**1. Introduction**

The author and colleagues at April Strategy have spent more than 20 years engaging with large organizations on assignments relating to strategy, innovation, organization design, and

© 2016 The Author(s). Licensee InTech. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. © 2018 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

change management. Assignments have spanned the public and private sectors, particularly in the CPG, automotive, and financial services and healthcare sectors.

mainly incremental innovations. The job of marketers was to stay abreast of what customers valued most about their products and then to package and position new products in a way that would emphasize those benefits. Competitors found themselves engaged in a "new/ improved" arms race, sometimes choosing to differentiate on performance and sometimes

Innovation Inside

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http://dx.doi.org/10.5772/intechopen.74090

As markets have matured, products have tended to converge. The same technology and know-how have become widely available. At the same time, the capacity to innovate has become more specialized and dispersed. Organizations are increasingly faced with the classic "Innovator's Dilemma" [1] where the capabilities that have taken an organization to a position of success become rigidities that can inhibit innovation, leaving the ground open to more

Twenty years ago, a car produced by one company could set itself apart from that of a competitor based on a number of physical differences. That is patently no longer the case. Value is found not just in what organizations offer but the experience that surrounds it. What might be called a postindustrial model is emphasizing customer experience as one of the few sustain-

How have organizations broken out of the product convergence trap? Some have persevered with product innovation but with ever-diminishing returns. Some have tried to brand their way out of trouble, investing heavily to encourage loyalty and build durable emotional bonds with their customers. Others look beyond product, making the most of new digital technologies to innovate in channel, brand, and customer experience. There has also been a considerable "behind the scene" innovation in process and business model, again enabled by technology. Doblin, an innovation consultancy, estimates that while 80% of effort still goes into product innovation, 80% of returns come from innovation elsewhere in the value

Going "beyond product" for innovation does appear to be fertile territory from a customer value perspective, but it brings with it many new executional challenges. How to build or gain access to new capabilities, and how to successfully manage an extended network of partners, suppliers, outsource providers? How to retain sufficient value and control within a more complex network of participants? How to maintain some strategic alignment with core

A global life insurance business found itself in a position where significant innovation opportunities had been identified in relation to healthcare. Rather than just giving people a lumpsum when they were diagnosed with a serious illness, why not go further and offer support across the entire care pathway, helping select the best qualified doctors and best performing hospitals for treatment, helping organize care and rehabilitation, and even helping them with ongoing healthier lifestyle nudges (that will help to reduce their insurance premiums)? This

on value.

chain [2].

business purpose and values?

flexible competitors.

**2.2. Beyond product innovation**

able sources of competitive differentiation.

This paper is informed principally by the team's collective direct experience as consulting practitioners and to a lesser extent from academic study.

On the topic of innovation, the received wisdom is that around 80% of initiatives fail for one reason or another. What are the reasons? Why is the failure rate so high? Is it inevitably something of a random process for which we have no choice but to tolerate 20% success, or are there more predictable and actionable reasons that organization leaders can do something about?

There has been a huge amount of energy expended around improving the innovation process itself and addressing points such as the importance of a strong customer insight, the clarity of the framing of the "customer job to be done" to inform ideation and design thinking, and the helpful rigor required to frame an innovation as "greenfield" investment proposition to potential investors.

Our observation is that rather less attention has been given to another significant cause of innovation's low strike rate—the ability of an organization to reshape itself so that it is able to effectively execute a new proposition.

Amidst all the talk of open innovation, partnering, and outsourcing, there is a concern about the ceding of value and control to third parties, but relatively little talk about how organizations can evolve their core—from the high-performance, dominant model that prevail today and toward what they need to become in the future to retain greater ownership of the value chain and build in greater responsiveness to customer opportunities.

This chapter explores the challenge of "innovation inside" and proposes a new way of framing a response from leadership. It should be emphasized that the thinking is embryonic and very much an "idea under study" with various pilots currently underway with clients. Therefore, the author would welcome feedback, challenge, and commentary.
