Scaling Up Transformational Innovations

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For large companies operating in mature sectors—such as Procter & Gamble in consumer goods, Apple in consumer electronics, and Adobe in cloud software—driving growth is a perennial challenge. Growth through acquisition is always an option, but many companies quickly find that the costs outweigh the benefits.

The only reliable path to maintaining market leadership is what is widely known as transformational innovation—major changes in products and services that redefine customers’ expectations by delivering significantly improved performance, providing new kinds of value, resolving long-standing trade-offs, and/or radically reducing manufacturing costs. Think P&G’s Tide Pods laundry detergent, the Apple iPod, and Adobe’s subscription software as a service.

But innovation of this type is not only difficult to envision; it is also extremely challenging to develop and scale up. Even companies that invest in R&D on transformational innovations often terminate projects with compelling value propositions during the expansion phase because they are reluctant to commit the necessary resources. Many that invest to scale up big-bet innovation projects do so only to see them fail.

Based on the experiences of Procter & Gamble and other big companies the authors shared a playbook for scaling up transformational innovation. It’s organized around four major challenges: providing sufficient leadership, building the right team, unlocking resources, and making big-bet decisions.

1. Providing Sufficient Leadership.  The leader of a business in which a transformational innovation is taking shape—typically the CEO or a business unit president (we’ll refer to this role as the CEO hereafter)—has a formidable responsibility: to manage the current business, which generates significant revenue and needs continual incremental innovation to hit short-term growth targets, while championing the transformational innovation that will lead to future growth, which requires large investments in resources and leadership attention. Unfortunately, many CEOs are biased toward focusing on the current business.  A quick scan of a typical CEO calendar supports this claim.  CEOs can carve out time for transformational efforts in three ways:  delegate operating decisions, articulate a purpose, and establish the right cadence for project stakeholder meetings.
2. Building the Right Team.  A CEO’s primary role in a transformational innovation is to partner with the senior R&D executive on the lead team to ensure that the organization gives the project the space and resources it needs to expand.  To give the team the expertise it needs, for example, to scale up a transformational innovation, the CEO should make two key appointments: the integration leader and the commercial leader.
3. Unlocking Resources.  Scaling up transformational innovations requires the whole organization to do substantially more work, typically with no increase in total resources. Two approaches are useful here: leveraging centralized sources of funding and staffing and finding ways to free up resources within the business unit.

Decision-making for transformational innovations requires projecting into an uncertain future. Business leaders need to agree on relevant measures that will dictate the decisions to scale up and launch. They must also avoid falling back on an overly cautious approach. The following can help:  focus on forward-looking metrics and know when to be bold.

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