Delivery vs. Innovation – Getting The Right Balance

Research by Bansi Nagji and Geoff Tuff published in the Harvard Business Review provide some key insight into ‘The Delivery – Innovation Paradox’.

These researchers provide a useful framework to guide business leadership innovation investment allocation decisions to get the balance right. The framework uses three main innovation allocation categories: core, adjacent, and transformational investments. Selecting the best mix for the business achieves superior share price performance. The mix decision is relevant  to ‘The Delivery – Innovation Paradox’ because core initiatives most closely align with a delivery focus that sustains profitability while adjacent and transformational initiatives align most closely with growth and competitiveness although arguably there are some underlying interrelationships.

The article provides some important guidelines to getting the right balance between delivery and innovation. Some of the key ones are:

1) Share price premiums of 10% to 20% can be realized with an innovation resource allocation mix of 70% to core, 20% to adjacent, and 10% to transformational although the authors caution this is based on an averaging of their observations;

2) The long-term cumulative return on innovation investment is inverse of the allocation mix given in 1);

3) Investment in transformational innovation yields blockbuster growth; and

4) Allocations should be optimized for the industry, competitive position, and a company’s stage of development.

The article emphasizes that execution is crucial to achieve intended results but the innovation allocation mix clarifies a key lever for business leadership decision-making.

One thought on “Delivery vs. Innovation – Getting The Right Balance

  1. Alisia

    Hello There. I found your blog using msn. This is a really well written article.
    I wiill make sure to bookmark it and come back to red more
    of your usefyl info. Thanks for the post. I’ll certainly return.

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s