1. TYPE OF INNOVATION - INNOVATION AMBITION MANAGEMENT AREA CoreAdjacentTransformational Talent management Strong analytical skills to interpret and translate customer and market data into specific offering enhancements. Design thinking, anthropological skills, scenario planning and the analysis of ambiguous data are required in a discovery and concept development process to uncover and analyze the social needs driving business changes, the underlying market trends, and ongoing technological developments. Teams integration Teams are most likely to succeed if they remain integrated with existing businesses. Even teams working on adjacent innovations benefit from the efficiencies that come with close ties to the core business, assuming they are given the appropriate tools to take their work further afield. Transformation innovation tends to benefit when the people involved are separated from the core business - financially, organizationally, and sometimes physically. Funding Projects in this area are mostly small-scale and do not need major infusions of cash. They can and should be funded by the relevant business unit's P&L through annual budget cycles. The search for breakthrough innovations requires sustained and sometimes significant investment. Their funding should come from an entity that can rise above the fray of annual budget allocation. Most probably this is within the executive suite, ideally the CEO. Offerings pipeline management Here companies can stage- gate processes to asses projects periodically, recalculate projected ROI and decide whether or not to continue. Depending how close the adjacent innovation is to core innovation project, it can leverage the same type of processes. Traditional stage-gate processes are dangerous in this case. Sales planning is not possible for something that has never been delivered before. The challenge here is to take a small number of possibly game-changing ideas and ensure that they emerge from the pipeline stronger. It is a non-linear process, very different from a funnel approach. Alternative remain undefined for a long period of time and need to be properly explored before they are rejected. Metrics Traditional financial methods are entirely appropriate. For example, NPI and ROI calculations can leverage assumptions about adoption rates, price points and other key variables that often can rely on customer input. Here we are dealing with stage-gate type of metrics that combine economic information with market data that can be obtainable and largely accurate. The assumptions that can be used in the other two types of initiatives cannot be used in transformational initiatives. This is because we are dealing with an offering whose need most often is unknown even by the end customers. A combination of non-economic and internal metrics are necessary to assess transformational efforts in the early stages of development. They can include factors such as the teams' ability to explore, learn and improve. Hard economical data for a transformation project should be applied only when there is a pilot and a product/service launch. Source: Straligence, adapted from Monitor, in © Harvard Business Review, May 2012