This document discusses innovation and provides strategies for organizations to improve their innovation portfolios. It introduces the concept of horizons of growth that categorize innovations according to their time horizon. Horizon 1 involves extending the core business, Horizon 2 focuses on building emerging businesses, and Horizon 3 creates options that may disrupt or challenge the existing business model. The document argues that organizations often underfund Horizon 2 innovations and lack focus for Horizon 3. It provides recommendations to address blockers at each horizon, such as empowering employees for Horizon 1, providing dedicated funding and teams for Horizon 2, and establishing a clear strategic thesis for Horizon 3.

1. COVER WITH
IMAGE IN BGENABLING
INNOVATION
A designers
perspective.
July 2016
@thomas_thinks
@frogdesign

2. THE INNOVATION PROCESS
2
NOW EXPLORE FUTURE
Innovation is the process by which we explore and build the future.
Its goal is to build a future which is better than the present.
BUILD

3. THE INNOVATION PROCESS
3
NOW EXPLORE FUTURE
Innovation requires specific capabilities and behaviours to succeed.
It also required enabling environment, which many large organisations fail to provide.
BUILD
Understand your Users
Identify problems
Explore opportunities
Develop Hypotheses
Prototype solutions
Test hypotheses
Iterate and Learn
Select & Invest
Build solution, market, &
organisation in parallel
Sustain investment
Deal with legacy conflict
Grow the market
Normalise the business

4. INNOVATION IN BUSINESS
4
The basic model for how innovation impacts business is the “S-curve”.
By investing time and money now, you make more money in the future.
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5. INNOVATION IN BUSINESS
5
“Innovation” is everything that is not “business as usual”.
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time
Innovation Business as usual
Many companies under-estimate the time and/or cost needed to
develop successful innovations. That leads them to starve their
innovation pipeline or demand business results too early.

6. THE INNOVATION PORTFOLIO
6
In a portfolio approach, the profits from mature businesses fuel
the investments for the next wave of innovation.
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7. THE INNOVATION PORTFOLIO
7
This is the basis of the “horizons of growth” model1 which defines 3 different
areas of focus for innovation according to the time horizon.
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time (in which value is realized)
HORIZON 1
HORIZON 2
HORIZON 3
Extend & defend
core business
Build emerging
businesses
—
Create viable options
—
1 from McKinsey & Company, “3 Horizons of growth”
May modify or
disrupt existing
business models
May challenge
definition of who you
are as a company

8. THE INNOVATION PORTFOLIO
8
An ideal innovation portfolio looks like this.
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time (in which value is realized)
Clusters of horizon 3
initiatives generating
insight and foresight
around areas of strategic
interest
A strong portfolio of
horizon 2 initiatives that
provide positional
advantage
A steady pipeline of horizon
1 initiatives focussing on
superior execution.
Increasing senior management
direct involvem
ent

9. THE INNOVATION PORTFOLIO
9
Too often, real innovation portfolio’s look like this. This pattern is typical
of companies that have fallen into the “success trap”2.
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time (in which value is realized)
There are lots of horizon 3
initiatives but they are
scattered and lack
strategic commitment.
There are too few
horizon 2 initiatives,
and they are precariously
resourced.
Horizon 1 initiatives take up
most of the innovation funding,
but often fail to deliver ROI.
2see https://hbr.org/2015/11/dont-let-your-company-get-trapped-by-success
Senior management
attention almost is
entirely on horizon 1.

10. How do you get out of
the success trap?
(some hypotheses based on
observation)
10

11. HORIZON 1 THE SELF-INNOVATING ORGANISATION
11
The people doing the
day-to-day business of
the company are the
best-placed to discover
horizon 1 innovation
opportunities.
How do we unlock
that potential?
BLOCKERS
• busy with your day job, no time or
budget for innovation
• not empowered or accountable
• no clear path forward for
innovative ideas
• lacking specific skills (e.g. user-
centered design, business case
assessment)
• hard to form interdisciplinary
teams due to departmental
boundaries
• top-down innovations fail due to
lack of adoption
ENABLERS
• devolve accountability for horizon
1 innovation to local P&L entities
• encourage innovation investment
from local budget.
• promote local, cross-department
initiatives
• process guidance (drawing on
lean/agile methodology)
• create a role for “founders” in
scale-up of successful initiatives
• expert assistance from centre &
preferred partners
• insist on ROI metrics
• focus on demand, not supply

12. HORIZON 2 LIBERATE GROWTH
12
Horizon 2 innovations
are too often starved
and hamstrung by the
corporate environment.
How do we liberate
growth?
BLOCKERS
• insufficient growth capital
• conflicts of interest with legacy
business
• slowed down by internal
processes that are designed for
legacy business
• lack of agility and focus
• shut down because measured on
the wrong criteria.
ENABLERS
• finance horizon 2 initiatives
generously, from outside existing
operating units
• measure success in terms of NPV,
not ROIC
• build dedicated, co-located teams
with all strategic competences
• allow out-sourcing (even of
services that are available
internally)
• don't let compatibility with todays
business get in the way (you can
always sell it)
• be creative with ownership
structures (it doesn’t have to be
part of the mothership)

13. HORIZON 3 HAVE A THESIS!
13
Horizon 3 innovations
enable us to explore
multiple futures.
How do we harness
this exploration to
build the future we
want?
BLOCKERS
• lack of an explicit thesis leads to
scattered and/or self-limited
explorations
• perceived as “boffins” far from
strategic priorities of company
• pressure not to work on the same
problems as other teams
• no clear criteria or process to kill
an initiative, or to promote it to
next level
• learning (i.e. failure) is devalued
• vision and passion are devalued
vs. rational/analytical thought
ENABLERS
• highest levels of management
must be directly involved in
creative process
• set a “north star” that is specific
enough to create focus
• encourage multiple teams to
explore same problem space
• celebrate learning (i.e. failure)
• emotion is OK! this is the space of
champions and visionaries

14. YOUR INNOVATION PORTFOLIO
14
What does your innovation portfolio look like?
What can you do tomorrow to improve its health?
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time (in which value is realized)
HORIZON 1
HORIZON 2
HORIZON 3
Extend & defend
core business
Build emerging
businesses
—
Create viable options
—
May modify or
disrupt existing
business models
May challenge
definition of who you
are as a company

15. frog is a company of Aricent. © 2014 frog design inc.