HBR: Focus Intensely on a Few Great Innovation Ideas, by Georg von Krogh and Sebastian Raisch, Oct 2009
The global companies that are the most successful at achieving growth through innovation (as opposed to acquisitions) tend to devote their energies to a small number of breakthrough ideas. They select the initiatives with the greatest market potential and marshal their resources to develop them.
The organic-growth champions do more than focus on breakthrough ideas. They also put innovation at the top of the agenda, work across functional and divisional boundaries, and empower employees with an entrepreneurial mind-set.
Obviously, pursuing dozens of innovations is less expensive than developing thousands. But it also requires an intense focus on picking winners and commercializing them.
In a study of organic-growth champions— including GE, BMW, Nestlé, and Samsung— researchers at the Center for Organizational Excellence in Switzerland found that the firms’ shareholder returns were almost double those of the other Global 500 companies (which had lower rates of organic growth).
Procter & Gamble focuses its R&D on just eight to 10 core technologies, and Nestlé … allocates large budgets to the 10 most promising innovations.
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