Orchestrating Effective Platform Innovation in CPG and Retail

Skilled orchestrators in this consumer-driven segment must be willing to diverge from old models and paradigms to make way for converged, innovative platforms


Success Driver 1: Creating the Right Orchestration Organization

Companies which embark on ambitious innovation initiatives often find that demands for short-term results lead to downstream complications including the loss of centralized decision making; misalignment of necessary skills; and conflicting agendas. Establishing the right orchestration organization and management structure upfront becomes even more critical in environments where the development process requires coordination across multiple external entities and organizational boundaries.

Convergent platform innovation is similar to small-cap, early-stage start-up efforts, often ill-suited to the management and cultural style of larger and more hierarchical organizations.

Large cap leaders in industries characterized by complex outsourcing—like consumer electronics and aerospace—adopt an “incubator” structure as a proven organizational strategy. An incubator organization structure can foster and enable the right mix of rapid decision making; championing of an entrepreneurial mentality; and the development of a risk taking culture required for success. As shown in Figure 3, establishing stand-alone objectives and mandates, backed by strong executive leadership, is key to making an incubator model work. Autonomous decision-making is needed across departments from identifying customer requirements; to feature definition and design; to supply chain and manufacturing partnership management. Incubators also require dedicated resources and budgets to leverage personnel and expertise from multiple functional units with shared metrics and incentives.

An incubator approach opens the door to organizational and governance alignment for rapid experimentation, appropriate risk taking and outside the box thinking.

For example, a consumer healthcare client seeks growth through diversifying into home-use health and beauty devices. But the company ends up squashing its R&D team’s most innovative ideas at the concept stage and missed development timelines for those ideas that made it to prototyping. As a result, poor organizational alignment created a failure cycle.

Without senior executive commitment, even the most promising ideas failed to receive adequate funding or hit internal rate of return targets. The few prototypes managing to make it to production—such as a promising light-based home-use wrinkle remover—were delivered by managers lacking shared incentives and trapped in traditional metrics. R&D engineers were focused on safety and functional features without involving contract developers early on to ensure cost-effective production. That led contract developers—focused on speed-to-market instead of balanced performance—to deliver a differentiated, but far too costly, product that failed to meet conservative payback goals versus risk profiles and quite naturally, died off.

Leading orchestrators complement the right organizational structure by ensuring they install the right management team to mitigate risks and delays. The majority of project delays and risks to distributed innovation initiatives occur at coordination “boundaries” where critical decisions are made and critical activities handed off from one group to another. These boundaries come in two forms: decision-making boundaries where sub-optimal trade-offs are made between competing options; and activity-coordination “boundaries” when work is passed from one firm in the value chain to another. Establishing an effective management team with necessary boundary-spanning competencies significantly improves decision making and goes a long way toward ensuring success.

Effective orchestration managers are often generalists with diverse functional expertise as well as relevant technical experience of the underlying key platform technologies. In addition to establishing the right organizational structure and installing the right team, best-in-class orchestrators broker and maintain effective partnerships across the innovation lifecycle and along the value chain.

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