If innovation is so important for business growth, why do so many companies get it wrong? The 6P Model for Making Innovation a Core Capability provides an overview of they elements any organization should have in place to support always-on, sustained innovation that delivers positive business outcomes. The original blog post for this content can be found at http://gregverdino.com/innovation-capability.

1. GREG VERDINO | WWW.VERDINOLLC.COM
MAKING INNOVATION A CORE CAPABILITY
THE 6P MODEL

2. Start
Innovation is the Key to Business Success
PETER DRUCKER
“The business enterprise “Innovation is the “An established company
has two - and only two – specific instrument of which, in an age
basic functions: marketing entrepreneurship. The act demanding innovation,
and innovation. Marketing that endows resources is not able to innovate,
and innovation produce with a new capacity to is doomed to decline
results; all the rest are costs.”
create wealth.”
and extinction.”
HOW WELL DOES YOUR BUSINESS INNOVATE?
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3. Innovation Upside
It Drives Superior Business Results
GROSS PROFIT
ENTERPRISE VALUE
Innovation isn’t all about starry Indexed mean of normalized Indexed mean of normalized
5-year CAGR
eyes and unfettered creativity.
5-year CAGR
Average
Average Across All 56
It is a business discipline that Across All Companies
provides a clear pathway to Companies
48
51
49
stronger performance in key 45
business metrics.
44
42
43
Companies that both exhibit strong
alignment between innovation and
business strategy, and possess a
supportive innovation culture
financially outperform their less
innovative peers.
Low
Moderate
High
Low
Moderate
High
LEVEL OF STRATEGIC+CULTURAL ALIGNMENT
SOURCE: Booz & Company, 2011 “Global Innovation 1000”
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4. Innovation Roadblocks
Why Do So Many Businesses Get It Wrong?
WHY DO INNOVATIONS FAIL?
Most senior executives rank 63% DON’T MEET CUSTOMER NEEDS
innovation among their top
Due to:
business priorities.
Inability to develop strong, market-relevant ideas
But many have not taken the Insufficient connection to customers
steps necessary to make Fear of failure
innovation a core capability
through sustainable programs 54% ARE TOO LATE TO MARKET
and repeatable processes.
Due to:
It’s no surprise that 80% are Too many in-flight innovation projects (lack of focus)
not satisfied with how their Too much innovation risk (unbalanced portfolio)
organizations innovate and Too much waste (inefficient, low impact process)
disappointed with the return on
their innovation investments.
Underdeveloped innovation capability
SOURCE: Accenture Innovation Survey, 2009: Top 2 reasons cited for innovation failure
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5. Mindset Reset
Rethink the Way You Think About Innovation
IT ISN’T OPTIONAL
IT’S NOT (JUST) IDEAS
IT’S NOT AN EVENT
“Innovation is the central job Innovation must focus on Real results require an
of every leader – business unit solving clearly defined always-on approach,
managers, functional leaders, challenges with applied sustainable processes and
and the CEO.” A.G. Lafley, creativity, a clear path to platforms that empower your
retired Chairman & CEO, P&G
implementation, and an eye people to function as a well-
on accountability.
tuned innovation capability.
IT’S NOT (ALL) iPHONES
IT’S NOT (JUST) R&D
IT’S NOT OUT OF REACH
Success requires leaders to Differentiate your business You don’t need to be a born
manage a diverse portfolio of across all core areas - from visionary, and you don’t need
radical, substantial and strategy, sales and customer a massive budget to win at
incremental innovations that service, to people, product innovation. You do need the
balance risks with rewards.
and process (and everything right attitudes, behaviors,
in between.)
strategy, and systems.
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6. The 6P Model
Make Innovation a Core Capability
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7. Purpose
Align Innovation With Your Strategy
And while a quick, creative approach to some new
new thing can sometimes pay-off, the “once is witty,
twice is shitty” principle comes on fast, and you’re
rarely left with a properly grounded, repeatable process
for making magic time and time again.
PURPOSE
Purpose means starting with why — why must we
Innovation must be purpose-driven. innovate in the first place. It means considering what
In other words, it must be fully — what do we hope to achieve through innovation. It
aligned with your organization’s then uses your overarching corporate strategy as a no-
overarching business strategy. This nonsense filter to turn innovation into a how — how
sounds obvious, but I’ve worked will innovation in this area empower us to more
with enough big brands and inside effectively deliver upon our top priorities; whether those
enough agencies to know that — priorities are revenue generation, top notch service
more often then not — this clear delivery, cost savings, vertical or horizontal expansion,
or just about anything else that differentiates your
sense of strategic purpose is the
company from its competitors.
exception more often than it is the
rule. We have a name for innovation
for innovation’s sake — we call that ARE YOU GROUNDING YOUR CALL FOR
the shiny object syndrome.
INNOVATION WITH A CLEAR SENSE OF PURPOSE?
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8. People
Build an Innovation Program of Substance
and the authority to make it happen, or might be
disengaged or disenfranchised. All of that said, these
people may be very good at what they do and
incredibly valuable to the company. But they’re not the
right people to drive an innovation effort.
PURPOSE
This doesn’t mean you need to restock your company
You’ve already got people, right? But with Steve Jobsian innovation super-humans. So who
have you got the right people? If do you need? People with the right mindset, for
you’re like many companies I’ve starters — individuals committed to the challenge of
worked with over the years, you change; who are well aware of the world outside your
probably have senior leaders on the walls; who can view your business challenges through
wrong side of the digital divide, too a series of new lenses, apply solutions from beyond
vested in the status quo, too resistant your team, department, company, industry or even the
to change (or scared of the business world itself.
repercussion), or too beholden to this And then you need to guide them, support them, and
quarter’s P&L. You probably have give them permission to fail.
staffers too tapped with their current
workload, who mean well but lack the
charter to drive change from within
DO YOUR PEOPLE BRING UNCOMMON, OUTSIDE
PERSPECTIVES & APPROACHES TO WORK DAILY?
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9. Process
Build an Innovation Program of Substance
ideas die on the vine? We all have.
A true, sustained innovation capability is governed by
clearly defined processes that govern how ideas get
surfaced, how they get evaluated, what criteria they
PROCESS
must meet to advance to the next stage, and what
happens when the company commits to testing the
OK, so now you’ve got your free idea in the market.
spirits and free thinkers — set them
loose, right? Well, not exactly. Process may not be sexy, but it’s necessary if you
Sustainable innovation, done right, want your innovation efforts to succeed.
means you’ll capture new ideas from
all corners of your company. All. The.
Time.
You know how you’ve gone into all
those standalone brainstorms, spent
an inspiring hour batting about cool
new concepts, then went back to
your workaday world as your new
HAVE YOU DEFINED & COMMUNICATED CLEAR
PROCESSES TO GUIDE YOUR INNOVATION PLAN?
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10. Platforms
Build an Innovation Program of Substance
PLATFORMS
Systems and software go hand-in-
hand with old fashioned process,
making it easier - and at scale,
possible - to move ideas to execution
efficiently, cost effectively, and with
the right number of checks and
balances. My purpose here isn’t to
promote specific platforms; there are
lots to choose from. They make your
life as an innovator easier and the
output of your process more viable.
Without them, even the best
innovation intentions will give way to DO YOU HAVE INNOVATION PLATFORMS IN PLACE
chaos over time.
IN YOUR ORGANIZATION TODAY?
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11. Partners
Build an Innovation Program of Substance
consider ways to bring nimble upstarts into the fold in
order to up the fresh ideas quotient, while leading
edge start-ups might consider how well resourced
multinationals could fund edgy new ideas. Public
sector and private sector can work together.
PARTNERS
The possibilities for partnership are limited only by
You didn’t think you could do it all your willingness to collaborate with others.
yourself now, did you? If you truly
intend to innovate (to create new
value for customers in order to realize
new value for the company) you might
want to think of your customers
themselves as your partners in
innovation. You may know this as
crowdsourcing… But as much as the
lines are blurring between company
and customer, the lines are also DO YOU INVOLVE YOUR CUSTOMERS,
blurring between company and COMPETITORS, COLLABORATORS & OTHER
company (even company and COMPANIES IN YOUR INNOVATION APPROACH
competitor). Large corporations might
TODAY?
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12. Performance
Define, Measure & Reward Innovation Success
core capability (much less a cornerstone of a
company’s culture) when the only measures of
performance relate to near term profits, successful
completion of day-to-day tasks, and other measures
of the here-and-now. Of course those things are
PERFORMANCE
important - there’s no sense in prepping your
business for tomorrow while you run the risk of going
Way back at the First P, I wrote that out of business today.
everything starts with purpose. But,
truth be told, performance is as good But a truly innovative organization knows that the
a place to begin and one of the most right incentives, rewards, and recognition systems are
critical components for innovation necessary conditions for innovation excellence. Think
success. Let’s be frank — it feels intrinsic rewards (status, recognition) as well as
good to talk about innovation, but it’s extrinsic rewards (prizes, money). Think beyond the
a different matter to rework the way check box on the performance appraisal…
we incentivize our people to make it
worth their while to bring new ideas,
process improvements and more to
the table on a routine basis. Simply HOW DO YOU MEASURE THE IMPACT OF
put, innovation will never become a
INNOVATION AND REWARD THE PEOPLE WHO
MAKE IT HAPPEN?
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13. Work
LEARN MORE ABOUT HOW GREG CAN HELP YOU
GREG VERDINO
MARKETING STRATEGY & INNOVATION
GREG@VERDINOLLC.COM
631.747.1451
WWW.VERDINOLLC.COM
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