Aspiration and capability
The growth gap describes the difference in extrapolated business performance and the business planning, for example, in 5 years.
To close the gap requires an innovation portfolio with innovation projects that ensure growth. Such a portfolio ensures the inflow of new “H2 projects,” which arise from incremental improvement innovations as well as disruptive technologies from the field of H3. What is common is the challenging start-up phase of the H2 projects.
The division of the innovation portfolio by strategic dimensions ( e.g. build your own vs. M&A) allows to adjust cost and risk appetite. The thematic focus on strategic initiatives ensures that product portfolios and roadmaps fit together in the long term.
Planning to close the growth gap
It can happen that an H2 project dominates in the growth plan and generates corresponding costs.
For example, a European manufacturer of strollers decides not to launch its next H2 product in the traditional market, but to offer a suitcase for business travellers. The motivation is the success and the corresponding saturation in the high-end segment of strollers.
The mountain estuary for the new H2 project is mainly based on technical expertise in design, the pursuit of the “personal mobility” strategy and the goal of penetrating a lucrative high-end segment.
After long market research and development, an expensive and heavy trolley is launched, with little sales. At the same time, a competitor manages to find a new stroller segment that covers more parents’ needs and is deliberately positioned slightly less expensive.
This shows how important it is to balance the different innovation strategies and horizons.
The risk increases accordingly and can throw the company back or even wipe it out. Especially if at the same time the business with the supposedly stable H1 products collapses.
Many examples of current project portfolios have this characteristic and should be corrected accordingly. This can be done in the portfolio at the substantive level, for example through more intensive fit/gap analyses of the market, product and technology. However, it should also be addressed at the process level, which ensures that an innovation board regularly compares the strategic initiatives with the results of the innovation portfolio .