The IBP advantage: The role of innovation management

Welcome to part three of this white paper series. We are going to spend some time looking at the role of innovation and the benefits a clear innovation strategy and execution framework can deliver to unlock portfolio growth.

Fact: many organisations lack an innovation strategy

Innovation is often used as a vehicle for gap-filling rather than a strategic driver for short, medium, and long-term growth. However, innovation growth through the right value proposition is imperative. Organisations need to be very clear about the value a new product to the market is generating for the consumer, the customers, and the company – focusing on the “triple win”. In this space, marketing, product, and insight teams play a key role. Whether it’s getting a clear view of the consumer or customer path to purchase or looking at untapped demand spaces or category drivers, insight should be at the heart of innovation to focus the effort. A scatter gun approach rarely delivers long-term success. This also applies when external pressure is given by regulatory changes (e.g. sugar tax) or changing technical standards (e.g. carbon emission, use of solvents, recyclable plastics, or new substrates). The focus and initiation might be different between internally or externally driven innovation, however the result should ideally support business growth or at worst mitigate costly impacts forced on reformation. These changes should also ultimately be connected back to the brand or broader portfolio strategy.

As part of the innovation strategy, organisations should be clear when planning to innovate, where to lead and where to follow, which should align with their broader value proposition (e.g. market leading or fast followers) and what this means to the organisation in terms of capability and structure. Clarity is also needed on having a clear execution plan, detailing how, where, and when to scale vs where and when to incubate, and how this forms part of the proposed lifecycle or product roadmap. The underpinned assumptions should then be shared in the right way across Integrated Business Planning (IBP) to build one cross-functional aligned portfolio master plan.

However, gap-filling activities will always be part of the daily business, in particular during times of business decline or challenging market situation. This needs to be carefully and consciously managed via the Portfolio Review – aligning on these activities to restrain from a purely tactical approach. Gap-filling often endangers the big innovations, as resources get distracted and drawn into the short-term fire-fighting.