Grabbing Lightning: Building a Capability
for Breakthrough Innovation
Gina Colarelli O’Connor (oconng@rpi.edu)
Associate Professor
Director, Radical Innovation Research Program
Radical Innovation Research Program
Phase I (1995-2000)
• Can we describe
management practices
for breakthrough
innovation?
– Using traditional NPD
processes does not work.
• Twelve projects.
• Multidisciplinary team.
• Prospective, Longitudinal
Phase II (2001-2005)
• How do firms build a
sustainable BI capability?
– Average life expectancy: 4
years.
• Twelve + nine
companies.
• Corporate level.
• Multidisciplinary team
• Prospective, Longitudinal
Companies in the Study
Phase I
Cohort I
1995 to 2000
GE
IBM
Air Products
DuPont
Analog Devices
General Motors
Nortel Networks
Otis Elevator (UTC)
Polaroid
Texas Instruments
Cohort II
2001-2005
Phase II
246 interviews
3M
Albany Int’l
Corning
J&J Consumer
Kodak
Mead-Westvaco
Sealed Air
Shell Chemicals
Cohort III
2004 to 2005
Bose
Dow Corning
Guidant
H-P
Intel
P&G
PPG
Rohm&Haas
Xerox
Defining Radical Innovation
Projects had an identified team and budget, and
were perceived as having the potential to offer
either
 New to the world performance features
 Significant (5-10x) improvement in known
features
 Significant (30-50%) reduction in cost
A Radical Innovation Project Lifecycle:
DUPONT BIOMAX
1990
1996
1993
Shell material for
disposable diapers
Diaper tapes
D1
Technology in search
of market applications
D2
D3
D4
1999
Project in limbo.
Development work
suspended.
D5
D6
New flurry of
development activity
for agricultural
applications.
New applications sought
through major corporate
PR campaign.
D7
D8
D9
Project transferred
to business unit.
Multiple
applications are
pursued.
Comprehensive Framework for Managing Radical Innovation
Technical
Uncertainty
Resource
Uncertainty
Market
Uncertainty
Organization
Uncertainty
Challenge 1:
Capturing
Breakthroughs Challenge 2:
Living with
Challenge 3:
Chaos
Market
Challenge 4:
Learning
Business
Challenge 5:
Model
Resource
Acquisition Challenge 6:
Transition
Challenge 7:
Management Individual
Initiative
The Radical Innovation Hub
RI Oversight Board
RI HUB II
RI HUB I
RI HUB III
Evaluation Bd.
Project 1
Project 2
Ide
a
th
a
G
s
r
e
er
Project Advisory Board 1, 2, 3….n
Idea Hunters
Project 3
Project n
Transition Oversight Bds. 1…n
Early vs. Mature BI Capacity
Early
Mature
Executives act as
provocateurs, patrons to
provide air cover
Leadership sets expectations, clarifies strategic intent,
develops RI culture, structures & reward systems.
Governance boards help align emerging opportunities
with strategic intent.
Mavericks champion
projects.
RI idea hunters seek opportunities. NBCreation
personnel work with teams to develop business
models. Adopt real options mentality and learning
based project management approaches.
Resources gained through
favors.
Individual managers with authority to provide seed
funding & internal VC organizations provide multiple
sources of capital for RI. Portfolio approach to funding.
Completion of RI tasks &
project staffing rely on
individual initiative.
Strategy for identifying, selecting, rewarding and
retaining RI champions, experts and team members.
Communication, metrics
barriers challenge project
transition. They flounder.
Transition teams established with funding and senior
mgmt support to accelerate projects until ready for
SBU environment.
The Radical Innovation Learning Curve
Radical innovation maturity is defined
as the degree to which the organization
has embedded a system for initiating,
supporting and sustaining RI activities
Average Life Expectancy of an RI system: 4 years
Phase II: Management Systems for BI
Mandate/Scope
Metrics/Rewards
Skills/Talent Development
Processes/Tools
Leadership/Culture
Org. Structure/Interfaces
Governance/Decision Making
Phase II Key Insights
Organization structures for RI.
Discovery, Incubation and Acceleration.
Organizational capacity.
Orchestration.
Conclusions and Next Steps.
Phase II Key Insights
Organization structures for RI.
Discovery, Incubation and Acceleration.
Organizational capacity.
Orchestration.
Conclusions and Next Steps.
Organization Structure: Idea Generator
Technology Board (Decides)
RI HUB
Idea Creation
Idea Development
Idea Screening
External Scanning
Case #1
R&D
NBD
Case #2
BU’S
BU’S/Divisions
Organization Structure: Idea Manager & Incubation
R&D
Growth Board/Corporate Renewal Team
(Advisory)
Venture Board/Business Development Council
• Idea review & elaboration
– Staffed full time
• External technology acquisition
• Incubation/Development
– Keep white space businesses
through to initial
commercialization
– Oversee incubation of aligned
opportunities too far out for
BU’s to handle.
Organization Structure: Holistic Sequential Model
CTO - Commercial
Senior Leadership Governance Team
Portfolio Governance Council (Middle Mgmt)
New Business
Discovery
•Idea Generation
New Business Incubation
•Project teams
•Project adv boards/RI staff
Other idea sources (R&D,
New Ventures, BU’s…)
New Business
Accelerator
•Project teams
•Project adv boards
RI staff
New
SBU
SBU1
(Accel’r)
SBU2
(Accel’r)
….
SBUn
(Accel’r)
Organization Structure: Corporate Venturing Model
CEO
Venture Review Board (CEO, CTO, COO, BU VPs)
NEW
VENTURES
New
Division
Business 1
BU
Business 2
Business 3
President
R&D
BU Related Projects
(1,2, …n)
Ventures
Technology
Organization Structure: R&D Management System
Portfolio Governance Board (CTO, EVPs, & BU Leadership)
Exploratory
Marketing
R&D Directors
Projects 1, 2, 3 ….n
Incubator for
unaligned
business
Exploratory
Research
Inventory, Bench
BU’s aligned
projects
“caught”
by BU
development
group
Organization Structure: Self Similar Model
Corporate Strategy
Governance Board
Strategy, Technology, Finance
Corporate RI Hub staffed full time
(Projects 1….n) – Funded in BUs
Divisional Hub
-staffed full time
-project 1….n
Divisional Hub
-staffed full time
-project 1….n
Divisional Hub
-staffed full time
-project 1….n
…………..
Org. Structure: Mirrored Model
CEO
CTO
R&D Staff (Ops, funding, personnel mgmt.)
RI Program 1
& Team
RI Program 2
& Team
RI Program 3
& Team
BU1
Acceleration
activity
mirror
BU2
Acceleration
activity
mirror
BU3
Acceleration
activity
mirror
…
RI Program 6
& Team
Planned
Acceleration
activity
mirror
Phase II Key Insights
Organization structures for RI.
Discovery, Incubation and Acceleration.
Organizational capacity.
Orchestration.
Conclusions and Next Steps.
Not just one competency….but 3
Oversee Transitions/Interfaces
Discovery
Creation,
recognition,
elaboration,
articulation
of opportunities.
Exploration
Incubation
Evolving the
opportunity into
a business
proposition
Experimentation
Acceleration
Ramping
up the
business to
stand on its
own
Exploitation
•Basic Research
•Technical
•Focus
•Internal Hunting
•Market Learning
•Respond
•External Hunting
/License/Purchase
/Invest
•Market Creation
•Invest
•Strategic domains
DIA isn’t Linear
Three RI Competencies
Leadership/Culture
Governance
Processes/Tools
Skills
Structure
Metrics
Discovery
Leadership/Culture
Governance
Processes/Tools
Skills
Structure
Metrics
Incubation
Acceleration
Leadership/Culture
Governance
Processes/Tools
Skills
Structure
Metrics
ry
ov
ery
ov
e
Competencies
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er
Int
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ter
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BInc
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D-I-A Competency Strengths Vary Over Time
D-I-A Competencies Over Time
%
Low
Medium
High
The Discovery Competency
Incubation
Discovery
Acceleration
Describing Discovery
The creation and identification of opportunities that
may have major impact in the marketplace, either
through the delivery of new performance benefits or
greatly improved performance.
Discovery ≠ Invention
Discovery ≠ R&D
Scientific
Work
Opportunity
Generation
Opportunity
Articulation
Implications & Observations
Discovery is a highly multidisciplinary competency.
More than technology….most companies have migrated
from technology identification to business identification.
Idea generation/opportunity recognition systems/people
are being built in:
 3M, Corning, Dupont, GE, AP
 Sometimes not even located within R&D (IBM’s Next big thing
workshops, Mead-Westvaco idea hunter workshops).
 Coupling with ‘eyes and ears’ investments, frequently connected
to R&D, and other forms of external scanning
• Corning’s Strategic Growth group, Dupont Ventures, Air Products
CDO.
• External scanning professionalized by Shell Chemicals G/C group.
Mismatches on Discovery
Companies desire Radical Innovation but do not
have deep scientific expertise, not organized to
leverage it.
 Need linkages across scientists and with businesses.
 “Business model” innovation, if radical, is typically enabled
by breakthrough technology or combined technologies.

Open innovation helps….but it’s not the complete
answer.
Companies confuse Radical innovation with
Diversification efforts.
 Moving into new markets is not the same as radical
innovation.
Mismatches on Discovery
Product innovation is not Radical Innovation.
Companies desire Radical Innovation in Businesses that
they’ve been involved in for decades.
 The action is at the interfaces.
Discovery generates a wealth of opportunities…many of
which the company will never invest in.
RI is about new domains yet companies tend to tighten
link to BUs over time.
RI ↔ Strategic intent reciprocal influence not happening.
 Tension regarding how tightly to specify strategic growth areas;
 If don’t specify, difficult to evaluate opportunities;
 If do specify, RI system cannot influence strategic intent of the
firm based on unanticipated discoveries
Management System Elements: Discovery
Mandate/Scope: Explore; Create
business concepts in alignment with
strategic intent.
Metrics/Rewards: Quantity
of ideas, richness/robustness
of concepts.
Leadership/Culture: Owned by
CTO. Fluid, imaginative culture.
Skills/Talent Dvlpmt: Creative,
inductive reasoners w/ penchant
for strategic thinking.
Processes/Tools: External & internal scanning, open
sourcing of ideas, networking. Opportunity elaboration
& socialization. Able to combine disparate bits of info.
Org. Structure/ Interfaces: Centralized
yet diverse, tightly linked to R&D.
Governance/Decision Making: Connections
to strategic intent. Able to see possibilities, to
enlarge opportunities.
The Incubation Competency
A Long & Winding Road
Incubation
Discovery
Acceleration
Incubation Defined
A competency of experimentation. The ability to
experiment with technology and business
concepts/models simultaneously to arrive at a
demonstrated model of a new business that brings
breakthrough value to the market and consequently
to the firm.
 Allowances for failures, but expectations of continued pursuit
of new frontiers.
 Creation and pursuit of options.
 Movement in multiple directions simultaneously.
 Focus on learning and redirecting.
 Focus on enriching and extending internal and external
networks to enlarge scope of the company’s knowledge
base and commercial opportunity space….in big ways.
Incubation: Objective
To nurture a portfolio of opportunities (options?) of
highly uncertain outcome, but immense possibility for
the market and the company.
To develop proposals (not plans) for new businesses,
based on experimentation with the technology,
production processes, value chain and potential
customers.
To clarify new strategic growth frontiers for the
company.
2 foci:
 Individual Opportunity level
 Competency level
Incubation
In Incubation many avenues are
explored initially, but few enter Acceleration
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Incubating Individual Opportunities: Defined
That work to build the concept to be bigger and
bigger and bigger, and to explore it’s potential as an
appropriate business for the company:
 How do we get the concept to be as broad as we can make
it before trying to narrow it down to a targeted market entry?
Enlarge the scope of the business.
 Develop a strategy for the new business in terms of
application(s) to pursue, value chain participation, revenue
model proposal, and underlying economic analysis.
 Clarify link to the company’s strategic intent
Incubating Individual Opportunities: Objective
Gain clarity of the value proposition for the market.
 Establish customer pull (revenue or codevelopment cost
sharing arrangements).
You cannot always know if it’ll make you a ton of
money up front, but you can usually figure out if
it’s going to be a loser from the beginning.
Incubating Individual Opportunities: Activities
Experiment on many dimensions: Market, technology, strategic.
Begin to investigate promising discovery possibilities (where
technical feasibility is proven and applications seem robust)
Interaction with the market. Application trials in 2-3 domains.
Work with potential customers to test if value perceived aligns
with the team’s expectations. (Probe and learn).
 Stimulates New market creation
 Stimulates value chain development (Partners)
Technical development work that translates the initial promise
into a specific application and tests whether the benefits are still
delivered in that application.
 Develop and evolve product concepts/formulations.
 Ongoing technical development given market learning.
Ongoing economic analyses given market and technical
experimentation. Objective is to clarify economics of the
potential business model.
Clarify near term and longer term options in terms of
applications, products and markets.
Incubation Competency
Coaching
Nurturing
Brokering
Thinning
&
Enriching
Coaching
Coaching re: the uncertainty management process
and ambiguous environment. (6 cases)
 “They seem lost in the market because the market isn’t even
there, they don’t know the processes.”
 “One thing that we talk about is how we get them to nonintuitive clarity sometimes...they’re like, oh my god, I hadn’t
thought about that or yeah, you’re right. And it could be
about their people. It could be about their market. It could be
about their product.”
Brokering
Brokering: connecting to sources of
knowledge, resources and politically
important players.
 Help with funding proposals.
 Help with connections internally.
 Trips around the world.
Nurturing
Nurturing
 They require a lot of hand holding to get them through this.
 These people need assurance that they’re okay because a
lot of their work is failure.
 I have frequent contact with them. Because team leaders,
just like probably everyone else, like to feel the connection
with the organization, like to feel that they're making a
difference, and they also like feedback, constructive and
otherwise. And so I probably see five or six of them a day,
whether it's, you know, casually, or a call.
 Ice cream socials
 Helping integrate idea with the company
vision… builds confidence.
Thinning and Enriching
Thinning and simultaneously enriching the
portfolio
 Governance board composition and involvement
in projects is a source of great challenge.
 High churn rates as learning occurs.
 If failure rate isn’t high….You’re not really on the
frontier.
• Tendency toward ‘incrementalization creep’ if
metrics are inappropriate and pressure exists for
high success rates.
• How bad is this? What are the best ways to protect
against this?
Incubation Skills: Entrepreneurial & Strategic
Entrepreneurial
 Opportunistic/flexible/ability to experiment
 Persistence
 Creative…Able to chart a course without past experience in
that arena. “Situation specific learning.”
• Identify critical professional groups and interact.
• Identify gaps in current value chain and incent others to fill
them.
 Resistance to closure…continue to generate and investigate
options.
Strategic
 Connect opportunities to company’s future health.
 Consider how this business might be resourced and run
given the company’s current structure.
 At portfolio level, constantly pace investments in ongoing
opportunities relative to capacity.
Coaching/teaching about incubation
Incubation Skills
Technically savvy
Creative…able to see many different uses for the technology.
Synthesizing skills: “Ability to take lots of different cues that
seem like they don’t go together and find a vision out of it.”
Interpersonal skills: Excellent networker, enjoy contact with
people they do not already know (potential partners, customers).
Strong analytical skills (to develop the economic models for
businesses).
A salesman would be terrible in business development…unless he was
just blessed with natural analytical skills.
Incubation Teams
Tension between how much direct market interaction
the scientist should have, and how much they can
rely on NBD types. When and at what key junctures
do the scientists need to have direct market
interaction?
 In several cases, chief scientist expected to be engaged. “If
you ask others to be your eyes and ears in the market..you
end up losing the true invention.” Scientists should see
users’ reactions themselves so they can educate the market
and so the market doesn’t misunderstand the invention.
 Vs. GE
Not cross functional, but small group of
multifunctional people
 Technically AND Market neutral
Incubation Talent Development
Most companies recognize difficulty in attracting/retaining this
talent.
 One company’s RI leader has gained ‘tactical stock value’ simply by
hiring good incubation talent.
 Several companies recognize they don’t have it, but don’t know
how/where to find it.
Viewed by some companies as a development opportunity.
 For ‘business’ people headed for general management
• Completes their rotation in technology organization.
• Develops entrepreneurial skills.
• If they can grow a small opportunity, they can learn responsibilities for larger
businesses.
 For Technical people…helps them become more attuned to
commercial concerns.
 Incubation Staff appear to have little upward career mobility.
Split across companies regarding use of junior people vs. more
seasoned.
 Junior people have energy, not bureaucratized.
 Seasoned have rich internal networks, we know their capabilities.
Incubation Leadership
Most incubation leaders are from the technology
community and have never grown a business.
 Only two in entire sample were hired from outside and had
business creation/strategy experience.
 Several expressed importance of learning from
Failure….less emphasis on past success. Why?
What’s the right background? NBD? Technical?
Strategic? Networked? Marketing? Experience does
matter.
Project Advisory Teams
For each project, need specific advisory boards who
are competent and networked in the
industry/space/business model associated with the
new opportunity.
 May require external advisors.
Metrics for Incubation
Many have revenue targets, but indicate those are
not the important part of the discussion with their
leadership.
Pacing of opportunities.
Influence on Strategic intent.
Signals of market enthusiasm (invited lectures, press
inquiries, technical progress, new applications, first
revenues).
Incubation Location
A tense topic.
For unaligned and multialigned, either a dedicated
business unit (2 cases), or incubated directly in R&D
or RI group.
For aligned, much more complicated.
 If in the BU, need metrics, budget and oversight that requires
experimentation rather than exploitation.
 If not in the BU, turf wars and NIH problems.
 If in R&D, may be stuck with bearing costs that aren’t yours.
Incubation Processes
Learning plans
Early market participation
Market probes become market launches….Begin to
harvest
 Helps identify potential new applications.
 Buys internal credibility.
 Helps learn about cost structure.
Bench inventory of ideas…If one dies, there’s a
better/more promising one to work on (2 companies)
 Provides psychological safety to teams working on ideas that
aren’t panning out.
 Makes kill decisions efficient. The team tells you.
Market Exploration vs. Market Exploitation
Market Exploration
Market Exploitation
Maximize variation to gain a
scan of the landscape
Limit variety: gain deep
experience.
High risk taking
Refine: focus on a target
market
Experimentation
Choice/selection
Flexibility
Efficiency
Discovery
Implementation
Focus on developing novelty
Focus: new connections, new
potential partners, new
application arenas to maximize
options
Focus: Building loyalty,
capturing market share,
saturating the identified
market, leveraging
knowledge of current
customers to maximize
profits.
GE’s Probing and Learning Process-CT Scanner
Searle’s Probing & Learning Process-Nutrasweet
Incubation: Observed Challenges
Allocation of funds across people vs activity frequently
weighted too much toward people. (Prototypes, fab
experiments, customer visits all needed).
Pressure to accelerate causes early transitions…too early.
 Confusion between incubation and acceleration.
Pressure for aligned innovation causes incubation deresourcing.
Continued reliance on stage gate processes, even modified,
reduces orientation toward experimentation with markets and
business models.
 Felt need to conform to organizationally accepted vocabulary,
well understood processes.
 Prevents the development of a true incubation mentality.
Concern expressed by several RI leaders that Governance
board would get bored with long timeframes required.
Incubation Mismatches
Incubation is about experimentation and generation of options,
but metrics frequently drive for targeting and financial results.
Early market participation and early harvesting may violate
company culture.
 Cultures of ‘executional excellence’ cringe at the thought of klugey
prototypes or informal launches.
 One firm stopped going to trade shows to demo and instead started
doing individual customer visits…managed expectations better and
learned more.
Aligned opportunities are strategically more comfortable, but
tactically more difficult.
 GE CEO program the exception.
 Bully pulpit????
Governance/decision making boards sometimes double as
coaches….
 Conflict of interest.
 Different type of talent needed.
 Time management troubles.
Management System Elements: Incubation
Mandate/Scope: Experiment; Vet projects through T, M, R,
O issues to determine biz potential. Manage portfolio.
Metrics/Rewards: Learning based
milestones (project), churn rate
(portfolio), magnitude of opps, learning
spillover.
Skills/Talent Dvlpmt: Project leaders: NBC
expertise, entrep’l acumen,rich networks. Staff:
strategic coaching, nurturing capabilities.
Processes/Tools: Inventory of projects to make killing
easier. Learning plan. Strategic Coaching.
Leadership/Culture: CSO, CNO
or VP NBD. Inquisitive, learning
oriented culture. No ‘failure.’
Org. Structure/ Interfaces: Dedicated
group at Corporate level, tightly linked to
R&D.
Governance/Decision Making: Project level:
advisory boards of experts. Portfolio level: Sr. BU
and Corp representatives.
The Acceleration Competency
or
Gathering Steam & Building Critical Mass
Incubation
Discovery
Acceleration
Describing Acceleration
Driving fledgling businesses to a point where they
can stand on their own relative to mature businesses
in their ultimate home (existing BU, new division).
Building critical mass of sales and operational
infrastructure.
Establish market presence.
Develop the management team.
Scaling
Prepare the business to blend into the fabric of the
rest of the organization.
Acceleration Objectives
Predictability
 Sales forecasts with some level of accuracy
 Manufacturing with respectable yields.
 Economics are at least heading toward profitable,
can demonstrate a pathway to profitability.
Scaling for Viability
 I need a landing zone for projects that the
business unit does not feel comfortable with. If I
transfer these projects too early, the business unit
leadership lets them die. I need a place to grow
them until they can compete with ongoing
businesses in the current operating units for
resources and attention.
Accelerator Location Challenges
In BU:
– Metrics not appropriate:
• “Big successes for us are just rounding errors in the current planning
horizon.”
• Need % of sales from breakthroughs” as a performance expectation.
– Too tight a link with BU’s causes incrementalization. Accelerating
outside the BU provides protection.
Not in BU:
– The big transition problem. Can’t get on their radar screen.
– Duplicate visits to customers, channel members, from multiple
points in the company.
– Turf wars
Mandate of RI group vis a vis aligned opportunities critical to
clarify and continuously reinforce.
Time horizon?
Multi-aligned opportunities?
Stretch-aligned (adjacencies)?
Management System Elements: Acceleration
Mandate/Scope: Escalate. Mature high impact businesses
to predictability and acceptability to operating unit culture.
Metrics/Rewards: Growth in
sales/inquiries of portfolio businesses:
identification of migration path, uplift
and spillover opps. NOT margins
Skills/Talent Dvlpmt: Acumen in nurturing
high growth businesses. Ability to interface
with mainstream
Processes/Tools: Manage for high growth. Focus,
respond to market inquiries, invest in demonstrating
path to profitability.
Leadership/Culture: General
manager orientation. Hard driving,
urgent culture.
Org. Structure/ Interfaces: Separate
structure, even for aligned opps, unless BU’s
use acceleration metrics.
Governance/Decision Making: Sr. Ldshp
team with powerful networks,
respect, political clout.
The DIA System
Incubation
Discovery
Acceleration
The DIA System Defined
The set of activities that
manage the links and
interfaces within DIA,
and oversee its health
in terms of the RI
mandate, it’s perceived
role in the firm, and its
portfolio of businesses.
Incubation
Discovery
Acceleration
System Imbalances
Can’t get heard
Big Ideas, Incrementally Executed
Incubation
Incubation
Acceleration
Acceleration
Failure to leverage learning
Discovery
Discovery
Discovery
Incubation
Acceleration
Open Innovation at the Extreme
No Courage to continue
Incubation
Discovery
Incubation
Discovery
Acceleration
Acceleration
DIA System Activities
Screening and evaluating businesses
Coaching
Assembling and re-assembling Project Teams
Providing & enabling project infrastructure
Barrier removal
Broker external and internal liaisons
Strategic alignment activities
Providing help for project resource acquisition
Education about role of Radical Innovation in the
company viz a viz rest of innovation system and
ongoing operations.
Pacing of projects
Oversee transitions from DIA landing zone
Attend to portfolio health and diversity
RI Portfolio Considerations
Diversification
 Degree desired?
 Dimensions?
•
•
•
•
Technology domains/competencies
Business/market domains
Time Horizon
Organizational fit (aligned, white space, gray space, spin outs)
Churn rate (viz a viz objectives)
 Within D? I? A?
 If too high in any one of these…what’s wrong?
• Poor ideas? Transitioning too early? Execution problems?
Inappropriate team composition? Inadequate resources? Lack of fit with
intended strategy?
 If too low….what’s wrong?
• Not ‘radical’ enough? Unwilling to kill?
RI Portfolio Considerations
Portfolio size objectives?
 How many projects/platforms?
Portfolio pacing objectives across DIA?
 Easy to get caught up with I and A and forget to replenish the pipeline.
Cross-portfolio management:




Checking for synergistic effects of one platform’s learning on another.
Checking for convergence or redundancies
Spillover to other innovation efforts.
Think about them as mutual funds…
•
•
Which have more prospects, which should be fed, which should be starved a bit for now.
Enormous scope of responsibility.
RI System Metrics
Health/Activity of the Portfolio






# of new ideas
# of new projects started.
# of projects transitioned between stages.
Synergies across projects
Diversity in terms of technology/market domains.
Pacing of projects compared to objective.
Interface Management


Smoothness of handoffs from D→I→A→landing zone
Communication flows from I and A back to D as new opportunities emerge.
Market Impact


Gaining external recognition as an expert in a particular technology domain.
Richness/promise of projects. “This one could really change the game.”
Impact on company







# of projects transitioned out into businesses.
$ impact of those projects.
Impact of learning within projects on other business arenas.
Spillover of RI management system elements to other high uncertainty arenas.
Development of entrepreneurial talent within company as project leaders are recycled
and out posted into BU’s.
Confidence that we can innovate. (vs. “we’ve atrophied.”)
Increased robustness of new ideas coming in.
Phase II Key Insights
Organization structures for RI.
Discovery, Incubation and Acceleration.
Organizational capacity.
Orchestration.
Conclusions and Next Steps.
Example BI Management System Time Line
CEO Innovation Initiative, 1997
Huge Kick off Televised Meeting
Company wide innovation board set up
to focus on
white space
Neil M April 15, 2000
Atrium Speech
Neal introduces NPD
processes
•Leverage orphaned
innovations from
pharma group
•Rocket project to
missile projects
Neal tries to generate growth
thru pharma
Neal works on governance for
Breakthru teams
Learns to position projects in a
strategic way – two turned
down
Neal: adds marketing
people to teams
making it safer to be in
riskier projects
Senior Mgmt
Activities
Paul – incubator with one project
Gemini
Ruby build growth platforms but
evolved to this from technology
platforms
Ted in charge of portfolio
Middle Mgmt. Activities
Margaret gets separate pot for white
spaces
New Ventures group not formalized
No external funding
Did not get in to budget for 2002
Paul lost interest in NVG
Weldon wants silos
broken down
between 4 big
groups.
Innovation Board
Neal restructures
R&D and
innovation
New ventures
group
disbanded
Ted moves to business
process group
Ted’s portfolio initiative
rolled out. Looking to
create innovation centers
in other countries
Ruby develops
technology platform
approach
Newly formed
Advanced Tech
Group
Margaret moves up
keeps focus of white
space – greater visibility
Organizational Capacity for RI
economic expansion
External
Influences
new competition
strained stock market
lawsuit
Internal
Influences
Sr. leadership
declares need
for more innovation
financial
stress of
company
poor earnings
CEO change
refocus on
innovation
I
CAPACITY1
D
Internal
Influences
External
Influences
TIME
industry
consolidation
A
culture, history of innovation
pace of technological change
global economic expansion
CAPACITY2
The Challenge of Sustaining at the Extremes
If too successful…..The absorptive capacity of the
organization is strained.
Jolts to the system…
– Internal
• Change in leadership, value of innovation to strategy changes
• Focus on acquisitions or global expansion as driver of growth
– External Crises make these investments in the future
impossible at this time.
• Stock market plummets
• Lawsuits
Impossible hurdles
– Corporate culture of operational excellence.
– CEO does not believe in innovation as a path to competitive
advantage.
– Lack of deep technical expertise in company.
Phase II Key Insights
Organization structures for RI.
Discovery, Incubation and Acceleration.
Organizational capacity.
Orchestration.
Conclusions and Next Steps.
DIA Must Be Orchestrated
Incubation
Discovery
Acceleration
DIA in Dynamic Environments
External
Influences
Internal
Influences
I
D
I
A
D
Internal
Influences
External
Influences
TIME
A
Four Organizational Approaches for RI
Rich
Champions or many
simultaneous
approaches/
experiments
Constrained
Organizational Capacity
Fit the competencies to the capacity
Hope for change/Seek
job elsewhere
Low
Management Systems
Educators/ Process
Facilitators/ Middle
Management initiatives
High
DIA Competencies
Phase II Key Insights
Organization structures for RI.
Discovery, Incubation and Acceleration.
Organizational capacity.
Orchestration.
Conclusions and Next Steps.
Model of Radical Innovation Capability
economic expansion
External
Influences
new competition
strained stock market
Internal
Influences
Sr. leadership
declares need
for more innovation
financial
stress of
company
poor earnings
I
CEO change
refocus on
innovation
CAPACITY1
D
A
D
Internal
Influences
External
Influences
TIME
industry
consolidation
lawsuit
culture, history of innovation
pace of technological change
global economic expansion
I
A
CAPACITY2
Innovation as a Business Function
Amazing progress among most of our companies in the 4 year
observation period.
More embedded throughout the organization.
Accepted in terms of role within innovation system.
Continued experimentation with processes, structures, but few are backing
off, even when times aren’t great (Stable funding in 10 of 12 firms).
Increased confidence.
Increasing focus on portfolios of RI opportunities.
New roles emerging..but NBC career paths a concern
Leaders: EBO Czar; Commercial Development Officer; Gamechangers
Director; VP, Strategic Innovation; President, RI and Corporate New
Ventures; VP Corp Bus Development; CNO
Inbound/exploratory marketing
New business creation specialists coach projects
New emerging businesses assigned general managers prior to regular
revenue flow
Not a program, but a constant.
But….very new yet. Most feel as if they’re on the track, but wish they
had better direction.
Current Research Direction: Career Paths
• How can firms Institutionalize an
Innovation function through people?
• New roles emerging, but no where to go!
Sr. Mgr.
Sr. Mgr.
Mid Mgr
Mid Mgr
Jr.
CTO
CNO
Jr.
Disc
Inc’n
Acc
Disc
Inc’n
Acc
Identifiable
Organization
Structure
Culture and
Leadership
That Values
RI
Appropriate
Metrics
Rich Interfaces
Connecting
Internal and
External
Powerful
Networks
RI Requirements
Governance at
Project, Portfolio
and System
Level
RI Specific
Skills & Talent
RI Specific
Process & Tools
Backup Slides
Phase II Key Insights
RI capability develops in stages.
Organization structures for RI.
The D-I-A model.
Organizational capacity.
Orchestration.
Evolving a Competency Occurs in Stages
Context
Initiation
Evolving
Sustaining
Pre-initiation
Context
Initiation
Evolving
Sustaining
Pre-initiation Context: Challenges
Objectives not clarified
across the organization
leaving room for
misinterpretation of the
initiative both inside &
outside RI community.
Senior and middle management
non-alignment of objectives

Misalignment of expectations
regarding performance
Objectives are sometimes short
term, but building an RI
capability is a long term
investment
Initiation
Context
Initiation
Evolving
Sustaining
Elements of Initiation
Define Mission/Agenda
Develop Processes
Understand Culture
Start the Idea Flow
Get the Right People
Announcement
Develop the Structure
Initiation: Challenges
Positioning: Announcing is
helpful to build
awareness…but heightened
visibility increases
expectations.
Mission Retrenchment: Initial (lofty)
mission comes under pressure as RI group
recognizes need for education and culture
change. Pressure to “get one out the door.”
Talent Tension: RI
staff are a rebellious
sort...but must learn to
operate as part of a
system.

New Business Creation
Skills: Severe shortage of
expertise requires reliance
on BU’s, conventional
processes
Idea Flow Yields High
Volume, Low Quality
Ideas: Tension re how
tightly to specify
strategic growth
areas/manage risk.
Leadership Experience: Most RI system
leaders lack entrepreneurial experience…
came up through conventional system.
Evolving
Context
Elements of Evolution
Mandate/Scope
Metrics
Leadership &
Governance
Portfolio
Management
Structures
System Resources
Processes
Skills/Talent
Development
Reward/Punishment
Systems
Evolving: Challenges
Failure: Building new business
is much riskier career path than
growing current businesses.
Fear of failure reigns.
System Interfaces: As
complexity of RI system
evolves, or elements of it
experience change in
leadership, lack of
interfaces for a period of
time.
Idea Generation: RI groups begin to focus less
on ideation and more on collecting and tilting up
new businesses…So where will the new ideas
come from?

Restrictive Governance
Boards: Composed mostly of
people who rose through
operations system.
Mandate Creep: Tightening link to
aligned opportunities/BU’s can
diminish opportunity search for
radical ideas.
Focus: How keep eye on long term prize
while harvesting small wins along the way
within each project?
Leadership Demands: RI leaders are
challenged to manage inward, outward and
upward simultaneously.
Sustaining
Context
Sustaining
Culture and
Leadership
That Values
RI
Appropriate
Metrics
Identifiable
Organization
Structure
RI Requirements
Governance at
Project, Portfolio
and System
Level
Rich Interfaces
Connecting
Internal and
External
Powerful
Networks
RI Specific
Skills & Talent
RI Specific
Process & Tools