Innovation & Design

Now Is Not the Time for Caution


Our special report looks at how innovation can steer a company's strategy, even in tough times

In times of economic hardship, businesses are more tempted than ever to batten down the hatches. After all, management literature agrees: Transformative innovation involves taking a risk with absolutely no guarantee of a payoff. And who would want to get tangled up in that type of strategy just as a company's core business is struggling? Surely only a crazy person.

Not so fast. As the saying goes, "When everyone zigs, zag." And, as our two guest columnists argue in this BusinessWeek special report on Growth Through Innovation, a resilient approach to innovation, whatever the economic weather, is critical to building long-lasting businesses.

Mark W. Johnson, chairman and co-founder of Innosight, a consulting firm that specializes in disruptive innovation, argues that the apparent contradiction between sustaining an existing business and taking a chance on something new arises because it's centered on the wrong question. "We've been paying too much attention to what companies do—and not enough to why they do it," he argues in his illuminating column on the need for business-model innovation. "So as an antidote, let's return to first principles and ask the most basic question: What made your company successful in the first place?" By reframing the question, new growth opportunities can become clear.

That's how the San Diego Zoo & Wildlife Park faced up to trouble on the horizon, realizing that despite healthy revenue figures, its business model was unsustainable in the long term. By stepping back to reassess the organization's position in the market, zoo executives identified various areas of opportunity. To date, two initiatives have been implemented successfully with 11 more in the pipeline, ready for successive rollouts.

Systematizing Innovation

Neither growth nor innovation has to spark a culture of chaos. As Roger Martin, dean of the Rotman School of Management in Toronto, explains through the early years of McDonald's (MCD), growth can be systematized through a combination of analysis and intuition. Martin's latest book, The Design of Business, from which this essay is excerpted, expounds his ideas on design thinking, a discipline gaining fans among executives looking to explore new markets and new ways of growing a business.

Also in this Special Report: case studies on two candy makers with very different approaches to growth and innovation. Upscale Belgian chocolatier Godiva recently introduced lower-priced bags of candies in supermarkets such as Publix and Safeway (SWY), with executives forecasting that the new lines will help double revenue by 2014. In contrast, the innovation cupboard at American candy giant Hershey has grown bare. In the mid-2000s, Hershey (HSY) regularly launched more than 200 products a year. Through the first three quarters of 2009, just 40 items have made their debuts. The message is stark. No innovation? No growth.

Finally, take a look at how innovation can spur growth on a global scale. On Sept. 21, President Barack Obama released his Administration's Strategy for American Innovation: Driving Towards Sustainable Growth and Quality Jobs. The white paper outlined the "grand challenges of the 21st century," broad issues affecting industries from health care to transportation. Taking our lead from the document, we outline 25 ways to rebuild America—and the companies that might make those ideas a reality.

Helen Walters is the editor of Innovation and Design at BusinessWeek .

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