Building a Growth Factory. David S. Duncan

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      1 Commercial—efforts to increase trial and usage of existing products without changing the product itself. P&G’s innovative Old Spice marketing campaign involving actor Isaiah Mustafa that generated close to 2 billion public relations impressions and propelled the deodorant into category leadership in 2010 was a powerful commercial innovation.

      2 Sustaining—the “er” innovations that take existing solutions and make them better, faster, cheaper, and so on. Sustaining innovations like new scents or formulations for different washing machines helped the Tide brand grow significantly even in mature markets over the past decade.

      3 Transformational—step-changes whose dramatic improvements reframe a category. An example of this form of innovation is Crest 3D White, a line of advanced oral care products, including one that whitens teeth in two hours.

      4 Disruptive—new brands or business models that win through simplicity or affordability. P&G’s quick cleaning line of Swiffer products disrupted the staid mop-and-broom industry.

      1 Core—improvements to existing offerings in existing markets or internal process improvements that increase efficiencies within the current business model. For example, the “Citi for Cities” team helps government clients improve service levels, efficiency, and security.

      2 Adjacent—“new to Citi” innovations that either extend existing products to new markets or leverage existing Citi capabilities, assets, or relationships to bring new-to-Citi solutions to market. For example, in 2011, Citi launched “Citi Velocity,” a new online information channel that allows traders and clients to have instant access to Citi research and real-time market information.

      3 Disruptive—“new to the world” innovations that reframe markets and create new ones. For example, Citi recently partnered with Jumio, a Silicon Valley start-up that leverages cameras in any mobile phone, tablet, or laptop to increase the security of remote payments.

      1 At least one type explicitly focuses on “noncore” growth from new markets or new customer segments.

      2 There are explicit and well-documented differences between types. P&G has simple checklists that help teams ensure they are following the strategy they want to follow. Citi developed a tool to help teams categorize and evaluate innovation projects by answering a straightforward set of questions.

      3 The types are integrated into other elements of the growth factory. For example, Citi Transaction Services uses the growth types to organize and optimize initiatives and investments for greatest impact and scale.

       Do we have clear definitions of the different types of growth we will pursue?

       Does at least one type focus on sources of growth beyond today’s core business?

       Do all our leaders understand these definitions, are they aligned on them, and are they using them to manage innovation efforts?

       Are our growth types integrated into other management systems?

       Definitions with significant “wiggle room” in interpretation

       Purely internal definitions that lack a market lens

       Disconnects between growth types and critical governance and controls systems

       Brown, Bruce, and Scott D. Anthony. “How P&G Tripled Its Innovation Success Rate.” Harvard Business Review, June 2011.

      1 Overall company performance targets that describe short- and longer-term revenue and profit goals

      2 Specific targets for each growth type spelling out how much each will contribute to the overall targets

      3 Operational targets splitting out growth goals by relevant operating units (e.g., business units, geography)

      4 A short list of the strategic opportunity areas that offer the most growth potential (e.g., customer segments, big problems to solve, critical technologies to pursue, game-changing regulatory developments)