Innov

ation When it comes to innovation and growth, corporate leadership faces a paradox. On one hand, visionary opportunity identification is essential to the long-term growth of the enterprise. On the other, operational challenges and revenue objectives mandate a focus on short-term results. Innovation is the engine that drives a company’s growth and profitability. Like the pursuit of good health, the quest for corporate growth is an everlasting and disciplined exercise. Just as fit individuals must strengthen their bodies through a multitude of activities, corporations must pursue well-rounded growth strategies, from incremental improvements to disruptive breakthroughs that create new industries and markets. Although incremental innovations are critical for protecting revenues through growing market share, substantial growth over the long horizon requires discontinuous or disruptive innovation. It is not surprising that up to 50% of annual company revenues[1] in some industries are derived from new products (defined as products launched within the past 3 to 5 years).

Most companies do see a direct tie between innovation success and their long term viability, and they are reluctant to do anything drastic unless in absolute essential need. There is a very good possibility that companies will look back at cutting margins, especially if the economy continues to ratchet downward.

While it remains that companies have not significantly improved the quality of their new product execution, the bigger factor explaining the decrease in innovation productivity is the lack of effective product portfolio planning and development of innovation strategies that are aligned with the company’ goals. Companies lack the systematic ability to visualize and balance investments in incremental innovations versus identifying and investing in projects that drive a sustainable competitive advantage in the future. The product portfolios over the past few...