Organizing for Game Changing Innovation

The case for game changing innovation

The notion that innovation is a key driver of top-line growth and total shareholder return is widely accepted among business leaders everywhere – as evidenced by their ongoing (and escalating) commitment to investment in innovation initiatives and new product development.

The case for more radical, game changing innovation—the kind that ushers in new business models and in the process disrupts entire industries—is even more compelling. The top 10 “unicorns”, venture-backed companies such as OpenAI, ByteDance, SpaceX, Anthropic, and Databricks (as of November 2025) have created a combined market capitalization well in excess of $1 trillion and have done so at unprecedented speed.

Top-tier innovation leaders such as Apple, Google, Samsung and Amazon illustrate, year after year, the power of effective innovation programs in driving superior growth in revenues and shareholder returns. Growth stories such as these are not confined to the technology sector nor to just startups and industry insurgents. Incumbents, such as GE, PG&E and IBM, with innovation track records spanning decades, continue to reap the rewards of institutionalized innovation.

For many companies however, despite escalating investment in innovation, results are frequently elusive. Innovation programs often fail to generate the levels of return on investment that are expected in timeframes that are acceptable. More often than not innovation programs are delivering incremental improvements rather than breakthrough solutions.

At Strategos we are often asked by our clients “how do I raise my game as an innovator” and more specifically “how do I organize for game changing innovation”?

A useful way to frame the challenge: you don’t “do” game changing innovation once—you build a system that increases the likelihood of producing it repeatedly. That system connects strategy, leadership behaviors, governance, talent, funding, and ways of working so that step-change ideas don’t die in the gaps between functions, budgets, and quarterly cycles.

Why innovation systems stall

Often we find that companies whose innovation programs are failing to deliver anticipated results have taken a piecemeal approach to the problem. They may have identified one or more of the relevant drivers of innovation but they are not managing them as an interconnected system. More fundamentally, they often lack a foundation of organizing principles with which to construct an effective innovation system.

Here are a few patterns that commonly block transformative innovation:

• A narrow “front end” that pulls ideas from the same sources, producing the same kinds of answers.
• Weak customer insight that defaults to stated needs, not unspoken jobs, tensions, and constraints.
• Governance built for certainty (annual budgets, fixed business cases, late-stage proof) rather than learning.
• A portfolio that’s unbalanced, over-weighted toward incremental work and under-weighted toward category-creating options.
• Culture and incentives that punish smart risk, slowing experimentation and decision speed.

The fix is not a single workshop or a new tool. It’s designing the operating model so that bold ideas can be found, shaped, tested, and scaled.

The organizing principles behind high-performing innovation systems

In our experience, highly effective innovation systems are usually based on a relatively small number of organizational principles. The sections below keep the original principles intact, while expanding what “good” looks like when you’re targeting disruptive, market-shifting outcomes.

Broaden the “front end” of innovation

Opening the innovation pipeline to a broad array of inputs from a diversity of sources significantly increases the probability of generating new wealth downstream. Innovation leaders routinely tap into the “wisdom of crowds” in order to glean new perspective and identify radical new ideas. The “crowd” may be internal (as in the case of IBM’s employee “idea jams”) or external (as in the case of InnoCentive’s Open-Innovation marketplace).

Raising the ratio of externally sourced ideas to internally sourced ideas typically generates a higher yield from the innovation pipeline.

How to strengthen this principle for breakthrough outcomes:

• Define a small set of strategic “search fields” so idea volume turns into insight (not noise).
• Source beyond adjacent categories: suppliers, startups, universities, customers with extreme needs, and ecosystem partners.
• Run structured challenges that target business model shifts, not just product features.

Invest in developing deep customer insights

Top-tier innovators are deeply empathetic. They invest in developing deep insights into their customers’ unarticulated needs. They identify needs that customers aren’t yet aware that they have, or solve common customer problems in new and creative ways. Traditional market research is of little use in this context. Instead, what’s required is an immersion into the customer’s environment and the use of tools and techniques that derive insights from in-person research.

What to add when you want transformational innovation:

• Look for “non-consumption” and workarounds—where customers are forced to improvise.
• Study the system around the customer (constraints, stakeholders, incentives), not just the user.
• Translate insights into testable assumptions that can be validated quickly.

Seek innovation at the level of the business model

In today’s highly dynamic market environments with rapidly proliferating customer segments, existing business models have a limited shelf life. Business model innovation (BMI) is therefore an essential strategy for driving value-creating growth. Although BMI is more challenging than traditional product or service innovation it often generates game-changing outcomes and typically generates superior returns over time.

Ways to make business model innovation practical:

• Make “how we create, deliver, and capture value” explicit—then redesign it deliberately.
• Prototype business models the same way you prototype products: small bets, fast learning.
• Build evidence progressively (problem validation → solution fit → business model fit → scaling logic).

Manage a portfolio of growth options

Top-tier innovators are highly effective at actively managing a portfolio of strategic growth opportunities. They bring management discipline to de-risk each stage of the opportunity lifecycle from ideation through development, experimentation and commercialization – including clear processes to kill underperforming projects. They construct balanced portfolios of growth options, which include both longer-term “game changing” opportunities as well as closer-in “adjacent” innovations.

Often these innovation portfolios are focused around one or more defined opportunity domains or strategic “aiming points”.

How to make the portfolio work harder:

• Separate “core,” “adjacent,” and “new” options so each has the right expectations and metrics.
• Fund options in stages based on learning milestones, not promises.
• Make pruning visible and celebrated—killing work is how you free capacity for better bets.

Implement strong governance mechanisms

Top-tier innovators are disciplined. They establish well-defined and transparent processes and decision criteria for managing at the level of both the individual project and the innovation pipeline and portfolio. Team composition, communication and engagement is also critical to success.

Governance that supports disruptive innovation usually includes:

• Clear decision rights (who can greenlight experiments, scale pilots, or stop projects).
• Lightweight, frequent reviews that focus on evidence and learning velocity.
• A senior forum that protects longer-horizon options from short-term performance gravity.

Create a culture that fosters breakthroughs

High-performance innovation cultures are designed for speed and adaptation. Increasing the clock speed of the “experiment-learn-pivot cycle” is critical. Failing fast and cheaply is what enables top-tier innovators to move quickly down the experience curve. Innovation metrics and KPIs must extend beyond traditional R&D and product development metrics, which fail to measure the company’s overall innovation capability.

It’s not enough to measure innovation outputs, we also need to measure innovation inputs and throughputs.

Practical cultural levers that change behavior:

• Reward teams for validated learning, not just successful launches.
• Train leaders to ask better questions (“What did we learn?” “What’s the smallest next test?”).
• Build repeatable rituals: demo days, learning reviews, post-mortems, and customer immersion.

Manage innovation as a core competence

In order to innovate and grow successfully over the long term, there must be a commitment to embedding and institutionalizing innovation as a core competence within the organization. Typically, this is a senior leadership challenge and the mandate begins at the top, with the CEO.

To institutionalize this competence:

• Clarify what capabilities you’re building (insight, concept design, experimentation, scaling, ecosystem design).
• Invest in talent pathways (rotation programs, coaching, communities of practice).
• Treat innovation as an operating system—supported by funding, governance, and leadership routines.

A practical way to start organizing for game changing innovation

If you want a fast path from aspiration to action, focus on three moves:

1. Pick a small set of aiming points. Not “innovate more,” but specific growth problems worth solving.
2. Design the pipeline end-to-end. From insight to scaling, with clear handoffs, decision rights, and learning milestones.
3. Rebalance the portfolio. Protect a handful of bold options and resource them with staged funding and senior sponsorship.

The goal isn’t more ideas. It’s an innovation system that repeatedly produces options for growth and has the discipline to scale what works.