Raising innovations

This relationship between the core business strategy and its innovation portfolio is tricky. But maybe not as tricky as companies make it. Molly Fleming writes in MarketingWeek:

In a results call for investors today (10 July), PepsiCo CEO Indra Nooyi revealed that the company is creating “a small entrepreneurial group” that will sit separate to the rest of the business.

She explained: “It is a business within a business and will be taken out of the core headquarters. It’s going to be an entrepreneurial group which will take some of the products we launched and nurture and incubate them to find what works.”

The Hive, modeled off a similar set-up that already exists in Europe, will look for “new age brands”, as well as fostering burgeoning ones within the business.

Separating innovation from the core business is a strategy PepsiCo used in its launch of new Drinkfinity earlier this year in order to foster a startup culture.

In the 1970s, ecologist framed two reproductive strategies for species: r-strategists had many offspring with little parental investment while K-strategists had a few offspring they invested heavily in rearing. The idea, crudely put, is that in rapidly changing environments, it’s better to create a lot of variance in offspring and let the fittest survive. In more stable environments a few, well-invested bets have a better chance.

This seems to be where innovation management is now. Some companies look at a rapidly changing market and turn to incubators, idea-contests, and skunkworks in hopes of raising a generation of many new ventures from which the fittest will emerge. Others build a clear strategic vision for their markets and, with that sense of stability, commit to a few bold ventures.

As an ecological theory, r-K strategies generated a lot of attention, which spurred a lot of research, which proved the theory was way too simplistic for all the different organisms and environments out there. Since the field of innovation management doesn’t self-regulate like that, the simple either-or still holds great appeal. Truth is neither option is a magic bullet when, in the end, the answer is it all depends.