Before any function can be created it needs a definition of its purpose, a Mission Statement. When organizing for corporate innovation the first time, or reorganizing an existing department, it’s important that a Mission Statement clearly communicates what it is going to do, defines success, and sets limits to its scope. The Mission Statement should be considered an absolute, because what is not included in it is as important as what is.
In the past decade corporate innovation organizations have reacted to pressures dynamically and have gone through significant changes. The most meaningful is the integration of marketing concurrent with the technology development. There were a few steps in this evolution, the first being a fundamental shift from R&D being independent from the consumer (for example the AT&T Bell Labs approach) to one where the purpose of R&D was to be focused on meeting consumers’ needs. This change was first described by Philip Roussel et. al in Arthur D. Little’s 1991 book “3rd Gen R&D” by Harvard Business Press. In the 30 years since corporate innovation organizations have evolved to become creators of new businesses, not just creators of new products. Their Mission Statement needs to reflect their purpose and potential.
A Proposal for a Universal Mission Statement for Corporate Innovation Organizations:
Increase the corporation’s profit via top-line growth. Identify meaningful consumer-driven opportunities, develop products that customers will purchase, and bring them to market in the most effective way.
This statement is in four parts. Each one is intended to have a specific purpose towards defining what an innovation organization should do, how it is measured, and by exclusion what is out of its scope.
“Increase corporation’s profit via top-line growth.”
Innovation can be focused on growing the business through new products, or by introducing new technologies and processes to improve efficiencies of existing products. In some companies both goals are within the same reporting structure, which is fine. However, they should be led, managed and budgeted independently. The overarching reason for this is a difference in team makeup. Although both growth and efficiency innovation requires deep technical capabilities, the growth organization also needs expertise in consumer research, business planning and marketing. Managing these ‘qualitative’ aspects of new product development requires a different approach to management, process, and goal setting than an highly technical and thus measurable one.
“Identify meaningful consumer-driven opportunities…”
This part of the statement speaks for itself. The purpose is to be explicitly clear that the focus on a corporate innovation organization is the consumer. The word ‘meaningful’ is also important. How that is defined for each company or project will depend on the circumstances. However, the expertise lies in reducing the uncertainty that surrounds it. Conducting consumer insights and research is critical to defining the unmet need or unfulfilled desire. Bringing a skeptical business mindset is needed to define the market size and rate of growth needed to determine if the opportunity is a business opportunity worth pursuing.
“…develop products that customers will purchase…”
This statement defines success in the product design and development as driven by the market. For example, developing solution that meets a need perfectly, but is too expensive for the target consumer, or too challenging to bring to market, would fail to meet the mission of a corporate innovation organization. An corporate innovation organization needs to be capable of, and empowered to, make tradeoffs that will deliver a product that consumer can and will purchase. Unfortunately, this is an area of weakness in traditional consumer research methodologies. To appropriately reduce risk, innovation research increasingly relies on market simulations to understand how pricing and retailing impact their business.
“…and bring them to market in the most effective way.”
A short phrase, but often the most resource consuming phase of successful corporate innovation. It’s also the area corporate innovation organizations missions have changed the most. Today’s innovation organizations should have the capabilities to define the new product’s market strategy, route to market, sales channels and branding. Leaders knew that keeping marketing separate from R&D always risked delays and costs. But it was only with the rise of market-winning competition from fast-followers, that they realized it also meant that many products were ‘not quite right’ for their market. Subtle but important differences can be found in new technologies developed integrally with marketing and those that were not. Drinkworks is a good example of a new product that combined marketing and technology development into a single stream. One of the definitive impacts this approach had were decisions to pivot from the original technology of beer concentrate to a market-driven product based on providing cocktails at home. that helped make it an excellent fit with the market, consumer and retailers.