Innovation - what’s it worth?

By: Paddy Willis

Our Chairman and co-founder, Paddy Willis, recently participated in a fascinating discussion at the IFE show, "Buy or Build - where next for NPD innovation?". Paddy was joined on stage by Gerardo Mazzeo, previous Head of Global Innovation for Nestle, and Mike Anstey, CEO of Pilot Lite Ventures.

One of the biggest takeaways from the discussion was the observation that if you don't measure it, you can't reward it. Gerardo pointed out that innovation rarely features in the KPIs set by large corporations for their teams. As a result, there's almost no incentive for Management teams to adopt radical innovation within large manufacturers. Add in the risk of screwing it up, and suddenly putting yourself out there to champion a bold idea is less attractive. 

This is in stark contrast to startup founders who put everything on the line to make a success of their innovation. 

Source: Deloitte, Making the Deal Work, Strategy Report

You'll often hear us say, "just because you can doesn't mean you should!". Product-led innovation is a trap that big and small companies are equally guilty of. Challenger brands, in particular, often require support in clearly identifying a real consumer need; this is something we've helped many founders discover. But what motivates startup founders to take innovation risks?

For brands like Nestle, most innovation work is renovation and updates of existing products. A recent report from Deloitte shows that most Corporate Investment is placed in core and adjacent areas where overall investment returns are low. The same report indicates that transformational areas of innovation that have the potential to attract new customers or create markets attract just a mere 10% of total investment. However, this innovation has the potential to drive much higher returns.

This transformational arena is the heartland for challenger brands. According to Nielsen, startups continue to punch above their weight in most categories, typically delivering twice the growth from NPD than their corporate neighbours.

By harnessing the power of startups, Mission Ventures de-risk and accelerate the growth of investments in this transformational area. Of course, the risks are higher, but so are the rewards and opportunities for bringing about game-changing innovation. 

Will any innovation managers find their KPIs adjusted to reflect the potential for rewards? We won't be holding our breath.