The most innovative chefs are known for creatively looking backwards as well as forward for ingredients and methods to surprise their eaters’ palates. That’s how they’re pushing their kitchens towards uncomfortable and unfamiliar directions. Similarly, innovation managers must be ready to push their businesses towards the uncomfortable and unfamiliar direction of future industry leadership by creatively looking backwards as well as forward within their industries to create breakthrough innovations and satisfy their business palate.
Recent work on innovation shows that the special ingredients that can enable breakthrough innovation are a trailblazer mentality, leadership ambition, and a practical framework for innovation. And a useful “preparation method” for breakthrough innovation that innovation managers can use to confront turbulent markets is open innovation. Now let’s delve into these:
Breakthrough Innovation Ingredients
Industry innovation breakthroughs are difficult to achieve. They require a special mentality to identify and abandon practices, ideas, models, and attitudes that have lost relevance in an industry. And the intellectual ability to identify future trends, to take on discovery journeys, to ideate new concepts and to experiment. We can call this special mentality trailblazer mentality : it allows businesses to selectively forget their past and to actively create their future.
An example of trailblazer mentality is Hasbro. In the mid-1990s Hasbro was a product company competing in an industry broadly referred as family entertainment. Its offerings mainly consisted of toys (Little Pony, G.I. Joe, etc.) and board games (Monopoly, Candy Land, The Game of Life, etc.). Moreover, until the 1990s people could only purchase Hasbro’s products in a retail store. Hasbro customers’ shopped, bought, and returned home with a toy or a board game.
Today, Hasbro is a self-styled branded-play company. Its offerings consist of online games, fan sites, movies, television shows, digital gaming systems, and comic books & magazines produced in partnership with Disney and other companies. One big breakthrough they had was Transformers. Customers can interact and purchase Hasbro brand through different serving points (not restricted to retail stores). Hasbro team was able in the mid-1990s to visualize the strategic shifts in family entertainment, to selectively forget their offering model and generate breakthrough innovations. They had a trailblazer mentality.
Trailblazer mentality isn’t enough for breakthrough innovation though. Ambition to achieve future industry leadership by flexibly adapting to change is required. Usually, companies that are hungry for leadership are the ones that know where they would like to be in ten years. These companies and their human talent are driven daily by the desire to lead their industry.
An example of leadership ambition is Apple under Steve Jobs. Apple helped transform no less than seven industries: personal computing, animated movies, music, phones, tablet computing, retail stores, and digital publishing. History will be able to remember this company as one that applied imagination and technology to business while having the clear ambition of leading by leapfrogging.
There are different frameworks to lead innovation and for achieving breakthrough innovation. One particularly useful framework is the Three Box Solution created by Govindarajan (2016). The three box solution recognizes all competing challenges innovation managers face when leading innovation. It facilitates the alignment of the organization and teams on the critical but competing activities required to simultaneously create new business through breakthrough or non-linear innovations while optimizing the current business through incremental or linear innovations.
According to the three box framework, companies have to allocate resources between the following:
Image Nº1. The Three Boxes
Box 1- Managing the present core business at peak efficiency and profitability.
Box 2- Escaping the traps of the past by identifying and divesting in businesses and abandoning practices, ideas, and attitudes that have lost relevance in a changed environment. This is called selectively forgetting the past.
Box 3- Generating breakthrough ideas and converting them into new products and businesses.
Future industry leadership requires that innovation managers overcome the bias to over focus on Box 1 and allocate resources to Box 2 and Box 3. Why? Box 1 will allow you to prepare for present competition but only Box 2 & Box 3 will prepare you for future competition, make you think how to lead your industry and generate breakthrough innovations. Simply put if the majority of your innovation projects are in Box 1 you are not working on breakthrough innovation and you are not investing in your future industry leadership.
Source: Harvard Business Review Press (2019) with adaptations by the author.
Breakthrough Preparation Method – Open Innovation
One way to achieve breakthrough innovations is through open innovation. Today many companies see open innovation – a process for sharing knowledge and ideas with other organizations- as a key approach for their Box 2 & Box 3 work. Examples include L’Oréal working with Renault on an electric “spa” concept car and corporate organizations collaborating with start-ups and scale-ups.
At Bridge for Billions, we support corporates that are seeking to make open innovation part of their DNA and to achieve breakthrough innovations. We are usually guiding them on their entrepreneurship programs, scouting of startups, corporate incubators, corporate accelerators or other. Through our technology, community, and methods we are able to unlock by them the future in their industries. We guide them in their collaborations with start-ups across the world.
The startups we work with are exceptional at detecting new market opportunities, industry trends and finding new business models facilitating the work of our corporates in their Box 2 and Box 3 challenges. I hope you enjoyed this recipe and that you can achieve breakthrough innovation!
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Written by Nastasha Velasco, Economist & Political Scientist, Bridge for Billions Innovation & Business Development Manager (UK, Germany & Northern Europe)
Nastasha helps organizations incubate growth, innovation & social impact by connecting you with extraordinary early-stage startups across the world. For the last 8 years, she led strategy, business development & innovation across sectors and regions. Share your most challenging problem with her, she will passionately solve it by you!