The Time When the Innovation Management Grew Up

History is going to judge 2007-2009 as the time when the innovation management grew up. The discipline forced on companies by the economic downturn has shown many of them better ways to innovate. Leaders like IBM and P&G are showing how to treat innovation like a discipline. A growing number of companies recognize that innovation is no longer a strategic nicety; it is a strategic necessity, says innovation guru Scott Anthony, former president of Innosight.

InnovationManagement.se asked Scott Anthony, managing director of Innosight Ventures, some questions about innovation management. Scott has advised companies such as Procter & Gamble, Johnson & Johnson, Credit Suisse, Time Warner, Kraft, Cisco Systems, and General Electric on topics of growth and innovation. He is also a regular contributor to Harvard Business Online. What are his thoughts on trends, on business model innovation, on difficulties for firms to really “walk the talk” when it comes to innovation?

1. Innovation management, as an explicit area, as a discipline in its own right, is quite a new thing Europe. What´s it like in the US?

I think it is still very much emergent in the United States as well, both in the academic and practical sense. You are beginning to see some companies like Procter & Gamble, General Mills, and IBM take a very systematic, thoughtful approach to innovation. But they remain the exception. You certainly have had a number of academics focusing on innovation for quite some time, like Robert Burgelman at Stanford, Clayton Christensen at Harvard, Vijay Govindarajan at Tuck, and so on.

2. When did you start focusing on/working with innovation management as an explicit area?

My journey traces back to taking a course taught by Clayton Christensen at the Harvard Business School in 2000. After graduation I worked with Christensen as a researcher, and joined Innosight in 2003. I headed up the Consulting side of Innosight until September of this year, when I transitioned to head up Innosight Ventures, our incubator and investing arm. So I’ve been a student, a researcher, an author, an advisor, an investor, and an operator.

3. According to a number of surveys, most CEOs put innovation high up on the agenda. A lot of CEOs in the Nordic region say that it’s important, but only a few seem to actually invest capital and resources in it. How do you think American corporate leaders perform in this area?

Over the past two years I have administered a very simple innovation survey to now more than 2,000 people across a range of organizations. The general finding is that almost everyone recognizes the need to innovate. And a large percentage of respondents have in fact made some kind of resource commitment to innovation.

Almost everyone recognizes the need to innovate

But people are still struggling to translate those resources into results. And because of that the resources can come and go. I do see interest in innovation increasing coming out of the 2008-2009 downturn. A growing number of companies recognize that innovation is no longer a strategic nicety; it is a strategic necessity.

4. What’s the most common kind of assignment for your company, one of the leading IM consultancy firms in the United States? What kinds of problems do your customers need help with, what are their objectives and requirements?

We generally provide assistance in two areas. The first relates to building a single growth business. The client might have a blank piece of paper, they might have a technology, they might have identified a high-potential market, and they want our help getting as far as they can, as fast as they can. Sometimes this involves developing deeper consumer understanding, sometimes this involves helping them flesh out an idea, sometimes it is helping with implementation. The second relates to creating the capability to make growth through innovation more repeatable. Here we work with senior leaders to develop a common language, innovation structures, processes, and so on.

That’s on the consulting side of our business. We do three things on the ventures side of the business. First, we scout for and develop plans to realize growth opportunities. Second, we prototype businesses in the field. For example, we have built a business called Village Laundry Service, which provides affordable cleaning services to consumers in India. Finally, we invest in disruptive growth businesses.

5. Consultancy firms in Europe and the Nordic region are trying to establish networks for innovation managers. Is this happening in the US market as well?

Absolutely. People are recognizing that there is much to learn from colleagues in other companies. Some of these networks are quite informal, but I see them growing substantially in the next few years.

6. Most companies seem to have the ambition of being innovative – what three obstacles do you think are stopping them from achieving their ambition?

The first and most important challenge is resource allocation. Innovation doesn’t happen by accident. Companies have to allocate time and money to innovation. Paradoxically, the second challenge is also resource allocation – in this case too much resource allocation.

Innovation doesn’t happen by accident

My colleague calls this the “curse of capital.” Companies seeking to demonstrate their commitment to resources place big bets, which actually make it harder for them to successfully innovate. Scarcity and innovation are friends not foes. The final challenge is what I call the “sucking sound of the core.” If companies don’t organize in the right way they end up doing what they’ve done before because “corporate antibodies” infect innovation efforts.

7. Do you regard any particular industry as being more at the forefront when it comes to developing their innovation processes and innovation management?

Evolution theory would tell us that you look for the conditions where companies HAVE to develop innovation processes and management. Certainly high technology companies have to get good at innovation given brutally intense competition. Similarly, consumer packaged goods companies have to constantly think about how to differentiate their products and services. Media companies also have the intense needs, but that business is changing so rapidly that there just hasn’t been time for people to do what was necessary.

9. If a company wants to be innovative in its business model, how can the company understand how to do this? What’s the best way to learn? What’s the best way of going about it?

I’ll put in a shameless plug here. My colleague Mark Johnson has an excellent book on this topic called Seizing the White Space, which comes out early next year. The first step is to “know thyself.” Mark argues, and I agree, that most companies can’t even articulate today’s business model. How can you innovate your business model if you don’t know what today’s model is! The next step is to take an “outside in” view of innovation. See what business model is required to realize an opportunity in the market, then determine how your business model needs to change.

10. What trends are you noticing; what are the big changes that companies are working on in their innovation work over the next few years?

I think history is going to judge 2007-2009 as the time when the innovation movement “grew up.” The scarcity and discipline forced on companies by the economic downturn has shown many of them better ways to innovate. Leaders like IBM and P&G are showing how to treat innovation like a discipline. I think more and more companies are going to take systematic approaches to innovation. I think there’s going to be a massive shift from focusing on innovating in existing markets to “export” to emerging markets to innovating within emerging markets. It is very possible that the innovation axis will tilt from the West to the East – this is one reason why we are expanding our presence in Asia, and I am moving out to Singapore early next year!

About Scott Anthony

Scott Anthony is the Managing Director of Innosight Ventures, an incubation and investing company with offices in Singapore, India, and the United States. He previously was the President of Innosight’s consulting arm, where he advised companies such as Procter & Gamble, Johnson & Johnson, Credit Suisse, Time Warner, Kraft, VF Corp, Cisco Systems, and General Electric on topics of growth and innovation.

Scott has written three books on innovation: Seeing What’s Next with Harvard Professor Clayton Christensen (Harvard Business Press, 2004), The Innovator’s Guide to Growth with Mark Johnson, Joe Sinfield, and Elizabeth Altman (Harvard Business Press, 2008), and The Silver Lining: An Innovation Playbook for Uncertain Times(Harvard Business Press, June 2009). He has written articles in publications such as the Wall Street Journal, Harvard Business Review, BusinessWeek, Forbes, Sloan Management Review, Advertising Age, Marketing Management and Chief Executive, is a regular contributor to Harvard Business Online and serves as the editorial director of Strategy & Innovation.

Scott is a featured speaker on topics of growth and innovation. He was a judge in the Wall Street Journal’s 2009 Innovation Awards. Scott is also a member of the Board of Directors of Media General (NYSE:MEG).

Prior to joining Innosight, Scott was a senior researcher with Clayton Christensen, managing a group that worked to further Christensen’s research on innovation. Previously, he worked as a consultant for McKinsey & Co., a strategic planner for Aspen Technology ,and a product manager for WorldSpace Corporation. While at McKinsey, he co-authored a publicly released report on the United Kingdom’s economic prospects.

Scott received a BA in economics summa cum laude from Dartmouth College and an MBA with high distinction from Harvard Business School, where he was a Baker Scholar.

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