Innovation
Creating Value By Unlocking Total Innovation
2 examples: Nabisco and Gillette were both in a challenging situation. Both had consistently under-delivered Wall Street’s financial expectations and the company’s own EPS guidance numbers. Nabisco, since its 1995 IPO following the 1988 buy-out by KKR that was popularized in the book and HBO movie Barbarians at the Gate, had only 10% of its U.S. products (including cookies, crackers, confections, and specialty products) growing retail consumption and market share… and it had spent about $100 million less in 1997 on advertising than it did in 1987. Compounding all this was the complexity of its capital structure and its association with tobacco via Nabisco’s ownership by RJR-Nabisco, a holding company owning 80.5% of Nabisco and 100% of RJ Reynolds. Gillette had similar issues over the 1995 – early 2001 period, including under-delivering on sales, profit, EPS and ROA growth targets as well as having a strong but dysfunctional organization motivated and driven more by effort then by results.
The new management team at both firms developed a growth vision and Strategic Plan; including the recognition that innovation needed to play a significant role in turning around and sustaining the company’s marketplace and financial performance to enhance shareholder value.
Specific PKA Innovation Management topic areas for talks and project work:
What ‘Total Innovation’ means and why needed
Success model and alternatives
Practical examples of innovation across the value chain/business system (e.g., that resulted in 88% of Nabisco’s U.S. retail businesses increasing its retail consumption and market share in 1999, 90% in 2000, and in meeting or exceeding Wall Street’s consensus EPS expectations for 10 straight quarters before it was sold following a public auction)
Key Messages
Why Companies Need Innovation
Total Innovation: What is it, why it is critically important?
Innovation Barriers & Characteristics
A Success Model & Strategies + Key Initiatives for Inculcating Innovation
A Process Framework and Specific Monday-Morning How To's
Examples Across the Value Chain
5 organization enablers for innovation
Passionate senior management commitment to innovation
A corporate culture that fosters innovation
Significant innovation talent
An organizational structure that facilitates innovation for current and new business
Effective teamwork throughout the process
Conflict transformation... leading through conflict!
When conflict is confronted it is more likely to catalyze innovation solutions versus polite conversation, issue avoidance, and denial
New Products and New Product Development ... Internal, Organic Growth
Key messages, takeaways
Successful new products: Lessons learned, cases and principles
Criteria for evaluation: ‘marketing + financial success’, nothing else counts!
New product process that works; including identifying Strategic Growth Opportunity Areas (SGOA's), with the client's basis-for-interest and key success requirements