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The Rise of Growth Innovation: A Survival Guide for Corporate Innovators

QUICK SUMMARY

The speaker argues that innovation is at a critical turning point where it must transform from being treated as a cost center to becoming a true revenue-generating function. Companies are increasingly prioritizing new sources of revenue growth over digital transformation, indicating a fundamental shift in innovation priorities. Growth Innovation requires explicitly aligning innovation activities with revenue streams across short, mid, and long-term horizons, with innovation teams sharing the same growth goals as business units.

KEY QUOTES

  • “Innovation is expected now to be a performance function.”
  • “If what executives are saying in our survey is true and that new sources of growth, of revenue growth is the big priority, then innovation must become a revenue [driver].”
  • “We know something else, which has come out of a lot of those conversations we’ve had with senior folks at a lot of our customers, which is, um, quietly, at least some companies have said to us, look, um, we make projections for the future to Wall Street… when we look back several years later… it doesn’t quite pan out like that in most cases.”

FULL SESSION SUMMARY

The Changing Innovation Landscape

The speaker begins by reflecting on their 12-15 years of attending FEI conferences, noting how innovation priorities have evolved from ideation and crowdsourcing to design thinking and digital transformation, with AI now taking center stage. However, they emphasize that something feels fundamentally different in the current innovation climate. The speaker introduces their company, Wellspring, a software provider focused on innovation and IP management.

The presentation highlights a growing sense of uncertainty in corporate innovation. Despite COVID being “more or less over,” many companies have put major innovation initiatives on hold due to economic uncertainty, geopolitical concerns, and other external factors. Most significantly, their annual study revealed a dramatic shift in business priorities: for the first time, “new sources of revenue growth” has overtaken “digital transformation” as the top innovation priority by a 15-20 point margin.

Innovation’s Performance Gap

The speaker identifies a critical disconnect between innovation investments and actual business results. Many companies privately acknowledge that their growth projections to Wall Street consistently fail to materialize despite increased innovation spending. Survey data reveals that few organizations strongly agree they consistently meet or exceed innovation goals. Key contributing factors include:

  1. Most companies don’t reliably hit launch dates for major innovation initiatives
  2. Organizations struggle to know when to kill underperforming projects
  3. Innovation is not yet treated as a true performance function

The speaker presents McKinsey data showing that companies growing primarily through acquisitions (inorganic growth) outperform those relying on organic growth by approximately 400%. While this might suggest abandoning innovation efforts, the speaker argues this indicates a need to fundamentally improve how innovation delivers value.

The Black Box of Innovation

The presentation describes the typical innovation approach as a “black box” where:

  • Corporate strategy is broadcast broadly
  • Innovation and R&D teams develop bottom-up projects
  • Projects move through stage-gate processes with varying success
  • Senior leadership views innovation as a cost center with uncertain returns
  • Business unit leaders struggle to connect innovation activities to near-term results
  • Innovation teams work in silos with limited visibility into market impact

This black box creates numerous problems, including zombie projects that consume resources without delivering value, difficulty securing funding for potentially disruptive innovations, and innovation being treated as a cost center rather than a growth engine.

Growth Innovation: A New Approach

The speaker introduces “Growth Innovation” as a solution – explicitly managing innovation as a revenue-generating function rather than a cost center. This approach requires:

  1. Making innovation explicitly about revenue streams across multiple time horizons
  2. Recognizing that all revenue streams have natural decay rates requiring continuous innovation
  3. Directly translating corporate growth priorities into innovation goals
  4. Aligning innovation goals with business unit goals
  5. Managing innovation as a portfolio of interdependent projects tied to specific revenue streams
  6. Bringing business and innovation leaders together for holistic decision-making

The speaker emphasizes that this approach has delivered measurable results for organizations, citing a Forrester study showing improvements in time-to-market, innovation efficiency, and team productivity.

KEY TAKEAWAYS

  1. Innovation priorities are shifting from digital transformation to new sources of revenue growth, indicating a fundamental change in how companies view innovation’s purpose.
  2. Innovation is still treated as a cost center in most organizations despite its potential to drive growth, making it vulnerable during cost-cutting initiatives.
  3. The “black box” of innovation creates disconnects between corporate strategy, innovation activities, and business outcomes, leading to wasted resources and missed opportunities.
  4. Growth Innovation requires explicit alignment between innovation activities and revenue streams across multiple time horizons.
  5. Successful innovation management requires treating it as a performance function with the same rigor as other business operations, including centralized systems to track dependencies and measure outcomes.
  6. Companies must manage innovation as a portfolio of interdependent projects rather than evaluating initiatives in isolation.
  7. Innovation and business teams must share growth goals and collaborate on decision-making to ensure innovation delivers meaningful business impact.

DELIVERY ON EVENT FOCUS: Aligning Innovation with Business Strategy

The presentation directly addresses the event’s focus by proposing a framework that explicitly connects innovation activities to business strategy through shared revenue goals. The Growth Innovation approach ensures alignment by:

  • Translating corporate growth priorities directly into innovation objectives
  • Requiring innovation teams to understand how their work supports specific revenue streams
  • Creating shared accountability between business units and innovation teams
  • Establishing decision-making processes that evaluate innovation initiatives based on their contribution to strategic growth goals
  • Implementing systems that provide visibility into how innovation activities collectively support business strategy

DELIVERY ON EVENT THEME: Harvesting Innovation and Sowing the Seeds of Future Growth

The presentation supports the event theme by addressing both near-term innovation harvesting and long-term growth:

  • Harvesting Innovation: The Growth Innovation approach improves the yield from current innovation investments by killing underperforming projects faster, focusing resources on initiatives with clear revenue potential, and accelerating time-to-market.
  • Sowing Seeds of Future Growth: The framework explicitly accounts for innovation across multiple time horizons, ensuring organizations invest appropriately in future revenue streams while managing current ones. By understanding the natural decay of existing revenue streams, companies can proactively develop innovations to replace or enhance them.

ACTION ITEMS FOR INNOVATION EXPERTS & CORPORATE CHANGEMAKERS

  1. Reframe innovation as a revenue function in all communications and planning documents, explicitly connecting innovation activities to current and future revenue streams.
  2. Map your innovation portfolio to specific revenue streams and time horizons, identifying gaps and overlaps in your current approach.
  3. Establish shared growth metrics between innovation teams and business units to create joint accountability for revenue generation.
  4. Implement a centralized innovation management system that provides visibility into project dependencies and enables portfolio-level decision making.
  5. Develop a formal process for evaluating and killing underperforming projects to free resources for higher-potential initiatives.
  6. Create a revenue stream decay model for your industry to better understand how quickly current revenue sources will diminish and when new innovations need to be ready.
  7. Restructure innovation governance to include both business and innovation leaders in key decisions, ensuring holistic evaluation of initiatives.
  8. Conduct an honest assessment of your organization’s innovation performance, measuring actual returns against projections over the past 3-5 years.
  9. Identify and eliminate “zombie projects” that consume resources without clear paths to meaningful revenue contribution.
  10. Develop explicit innovation strategies that go beyond growth targets and portfolio balance to specify exactly how innovation will capture value in the market.