Hybrid R&D: The Path to Breakthrough Innovation – Part Two

In my first post, I introduced the idea of BIGs or Breakthrough Innovation Groups. They are defined as having three specific characteristics:

1. The immersion of commercially oriented professionals into a traditional research organization;
2. A defined strategic area to operate within; and
3. A mission to envision, develop and launch entirely new product lines or businesses outside the company's core but within the strategic area.

Corporations have established these BIGs to raise the revenue growth rate above what can be achieved operating in its mature core markets. Have they achieved success? In my experience, the results are mixed and here are a couple of the challenges they face:

• Inability to obtain funding for high risk yet high reward concepts. Corporations that operate in mature markets find it difficult to place bets on breakthrough ideas. While potential home runs they also have many unknowns. In many cases, the idea creates an entirely new product or service category so there are many unanswered questions in the early stages. Corporations not committed to a balanced innovation portfolio will put their money on the “sure thing.”
• Staffing breakthrough projects with the right skills. By definition these breakthrough ideas are coming from the R&D organization but at what point do the researchers need to be replaced with product developers? Leading larger development teams, hitting major milestones and passing management gates are sometimes new to the research team and could lead to missteps.

Despite these challenges some companies are getting it right.

What does success look like? It can come in one of two ways. In some cases as the project advances the core business unit decides that the breakthrough idea will fit into their portfolio. Initially, they claim it is too removed or too risky to be part of the core business but as the risks are removed and the excitement of a homerun becomes apparent they “adopt” it and make it their own. While this generates some disappointment from the original core team, they are proud of bringing a great new product to market.

The other success mode is the creation of a new business unit around a breakthrough idea. In some cases, an acquisition or a smaller existing product line is bolted on. Once again, staffing takes on a major role. Just as when the idea was leaving research for development, now the team must be staffed with the right operational people to achieve its long term goals. Once again, perhaps some disappointment from the development team but they also take pride in shepherding the concept through the rigors of a gated development process.

I hope these insights into Hybrid R&D encourage more corporations to take the leap. Great ideas are out there – we just need the inspiration and perspiration of hard work to make it happen!