How do you "C" innovation?

| Product Lifecycle Management | Formulation Management
Posted By: Michelle Duerst


Companies depend upon new product innovation to secure their consumer brand image as well as drive growth. The problem arises when the cost spent on the new product development does not result in actual revenue growth.

Gartner explains further, “Companies that successfully manage innovation as an evolving competency can increase revenue, improve operational effectiveness, and pursue new business models or business structures.”[1]

There are additional aspects to consider for both the R&D Team as well as the C-Level executives that define strategy, budget, and resources.


4 Innovation Success Factors for C-Level Execs


1. Define the What, How, and Why

Each C-level executive has their own focus to address long term goals to improve profitability. CEO’s typically define “what” the overall direction is, while the other C-level executives manage “how” they will achieve the goal on a day-to-day basis.

Conflicts may arise when the long-term goal disrupts the daily operations. To avoid these gaps, key executive team members must align on when these disruptions will occur and on what level.  


For example, a long-term goal may be to integrate all data systems.   Before the long-term goal can be achieved, effort must be taken to analyze, clean, and harmonize data. This may result in short term disruption, but long-term productivity will be increased.


2. Clarify Focus

Before you can successfully implement an innovation strategy, you must focus on the key elements of what needs to be accomplished and evaluate the current methodology and technology. This requires more than a single executive analysis, but requires granular analysis from Subject Matter Business Experts (SMBE).

Gartner explains, “Organizations must know why they’re innovating—the focus is on increasing business value aligned with organizational goals and strategy.” 1

3. Redefine Cost/Revenue Ratio

The traditional cost/revenue ratio placed the burden of reducing costs to be lower than the revenue. However, flipping the ratio to ensure you grow more revenue to exceed the cost expands the potentials for innovation, capitalizing on opportunities that could not be realized in the current budget scope. 

For example, a new manufacturing plant may require immediate investment, but faster production can yield long-term profitability. The same can be correlated to corporate infrastructure and innovation tools.

Gartner recommends “Distinguish between the incremental changes or improvements that are part of routine business management and the more disruptive and radical innovations that transform business performance and results.”1 

4. Ensure Quality and Loyalty

Many executives can quickly identify major cost factors and just as easily list the most effective ways to target the costs. However, one profitability factor can just as easily transfer to a significant revenue drain.

Innovation not only increases the number of customers, but solidifies the existing consumer base. Each new customer costs 7x the amount it would take to retain a current customer.[2]

Reasons Why Consumers Defect[3]

  • Better Price (41%)
  • Better Quality (26%)
  • Better Service Agreement (15%)
  • Better Selection (10%)
  • Better Features (8%)

Based on these statistics, more than 67% of customer defections are through highly controllable losses.

Both price and quality can be controlled through standardized processes, eliminated waste, increased vendor management, fewer recalls, and regulatory compliance.

True innovation must include greater visibility throughout the entire R&D process, with the ability to analyze for both quality and compliance issue in every region.


[1] Source: Gartner, “Innovation Management Key Initiative Overview” by Jackie Fenn, April 2014

[2] Source: