In the early 2000s, Procter & Gamble (P&G) made a surprising move. The company admitted its internal innovation model was failing. It decided to source most of its innovations externally and shifted to open innovation.
Open Innovation: Why the Best Ideas Don't Always Come From Inside
For most of the twentieth century, corporate innovation was largely closed.
Successful companies built big, well-funded internal research and development (R&D) departments. They protected their discoveries with patents and secrecy. The logic was clear: if knowledge drives competitive advantage, keep it in-house.
One Idea, Many Rhythms: How Innovation Works Across Different Industries
Innovation is often seen as a universal concept. But if you explore how different industries innovate, you’ll find a richer and more complex picture. I’ve worked on innovation briefs across many different categories over the years, but the way we’ve approached ‘new product development’ has been very different.
Pharmaceutical companies, fashion brands, tech startups, and breakfast cereal makers all innovate. Yet their timescales, risks, regulations, and success criteria vary greatly.
Recognising these differences changes how we view the approach and requirements of innovation.
Let’s delve into four distinct categories.
Pharma: The Long Game
Patience is a strategic asset in the pharmaceutical industry. Drug development is one of the most costly and time-consuming processes in any sector. Developing a new drug can take 10 to 15 years and cost around $2 billion.
The failure rate is staggering. Most drug candidates that enter clinical trials never reach the market.
Still, the industry keeps investing. Why? Because the potential rewards are massive. Without innovation, a pharmaceutical company has a ticking clock. Patents expire, and generics fill the market.
Pharma's innovation is defined by rigour and portfolio thinking.
Rigour is essential due to strict regulatory and ethical standards around drug safety. Portfolio thinking means no single drug can support an entire organisation’s innovation strategy. Companies spread risk across various compounds, knowing that most will fail, but a single success can cover everything.
Pharma doesn’t move as fast as tech startups. It builds long-term processes with staged investments and careful gatekeeping. There's a tolerance for years of work that may ultimately fail.
Fashion: Innovation at the Speed of Culture
In fashion, almost everything shifts. While pharma measures innovation in decades, fashion counts in weeks. Fast fashion, led by brands like Zara and H&M, has turned a two-season cycle into a continuous flow of new products. Zara, for example, can take a design from concept to store in just two weeks.
This type of innovation is about cultural awareness and operational agility. Zara’s model focuses on how it produces rather than what it produces. Integrated supply chains, small production runs, and feedback loops allow for real-time responses to customer preferences.
Fashion also highlights where innovation happens. In pharma, it’s in the lab. In fashion, it’s where design, supply chain, and trend forecasting intersect. This blend of creativity and precision is hard to replicate.
However, fashion faces a growing tension between rapid innovation and sustainability. The environmental impact of producing vast amounts of short-lived clothing is significant. This poses a challenge: how to maintain momentum while managing scarce resources.
The companies that solve this will shape the industry's future.
Technology: Iteration as Philosophy
The tech sector has greatly influenced modern views on innovation, sometimes negatively. Familiar mantras like “move fast and break things” can encourage poor quality if misapplied.
Top tech companies treat product development as a continuous loop, not a linear path. The model of research, development, and launch has been replaced by a more fluid approach. Products are released early, user behaviour is observed, and the product evolves based on feedback.
The launch is just the start of the innovation journey.
This method works in tech partly because software updates are cheap and instant. The cost of making mistakes is low. This allows for quick corrections without losing years of effort or money.
What tech has encouraged is the practice of testing assumptions early. Instead of creating a complete product, you build a minimal version to learn if your core idea is correct.
This principle has spread beyond tech for good reason. The logic is sound: reduce the cost of being wrong by failing sooner.
FMCG: The Innovation Paradox
Fast-moving consumer goods (FMCG) present a unique innovation challenge. These markets are large, competitive and have tiny margins. Consumers tend to stick to familiar brands, making it hard to disrupt habits.
This creates the FMCG innovation paradox. Companies like Unilever, Procter & Gamble, and Nestlé invest heavily in innovation. But their size makes radical changes risky and rare.
New flavours, reformulated products, and improved packaging are the staples of FMCG innovation. These are incremental, carefully tested, and rolled out with military precision.
The testing process in FMCG is thorough. New products often go through consumer research, regional trials, and retail performance modelling. The innovation funnel is highly systemised. A product is deemed a failure if it doesn’t achieve a sufficient repeat purchase rate.
Yet disruption does happen, often from entrepreneurs and challenger brands.
The craft beer movement challenged major breweries. Direct-to-consumer brands disrupted legacy personal care giants. Often, disruption arises from a different model of engaging with consumers.
IN SUMMARY
When you compare these four sectors, the differences are clear.
This means there is no single template for effective innovation. The best approach depends on your industry. Consider your failure costs, market pace, regulations, and consumer expectations.
Recognising these differences and adapting your innovation process is essential for any organisation. The challenge lies not in finding a universal formula but in understanding your industry's rhythm and ensuring your approach is fit for purpose.
Case Study: Apple and the Art of Sustained Innovation Strategy
Apple is the most valuable company in capitalism's history. Yet, it has often been declared dead or irrelevant more than any other organisation. Understanding how Apple has consistently innovated is a key lesson in innovation strategy.
Innovation Strategy: Turning Ambition into Direction
Most organisations that struggle with innovation are not short of ideas. They are short of direction. There is no shortage of enthusiasm for new possibilities, no absence of creative people willing to imagine different futures. What is missing is a clear answer to a deceptively simple question.
What kind of innovation are we actually trying to achieve, and why?
Innovation as a Core Business Process. Why Great Companies Don't Leave It to Chance
There is a romantic version of innovation that many of us carry around with us. In this version, a brilliant individual has a flash of insight in the shower, or a small team works obsessively in a garage, and something transformative emerges. The idea arrives. The world changes.
It makes for a great story. And occasionally, it's even true.
What Is Innovation And Why You Should Care
Following on from the recent blog series on Entrepreneurship, here's a new topic to explore.
Introducing a blog series on one of the most important yet misunderstood ideas in business: Innovation.
If you've spent time in business, technology, or politics, you've likely heard the word Innovation. It’s everywhere. On company websites, in university brochures, and in government plans. It has become so common that its meaning is fading. Everyone seems to be doing, funding, or claiming to lead it.
Sustainable Entrepreneurship: Protecting Your Mental Health and Finding Balance
Exit Strategies: Planning Your Entrepreneurial Endgame
Most entrepreneurs focus intensely on starting and growing their ventures while giving little thought to how they'll eventually leave them. This oversight is understandable. When you're fighting for survival or managing rapid growth, planning your exit feels premature or even defeatist. But thinking about exit strategies from the beginning isn't pessimistic planning for failure. It's strategic preparation for success.
Ken Kutaragi: The Father of PlayStation and Corporate Entrepreneurship's Greatest Success Story
In the early 1990s, Sony was known for its Walkmans, televisions, and music. Gaming? That was Nintendo's world. Yet within this electronics giant, an engineer named Ken Kutaragi was quietly defying his superiors. He worked on a project that would transform Sony. He succeeded in revolutionising an entire industry. Over three decades, he generated over $500 billion in revenue.
Corporate Entrepreneurship: Innovating from Within
Entrepreneurship isn't confined to startups launched in garages or ventures funded by venture capital. Some of the most impactful innovations occur within established organisations. They’re driven by employees who think and act like entrepreneurs while working within corporate structures. This phenomenon is variously referred to as intrapreneurship, corporate entrepreneurship, or corporate venturing. It represents a powerful yet often misunderstood path.
WeChat: Building the World's First Super App
In a world dominated by single-purpose applications: one for messaging, another for payments, a third for social networking, one app defied convention to become something unprecedented. WeChat became the world's largest standalone mobile app in 2018, with over 1 billion monthly active users.
App-Based Entrepreneurship: Building Businesses in Your Pocket
Mobile applications have fundamentally changed entrepreneurship. What once required significant capital, infrastructure, and technical teams can now be built by small teams or even solo founders with relatively modest resources. The smartphone in your pocket represents a direct connection to billions of potential customers, a powerful computing platform, and access to services and APIs that would have cost millions to build a decade ago.
McDonald's: The Blueprint for Franchise Entrepreneurship
In 1954, Ray Kroc visited the McDonald brothers in San Bernardino to see why they were making so many milkshakes. The 52-year-old milkshake mixer salesman had spent decades in various sales jobs, never quite finding his breakthrough. What he witnessed that day would change his life and revolutionise the restaurant industry. A streamlined hamburger stand serving customers with unprecedented speed and efficiency.
Franchise Entrepreneurship: Building Your Business on a Proven Foundation
Grameen Bank: Proving the Poor Are Creditworthy
In 1976, while walking through the village of Jobra in Bangladesh, economics professor Muhammad Yunus encountered a woman named Sophia Begum weaving bamboo stools. Despite her skill and hard work, she earned barely two cents per day. The reason was simple yet devastating: she lacked the twenty cents needed to buy bamboo from the market. Instead, she borrowed from local moneylenders who charged predatory interest rates, so that her entire profit went toward servicing debt. She was trapped in a cycle of poverty, not because she lacked ability or work ethic, but because she lacked access to affordable credit.
Social Entrepreneurship: Building Businesses That Do Good
For decades, business and social impact occupied separate spheres. Businesses existed to maximise profit. Charities and nonprofits addressed social problems. The assumption was that these objectives were fundamentally incompatible. Pursuing profit meant sacrificing social good, while prioritising social impact required abandoning commercial viability.
Scaling Challenges: When Growth Creates New Problems
Success in entrepreneurship often creates an unexpected problem: growth itself becomes the challenge. What worked brilliantly at 5 employees breaks catastrophically at 50. Processes that seemed unnecessary become essential. Many entrepreneurs discover that scaling a business requires fundamentally different skills from starting one.
Understanding Startup Incubators: Nurturing Ideas from Conception to Viability
Having discussed Accelerators in a previous post, here’s a detailed exploration of Incubators and how they support entrepreneurs.
When entrepreneurs first conceive of a business idea, they often face a daunting challenge: how to transform a concept into a functioning company. While accelerators help existing startups grow faster, incubators serve a fundamentally different purpose. They help nascent ideas develop into viable businesses. Think of incubators as the greenhouse where seeds are carefully nurtured, while accelerators are the Baby Bio applied to young plants that need to scale quickly.
Financial Management for Early-Stage Ventures: Mastering the Numbers
Many entrepreneurs excel at product development, sales, or operations, but struggle with financial management. This is dangerous. Poor financial management kills more startups than bad products do. Running out of money, failing to understand unit economics, or making decisions based on gut feel rather than data can destroy an otherwise promising venture.