clarification is important because, as discussed in other sections of this e-book, sustainable growth through innovation requires a company to pursue multiple types of growth at the same time. The company needs to measure, manage, and staff these different types in different ways. A lack of clearly defined growth types almost always suboptimizes one type of idea to the detriment of the whole enterprise.
A theme that we will repeat throughout is that there isn’t one perfect way to categorize different types of growth pursuits. For example, P&G has identified four distinct growth types:
1 Commercial—efforts to increase trial and usage of existing products without changing the product itself. P&G’s innovative Old Spice marketing campaign involving actor Isaiah Mustafa that generated close to 2 billion public relations impressions and propelled the deodorant into category leadership in 2010 was a powerful commercial innovation.
2 Sustaining—the “er” innovations that take existing solutions and make them better, faster, cheaper, and so on. Sustaining innovations like new scents or formulations for different washing machines helped the Tide brand grow significantly even in mature markets over the past decade.
3 Transformational—step-changes whose dramatic improvements reframe a category. An example of this form of innovation is Crest 3D White, a line of advanced oral care products, including one that whitens teeth in two hours.
4 Disruptive—new brands or business models that win through simplicity or affordability. P&G’s quick cleaning line of Swiffer products disrupted the staid mop-and-broom industry.
Citi has defined a different (though somewhat related) set of growth types to guide its innovation initiatives. Specifically, in 2011, Citi defined three types of innovation:
1 Core—improvements to existing offerings in existing markets or internal process improvements that increase efficiencies within the current business model. For example, the “Citi for Cities” team helps government clients improve service levels, efficiency, and security.
2 Adjacent—“new to Citi” innovations that either extend existing products to new markets or leverage existing Citi capabilities, assets, or relationships to bring new-to-Citi solutions to market. For example, in 2011, Citi launched “Citi Velocity,” a new online information channel that allows traders and clients to have instant access to Citi research and real-time market information.
3 Disruptive—“new to the world” innovations that reframe markets and create new ones. For example, Citi recently partnered with Jumio, a Silicon Valley start-up that leverages cameras in any mobile phone, tablet, or laptop to increase the security of remote payments.
Setting these definitions was an important step in Citi’s efforts to manage innovation more systematically. Common definitions enable each of Citi’s diverse business units to assess and describe their innovation portfolios consistently, positioning Citi to deliver against an important strategic goal of former CEO Pandit: the creation of a Citi-wide innovation portfolio view.
Despite differences in nomenclature, these two organizations define their growth types in ways that share important commonalities:
1 At least one type explicitly focuses on “noncore” growth from new markets or new customer segments.
2 There are explicit and well-documented differences between types. P&G has simple checklists that help teams ensure they are following the strategy they want to follow. Citi developed a tool to help teams categorize and evaluate innovation projects by answering a straightforward set of questions.
3 The types are integrated into other elements of the growth factory. For example, Citi Transaction Services uses the growth types to organize and optimize initiatives and investments for greatest impact and scale.
It’s impossible to imagine building a factory without first defining what that factory is going to produce. Detailing growth types is an important step on the road to the systematic pursuit of growth.
Diagnostic Questions for Leaders
Do we have clear definitions of the different types of growth we will pursue?
Does at least one type focus on sources of growth beyond today’s core business?
Do all our leaders understand these definitions, are they aligned on them, and are they using them to manage innovation efforts?
Are our growth types integrated into other management systems?
Warning Signs
Definitions with significant “wiggle room” in interpretation
Purely internal definitions that lack a market lens
Disconnects between growth types and critical governance and controls systems
Further Reading
Brown, Bruce, and Scott D. Anthony. “How P&G Tripled Its Innovation Success Rate.” Harvard Business Review, June 2011.
1b. Growth Goals and Guidelines
Specific, Shared Targets and Clear Definitions of Tactics That Are On and Off the Table
There is a persistent image of an innovator as an unshackled, improvisational change agent. In reality, unfocused innovation efforts tend to struggle. Instead, companies should create clear goals and guidelines for their growth factory.
Growth Goals
Any well-run manufacturing factory has a detailed production schedule that details desired output. Similarly, companies building a growth factory should have at least four different levels of targets:
1 Overall company performance targets that describe short- and longer-term revenue and profit goals
2 Specific targets for each growth type spelling out how much each will contribute to the overall targets
3 Operational targets splitting out growth goals by relevant operating units (e.g., business units, geography)
4 A short list of the strategic opportunity areas that offer the most growth potential (e.g., customer segments, big problems to solve, critical technologies to pursue, game-changing regulatory developments)
For example, Procter & Gamble has clearly articulated targets for its growth efforts over short, medium, and long time horizons. It carefully details where that growth should come from, developing a target portfolio that considers balances such as organic or acquisition; domestic or international; growth from existing categories or new category creation. P&G gets specific, analyzing which markets it plans to target and, by default, which markets it will not target.
Citi has begun to incorporate an innovation lens into how it sets its own growth targets. Some of Citi’s largest businesses are now analyzing and moving toward balancing their growth pipelines by focusing on Citi’s growth types of core, adjacent, and disruptive innovations. In addition, Citi has established a number of strategic opportunity areas that orient its innovation efforts. For example, the Citi Ventures unit, which is a primary catalyst for adjacent and disruptive innovation, has defined six strategic focus areas. These focus areas—influenced
