Are you satisfied knowing that it is highly likely your team will answer “we are average or below average” to the simple question “Do you have a clearly defined innovation process and know specifically how that ties to your growth pipeline?”
For the last nine months executives from around the world, some of them perhaps reporting to you have answered this way in our Growth Pipeline Diagnostic™. Let me back up for a second and explain where I am coming from. Frost & Sullivan has for 60 years been driving our clients’ growth pipeline and in doing so have identified the best practices for creating a company with the strongest characteristics of innovation and growth. The evidence is stark with 57 of the top 100 companies seeing their revenues decline in the last three years. As a response, our team developed ten insightful questions, each with three best practice benchmarks associated to help our clients deal with the reality of their innovation & growth strategies in place. We were blown away by the responses. This was no normal survey because the way we executed it was different than any other assessment of this kind. Instead of survey blasting out a questionnaire, we chose two methods to compare the way executives respond.
Method one involved our client-facing organization reaching out to executives involved with innovation and growth and having them go through the questions and benchmarks by themselves, unaided by a Frost & Sullivan employee. Method Two involved individuals and groups being led through the questions in a collaborative session where they got to interact and be challenged on their responses.
For the purposes of this red flag to CEO’s I am going to focus on two questions in particular. One of them from the five questions in the Innovation section, and the other from the five questions in the Growth section.
In question number three we asked executives to respond to the following statement:
In doing so we are trying to ascertain if the executive believes they have the following innovation best practice benchmarks:
1: The team invests time and resources each quarter to drive the innovation process.
2: The innovation process integrates all sources of growth ideas, including Research & Development, Sales, Marketing, Mergers & Acquisitions, Partnering, Geographic Expansion, Technology, etc.
3: A digital platform is leveraged to capture and track all growth opportunities identified.
Here is where it gets interesting. With the unguided executive group, the average score was 3.2 out of 5. For the group that was guided, actually being shown an innovation process and then asked to respond the score was a full point lower, 2.2. Let’s call that gap the chasm of uncertainty. Think about this for a second, your team potentially has a restricted idea of even what an innovation process conceptually looks like. Let it soak in and then ask yourself how confident you are that your company is establishing a foundation to meet your growth objectives. I certainly do not want to sound alarmist but let us consider that it is increasingly difficult to grow, we know this, incredible pressures are surrounding you all the time, so at the very least one would hope that you are establishing a home base that is well guarded with the right tools and weapons in place. Even in an optimistic world of the respondents that were in the 3.2 unguided group, this is a coin toss confidence scenario. Not good.
Let us move onto the next question from the ten. We asked executives to respond to the following statement which is Question six and in the Growth Section:
The Decision Support Best Practice Benchmarks stated are:
1: The analysis process includes multiple sources of data, both qualitative and quantitative, to assess each growth opportunity.
2: Investment in capital and time is provided to take the measurements on each growth opportunity.
3: The team has designed and agreed upon the measurement tools used to measure and prioritize each growth opportunity.
This is a very important question because it gets at the very heart of the choices companies make when specifically pursuing growth opportunities. These choices define your success. Make good ones and your company likely succeeds and thrives. Make bad ones and you can look forward to a rough ride and likely a competitor eating away at your market share. That thought alone is enough to give me indigestion. Sadly a similar trend was observed. In the unguided executive group, the average score was 3.4 out of 5. In the guided group once shown an example assessment flow and true growth pipeline, the score was much lower, an average of 2.6. The critical word in this question is “consistent” because we are looking for decisions where you are able to remove the loud voices and authority figures from the data-centric approach of being fact-based. Decision support diligence is all about a fact-based assessment of an opportunity that comes up through the innovation process gating criteria. So let us connect the two questions together and you have what on the face of it looks like a precarious situation. If this were a book you would already be confusing your organization and thus by proxy your customers in Chapter One. By the time you get midway through the ten chapter book and are expected to perform diligence on opportunities, you decide to skip all the way to the end of the book and hope that the story ends well. These two elements not being synchronized is sub-optimal at best, devastating at worst with unfortunately most companies trending toward devastating based on our assessment. Perhaps this is why anywhere between 75% to 90% of new product introductions fail?
Let us get into solution mode because the great news is this is only terminal if the patient chooses to accept “average” as acceptable. My guess is you don’t. So what are the steps to getting onto an accelerated growth track, building your growth pipeline and powering your future?
1 – Get clear on what your objectives are regarding innovation. Saying “to help us achieve new growth” is obvious, that’s the cake, but get focused on the ingredients. What kind of new growth? Innovation teams need targets, not vague descriptions, or even worse, left to decide on themselves. Innovation must operate like a Seal Team of sorts, precise, focused, and with a clear mission. You should have multiple ‘Seal Teams’, each with a clear objective rolling up to the overall mission. Based on that, and your corporate tolerance for risk, the type of innovation process and decision support framework will be clearer. You should within this be very clear what your innovation timetable looks like. Are you clear on what your three to five-year growth plan looks like? Clarity will help you measure progress and know what success will look like.
2 – Get realistic about resources. This is not something that is a part-time job. It requires definition, focus, and investment. Expect to allocate resources to manage and drive the growth pipeline with effective digital support tools to match. You have to ask yourself and know immediately how those resources are applied to your core, to organic, to incremental, and of course yet to be determined activities. If you can’t answer that then you have an issue needing to be addressed immediately.
3 – An Innovation Process means a set of distinct steps. It is not a building with bean bags and table tennis tables, it is not even people. It is a set of distinct parameters with which people interact in order to create growth. It houses your intellectual property and it drives a consistent way of executing growth so that your culture thrives no matter whom is employed over your hopefully long and prosperous future.
4 – Consistency is a critical piece of the puzzle that you must institutionalize. Part of that, yes, is process, but when we are assessing growth opportunities that make their way through the innovation stage gates we like to ensure that human bias is not the first gate. It so often is. The loudest voice, the most senior person, you must set aside authority and ambitions and put in its place open inquisitive analytical minds. This is not to suggest decision by excel. It is to suggest instead both systems and people that are focused on evidence-based decisions. And this process must be repeatable and transparent.
Sounding simple? Well, I imagine to you this is common sense practical guidance. Then why are hundreds of executives at multinational billion-dollar companies, some who maybe work with and for you, answering “average” and “below average”? Why then do we fail so frequently at new product introductions? Sometimes the most powerful actions we can take are the ones we think we took for granted but in the end have just become complacent. Let’s get back to powering a future shaped by growth! We can do better.
Connect with Richard and his team to schedule your own Growth Pipeline Diagnostic™ and realize a clearer picture of where you can power a future shaped by growth.
Provocative Punchy Growth Questions to Ask Yourself and Your Team?
- Have you considered how to prioritize your internal processes that are most critical to driving growth?
- How clearly are your growth opportunities tied and assessed by board directed governance?
- Are you analytically mapping your growth opportunities directly to sustainable mid to long term trends?
- What are your consistency policies to ensure growth opportunities are measured consistently across your company?
- How are you balancing your available resources based on the innovation pursuits you expect?