To achieve 3-percent annual growth, a typical $10-billion consumer products company needs to maintain an innovation pipeline worth up to $5 billion. Alarming figures, given that most managers underestimate—by a factor of two or three—the value they need to create through new products.

Does this mean managers should rush to launch a lot more initiatives? No. Our work with leading consumer products companies around the world has shown us that the most successful innovators carefully screen ideas up-front so that only the highest-potential product concepts get developed.

One such company is Clorox. Over a five-year period, Clorox decreased its number of projects under development by 40 percent and increased the net value of those projects by 50 percent. How did the company do this? In great part by building its innovation efforts on innovation platforms.

Let’s look at how Clorox and other consumer packaged-goods companies, or CPGs, use innovation platforms to create leaner and more productive innovation pipelines.

1. Developing multiple products from a single platform. Using innovation platforms is an effective way to channel investment into fewer ideas that offer larger potential returns. At its simplest, an innovation platform is a fundamental component, product or mode of delivery that is used to develop multiple innovations. Innovation platforms have long been used in auto-making and high technology to create a host of products from the same core parts. Toyota, for instance, built its sports wagon, the Matrix, on the frame used for its very popular small sedan, the Corolla.

Consumer products companies have only recently adopted innovation platforms. Whereas a car frame or a new engine type constitutes a platform for automakers, a consumer insight with multiple potential implications serves as a platform for CPGs. The implications might include a new occasion for using a product, a new technology or formula for making it, a new channel for distributing products or a new delivery system that makes products more attractive.

For example, recognizing that consumers on the go place a premium on convenience, Clorox used that insight as a platform to build several products with the same type of portable, handy application, including Clorox Disinfecting Wipes, Armor All Wipes for cars and Formula 409 Wipes for windows.

2. The benefits multiply. Innovation platforms have become an integral part of product strategy at prominent CPGs in addition to Clorox in recent years. For instance, Gillette created a program in 2003 that required any team proposing a new concept to identify the concept’s platform for repeatability; to project three-year sales in each market the platform would serve; and to set cost, profit and revenue targets for the platform.

Once a firm can compare and contrast the attractiveness of multiple platforms, innovation becomes more efficient because developing a new product doesn’t have to be done from scratch. In Clorox’s case, the investment in Clorox Disinfecting Wipes laid the research and development tracks for Armor All Wipes and Formula 409 Wipes, speeding the development and respective launches of those products. We have observed that CPGs typically cut development time by 20 percent to 30 percent by using innovation platforms.

3. Making smarter decisions. In our experience, companies that don’t build innovation pipelines off platforms tend to see sloppy decision making set in and, worse, experience diminishing returns. For instance, at a CPG we’ll call CareCo, 600 projects were vying for resources. The company’s stage-gate process did little to identify higher-potential projects so that lower-potential ones could be eliminated.

As a result, the company ran harder and harder on the same treadmill for diminishing returns. If, by contrast, some of these projects could have been clustered into high-potential innovation platforms, the investment imperatives would have become clearer, and the team could have focused on the projects that were truly going to make a difference to the business.

The focus on platforms doesn’t necessarily stop innovation leaders from exploring other opportunities; it just raises the hurdles those concepts must clear. Promising ideas not connected to a platform must offer economic opportunities that match the total potential value of a promising platform.

By building new products on platforms that offer repeatability, innovation leaders—in any industry—can focus more of their resources on the highest-potential ideas and sustain the commercial backing that transforms new concepts into winning products.

(Nicolas Bloch is managing partner for Bain & Company Belgium and a leader in the firm’s European Consumer Products Practice. Kara Gruver, a partner in Boston, and David Cooper, a partner in New York, are members of the firm’s North American Consumer Products Practice.)

Slimming innovation pipelines to fatten their returns

To achieve 3-percent annual growth, a typical $10-billion consumer products company needs to maintain an innovation pipeline worth up to $5 billion. Alarming figures, given that most managers underestimate—by a factor of two or three—the value they need to create through new products.

CLOROX’S INNOVATION-MANAGEMENT APPROACH

To take the up-front screening provided by platforms a step further, several years ago Clorox closely defined what types of innovation each of its many businesses—among them such household names as Armor All, Kingsford charcoal and Fresh Step cat litter—could pursue.

The Eden of Sin

Seen from the air, it’s a triangle with points east, south and west; but seen from the sea, the island of Panay looks like a crown or helmet because its mountain ranges form a cap akin to the native farmer’s salakot.

High on coffee

LA TRINIDAD—Perched on a dizzyingly steep slope, in a lush landscape with a brook and tall pine and alnos trees, Chit Juan took another step in her pursuit to continue producing organic coffee. The Figaro Foundation’s director hollowed out muddy soil in a patch in the jungle, cut around the black plastic covering of a seedling, popped the sapling into the hole and put the soil back.

Winning: Acquiring culture

When the New York Stock Exchange (NYSE) merged in 2006 with the electronic-trading operator Archipelago Holdings, the world’s largest bourse acquired more than just technology.

TWO YEARS AFTER KATRINA

NEW ORLEANS—It’s difficult to nail down the last time this antique city was considered cutting-edge.  Was it the 1850s, when a coffee-shop owner invented the Sazerac cocktail?

Piece by piece, devastated buildings find new life

Brad Guy, an architect and researcher at Penn State University, is an advocate of “deconstruction”—not the thorny literary theory, but the idea of carefully taking apart buildings and making the component parts available to builders.

A second line of defense

Before Katrina, John Knost hadn’t really invented anything—unless you count the foam insulation he stuck on the edges of his apartment’s metal spiral stairs. They keep visitors from bruising their heads.

Down by the riverside

Developer Sean Cummings envisions miles of parks stretching along the East Bank of the Mississippi River.

The Great Propagandist

PROPAGANDA is in bad repute, it has been so for a long time. Thanks to Adolf Hitler, Joseph Goebbels and Lenin, principally, it has also taken on a sinister ring.

A strong foundation

EDUCATION Secretary Jesli Lapus wasn’t lying when he earlier declared that the opening of classes was generally smooth and peaceful. But he wasn’t giving us the entire panorama either.

Legacy: A sense of history

Sometime last year in 2006, there were two pieces of good news that may have gone unnoticed, but which greatly benefited the poor people of the world. And it is not about what the world’s richest nations have decided to do to help the situation on global poverty. Rather, it is about the personal philanthropy of the two richest men in the world: Bill Gates and Warren Buffet.

A Harvard Management update classic: Get your new managers moving

When Jacqueline Lopez arrived for her first day on the job as a new program manager at Intel’s Mobile Platforms Group, Jessica Rocha, her boss, handed her a calendar bursting with meetings.

Dot-com pioneer

Julia Theresa Yap has witnessed the growth of Pacific Internet Philippines from a pioneering Internet-service provider (ISP) in 1996 to the largest independent Internet communications service provider in the country today.

Winning: Weed out bad apples before your business rots

Q: How do you weed out the bad apples in an organization? David Michalek, Bartlett, Illinois                 

A: Start by putting down the pruning shears and picking up a buzz saw.

Look, nothing hurts a company more than when the bosses ignore, indulge or otherwise tolerate a jerk—or two or three—in the house. Such latitude undermines organizational trust and morale. Without those, the competitive linchpins of collaboration and speed are just plain harder—not to mention the fact that jerks take the fun out of work.

About face

In an industry dominated by multinational players with unlimited advertising budgets and sleek corporate images, an upstart local cosmetics firm is giving the giants a run for their money with its no-frills products and relying mainly on word of mouth to capture the loyalty of beauty-conscious clients all over the world.

Talk is cheap, so why do they prefer costly bullets?

WASHINGTON, D.C.—Decades of applying various forms of dispute resolution to various facets of American life—from neighborhoods and workplaces to conflict and judicial processes—have helped the US maintain its social fabric, political liberalism and religious and ethnic plurality in the racially sensitive aftermath of the September 11 attacks on the nation’s emblems six years ago.

The Filipino intellectual

THE Russian language has a special term for the intellectuals: a member of the intelligentsiya—intelligentsia—the most intelligent, “intellectual,” or highly educated segment of society especially interested in the arts, literature, philosophy and politics. But flattering as the characterization is, anti-intellectuals are not impressed; in fact, they are so annoyed, if not downright hostile, that an intellectual would not proclaim himself, and, if he did, chances are he’s not. It remains for society to call him so, either as a compliment or honest recognition or as a condemnation.

RP must learn from Vietnam

OUR country can learn a great deal from Vietnam, particularly in how our neighboring Asean state successfully revitalized its moribund economy starting in 1986, and powered ahead with an average annual growth of 8 percent to earn the admiration of the global business community while simultaneously reducing poverty incidence, thus achieving the seemingly elusive goal of sustainable economic growth and equitable income distribution. 

WHAT TO SAY WHEN IT’S TIME TO MOVE ON

IT’S a reality of modern corporate life that you have to say goodbye more than a few times as you advance in your career. And often, despite your best intentions and efforts, the legacy you leave behind is a mixed one.

Woman on Top

LAND Bank of the Philippines president and CEO Gilda E. Pico is a true banking veteran, having worked in the industry for 40 years in which 25 years were devoted to LandBank.

The subprime sinkhole

TAHER AFGHANI was working for discount retailer Target Corp. near San Francisco when friends told him about the riches to be made in California’s Mortgage Alley.

An election nightmare

I WAS quite awake when I had this nightmare last week: Benigno “Ninoy” Aquino Jr. and Jose Rizal ran in a senatorial election: Rizal ran second to topnotcher Aquino, albeit by a slight margin. The distance of 85 years between their death did not make the result, much less the election itself, improbable to the Commission of Elections (Comelec), which has a well-deserved reputation for improbability.

As always, a tough balancing act for the Secretary of Finance

Note:  This is a condensed transcript of the discussions at a recent Quijano de Manila symposium at the Cherry Blossoms Hotel, Manila. The resource person, Finance Secretary Gary Teves, fielded questions from senior journalists led by the QMS moderator, Adrian E. Cristobal.

A Ceo’s Six Steps To Effective Feedback

Delivering feedback is among a manager’s most important tasks, yet many managers struggle to do it fairly and consistently, and—above all—in a way that drives improved performance. In the chapter on people development in his recently published book, Lessons on Leadership: The 7 Fundamental Management Skills for Leaders at All Levels (Kaplan, 2007), Jack Stahl, CEO of Revlon and former president of Coca-Cola, proposes a six-step model to make the feedback process easier and more effective.

Five questions with Richard H. Axelrod, coauthor of You Don’t Have To Do It Alone

Getting others involved in the work you’re responsible for is the essence of management. But what distinguishes the best leaders is how they attain that involvement. Requiring participation is easy enough. But compliance does not equal engagement.

The Coach … as businessman

Joel Banal’s life has always revolved around basketball, from playing collegiate ball for Mapua and amateur basketball in the MICAA and the national team to his pro stint in the PBA, and finally moving on to coaching, where he also made his mark both at the professional and collegiate level.