THE FUTURE OF INNOVATION
Practice and Possibility among the Most Effective Large Corporations

EXECUTIVE SUMMARY

Based on extensive interviews with executives leading innovation in large corporations - - ranging from the CEO level to the project manager level - - this study concludes that, in terms of process strategy, the most effective innovation programs

draw the widest possible inputs from all sources, within and beyond a company’s boundaries, including suppliers, customers, and broad networks of other sources;  place this collection of ideas into competition with each other, with as much judgment coming directly from the marketplace as early as possible in the process; and  base their innovation processes in part on a back-to-front model, with a coherent plan and an effective team identified early in the innovation process for eventually moving successful new products or services from incubation to mainstream production.

In terms of tactics and day-to-day practice, three key points of consensus are widely held among innovation executives at large corporations:

Vocal Support from the Top - - Strong and frequent messages from the CEO of an innovating corporation are essential. The core message must be vivid, perhaps even extreme: without a commitment to innovation, the company has no future.

Refuge and Champion - - Innovators must be given refuge from day-to-day demands of corporate life to the fullest extent possible, and they need a senior management champion to “fly high cover,” as one former Procter & Gamble executive put it.

Fight the Immune Response - - No matter how effective and heartfelt top-level support for the messy and threatening work of innovation is, large organizations can’t help but put barriers in the way of innovation. Innovation leaders have to expect this, and fight strategically against the various barriers certain to emerge, including “sales prevention departments” like legal and loss-prevention that will object to important new ideas; “feature creep” that loads good new ideas with too many expectations for performance features; and star treatment for high-performers who will often try to shoot down new projects they find personally threatening.

The most significant emerging trends in innovation management are well articulated by BellSouth’s Steven Tischer, who sees the development of new ways of relating to customers as more important than creating new products and services.

We are approaching an age in which, as Chevron’s Ray Buschmann put it, “we're going to get closer and closer to the point that our products won't wear out." We’re approaching a point at which computer memory will be almost infinite, and almost free; a moment in which highest-quality production will be available for a broad array of products at remarkably low costs.

Given these emerging realities, differentiation in the marketplace will in the future come far more from the quality of the relationship with the customer, rather than the quality of the products and services being delivered.

The net result of these changes is that consumer marketing will come to look a lot more like business-to-business marketing, with a much higher degree of collaboration, consumer control of manufacturing, delivery and packaging, and the professional-services-firm model replacing the old manufacturing model, as every enterprise becomes, to a degree, a consulting enterprise.

Executives from the following companies were interviewed and have comments in the full study:

Unilever		Microsoft
Hewlett-Packard		Shell International
Herman Miller		BellSouth
The Coca-Cola Company		Sun Microsystems
Reuters		The Turner Corporation
Chevron Global Lubricants		Lucent Technologies
Procter & Gamble

Comments from several executives interviewed from other companies are included anonymously, at their request.

In addition, analysis of innovation programs and practice at these companies are included, based on publicly available information:

 IBM
 3M
 Xerox
 Eli Lilly
 Apple Computer