One of my network groups for innovation leaders had an interesting Q&A session with the CEO of an 8,000 people strong company. The objective of the meeting was to get a better idea on how CEO’s view and approach innovation. We definitely met this objective.
One of the questions to the CEO was what he would like to see from the innovation people within his company. His reply came promptly: Bigger products, please.
By this, he means that he would like to cut-down on the number of products rather having a hand-full of products with big revenues than having a large portfolio of products with smaller revenues.
Fewer, but bigger products, make sense in many ways. One thing is that a company can better focus and perhaps even decrease the complexity of their business. However, there are also risks associated with such a strategy.
If you pursue bigger products in terms of revenue, you also set the bar high early in an innovation process. Does this project have the potential to become a big product? If you do not get a clear positive answer, then you might be more inclined to drop it.
This in dangerous in times where it is getting increasing difficult to predict market success due to the overall faster pace of change. Perhaps the project could be turned into a big product with a slightly different approach and a bit more patience? Now, we will never now.
And what if you fail with a big product launch? Then you suddenly have a big gap in your revenue stream. This scenario could lead companies to take a more cautious approach in which they do not take the risks that often are necessary exactly in order to create products that connect in a big way with customers. Perhaps a strong focus on creating big products will only deliver incremental innovation in the long run.
The CEO made a very convincing overall case for innovation in his company, but I am not fully sure how companies should approach such a big products strategy. Let me know what you think.