The December issue of Harvard Business Review, Build an Innovation Engine in 90 Days, shares the important distinction of core and new-growth innovation.
Core innovations enhance existing offerings or improves current operations. They enhance the current strategy and organization structure with the objective of offering rapid and substantial returns in the near future and funded at scale.
New-growth innovation generates new opportunities by reaching new markets or new customer segments. They extend your current strategy or introduce new strategies that offer complementary or completely new products and/or services to existing customers or new customers and new markets.
Note: the larger your growth gap, the further from your core those innovation efforts will likely need to be and the longer it will take to realize revenue.
“You can work up a serviceable estimate of the size of the gap if you spend up to two weeks developing rough but honest numbers for the revenue and profits your current operations will deliver in the next five years and then compare them with your five-year goals. This will give you a basic sense of what percentage of your time, effort, and resources needs to be focused on core innovation, and what percentage on new-growth efforts, and how ambitious the latter need to be.”
With a little upfront planning, you, too, can determine your path to innovation.