A process to launch new products without a defined strategy will struggle to focus their limited resources; without funding it can't get started; without human resources it will never launch. The model that I am presenting is focused on new product growth, but many of the processes and platforms will fit the other growth dimensions.

The graphic above details the platforms, processes and roles needed for this growth model. Platforms, for lack of a better term, refer to the foundations that are needed to support the processes. The processes outline the key steps to deliver new product growth, and roles are the participants who are needed to execute the model. 

The growth model requires three platforms: Strategic, Organization, and Networks. The Strategic platform provides communication of the innovation strategy to the organization to ensure alignment, a system to collect and report key performance indicators (KPI) of the model, and a competitive intelligence program to provide actionable intelligence on the company's competitors. the Organization platform provides a governance system to manage the processes, funding to execute the projects, and a central team to administer the processes. The Networks platform connects internal experts in identified opportunity areas to discuss how to exploit the opportunity and external connectors to bring select external expertise to supplement the internal platforms.

Processes are divided into Strategy, Planning, Prioritization, and Execution processes. Strategy sets the direction of the growth model - selects the opportunity areas of focus and defines how to play in those areas. The Planning processes assess the company's core capabilities (and gaps) and identify the upcoming trends impacting the opportunity areas. Prioritization looks at each opportunity area, considers the company capabilities and industry trends to identify, evaluate, and prioritize the best opportunities in the area. The Execution refers to the creation and execution of projects designed to exploit the best opportunities.

At a high level, there are four roles required to execute the growth model. The RACI chart below will help you understand the responsibilities. An executive team (or a high level executive) who handles the strategy phases. Innovation Leaders are usually one or two committees of senior company managers who are tasked with executing the strategy defined by the executive team. An Innovation Team and Subject Matter Experts (SME's) help during the prioritization process. Lastly the Innovation Team and Project teams are charged with the executing the projects designed to exploit the best opportunities.

You may have noticed that each process and platform reinforce the others. That is why a holistic model is required. Take out any piece and the output quality is significantly reduced.

How does your company structure to grow?

McKinsey recently posted an interesting article that lays out a formula to spur innovation in an organization. The article examines the 100,000 lives campaign that encouraged hospitals to become innovative in attacking preventable error deaths. I encourage you have a look at the article (free if you register on McKinsey's site), but it demonstrates that a implementation of a successful innovation strategy can follow this roadmap:

1. Name the Problem - Grab peoples attention by giving the problem a simple to remember name. The 100,000 lives campaign used "Needless Deaths". That grabs your attention.
2. Define a Clear Goal - The goal should embrace all aspects of SMART. A clearly defined goal helps focus an organization.
3. Break Out the Hard Count - Take that goal and break it down in the individual actions and/or resources that you will need to achieve the goal. The actions/resources makes it easy to understand what needs to be done.
4. Use Affordances -  Give people concrete, easy to understand tools to attack the problem. Ease of use allows them to quickly use it and enhance it with their own innovations.
5. Share - Share the victories and defeats with all participants. Diffusion of knowledge will accelerate achievement of the goal.

Great tips for any change campaign, but very applicable to encouraging innovation in a large corporation.

Does it seem that your company rolls out feature after feature for your products (to the point that you can not keep track of them all), all the while wondering why revenue and profit growth has slowed to a crawl? It is likely that they have hit the incremental innovation trap. I am not saying incremental innovation is a bad thing; in fact incremental innovation is an incredibly important part of the innovation process. It helps round out a product line to capture all profit available in a market, but it exposes the company to some bad habits. The image below does a great job illustrating this point. Initially, when a great product is released and captures market share the returns on investment are very high (or atleast they should be or you should be considering discontinuing the product). During this time you round out the product with new features or great product extensions - all incremental innovations. These incremental innovations are great because they are low risk (your product and market is already established) and deliver high returns (these are innovations that you know your customers will love and pay for). Alas, this will not last forever. Soon you will pick all the low hanging fruit and try to release new features or extensions that only a small subset of your customers want or that all your customers want but for which they are reluctant to pay more). Your ROI will shrink to below your cost of capital. Cost of capital is the return that your investors expect from their investment in your company. For a large public company this could be around 12-20%; for a start-up with VC funding it is more along the lines of 50% or more. Once below your cost of capital, incremental innovation is not adding value for its shareholders. That's were other types of innovation come in. They don't need to be disruptive. You should be looking to the adjacencies as advocated by Chris Zook in Beyond the Core. That is look for a new vertical or geographic market to sell your existing product, add a new product or service that will complement your current offering, or repackage your current offering in a way that delivers a leap forward in value. Well executed, these are moves that will reignite revenue and profit growth. I am not going into the detail about Chris' book in this post, but these are moves that you need to think about and evaluate well before you sail past the Cost of Capital line. The problem is that the ease of incremental innovations and often the long duration that they reap rewards creates a bad habit for the company. Like a siren's call, the company begins to assume that new features will always equal new revenue. When it doesn't happen, they assume it was just the wrong feature and immediately look to build another new feature - failing to recognize that the current product has matured and new features will not deliver the returns that they remember so vividly. They are stuck in the incremental innovation trap; destined to run into the rocks. So how does your company do balancing the ease of incremental innovation with the need for long term planning?

As a devout planner, I benefit from the fact that my projects generally stay on track and deliver solid results. However, the risk of a planner is that it fosters an environment that misses out on those creative moments of innovation that arise through spontaneity, improvisation and free thinking.

A planner can always "schedule" time for steps, but these activities may not come naturally to me. That's why I am always on the lookout for good frameworks to ensure that creativity can bubble up to the surface of my groups. Presentation Zen just posted a video about Edward de Bono's Six Thinking Hats. I have heard about the method before, but it never stuck with me. Now that my MBA experiences have helped me recognize my strengths and weaknesses as a group member, this methodology seems like a great tool to help planners move outside of their habitual thinking.

There are great internet resources about the methodology (such as this one at Mind Tools), but I will do a brief review. First here is a video of Edward de Bono discussing the first five hats.

Overview of the Six Hats:

White Hat: The facts and nothing but the facts. Data, information, what questions need to be answered, what are the gaps, what do we have, what do we not have, and how are we going to get it.

Red Hat: Emotions are OK. This is where people talk about feelings and instinct that we can't support with facts. Since in most business environments feelings are not allowed, people rationalize them in a logical argument that can severely bog down a meeting. Red Hat gives team members a way to signal that this comment is a hunch. Red Hat comments can range from personal like or dislike to instincts coming from many years of industry experience. The key point is that anyone expressing a Red Hat thought does not have to justify it.

Black Hat: The logical negative. Essentially, the Black Hat is our critical thinking. Why does something not fit; what are the weaknesses. It is an important function early in innovation to identify weaknesses that will need to be overcome and critical assumptions that will need to be verified before big bets are placed. Black Hat thinking should be used at critical points of innovation, but it should not dominate the process as it will generally lead to risk-adverse projects with relatively low payoffs.

Yellow Hat: The logical positives. What is the logical feasibility, benefits and advantages that would flow from project. Just as critical thinking finds reasonable weaknesses with the plan, we should also think about reasonable strengths inherent in the plan (something we often forget about while focusing on the negatives).

Green Hat: The creative hat. The Green Hat allows the group to put forward new ideas, discuss possibilities of the project (ie, where can it go), and think of alternatives. It is a great tool to reverse dominance of Black Hat thinking. When the Black Hat seems to dominate group discussion ask the group to put on their Green Hats for awhile!

Blue Hat: The one hat to rule them all. This is the hat of the meeting chair who's job is to ensure the discussion covers the other five hats.