PLANNING

(AND DOING)
INNOVATION
JOHN CAIN & ZACHARY JEAN PARADIS
With contributions from Joel Krieger, Adrian Slobin and Pinak Kiran Vedalankar

These days, nearly everyone touts the

importance of innovation, yet most
companies struggle with how to replicate it regularly. And the rise of the interconnected and increasingly digitized
world has raised even more questions
about innovation and agility questions
about how new technologies might be
rewriting the rules.

everyday obstacles of using innovation

effectively. An understanding of how
to support constant innovation systemically through internal processes,
culture, methods, and tools is required.
This, along with the incorporation of
different approaches, can lead many
firms to creating stronger value
through innovation.

Clients frequently ask us how to

produce meaningful innovation in their
businesses. Amidst tremendous choice
and change, the questions remain:
What is innovation? And how can we
use it to deliver results?

Organizations should consider

introducing a portfolio of innovation
approaches to maximize agility across
the finding and vetting of opportunities,
the scaling of responses, and the optimization of details. Here we will address
a few of the common myths that hinder
organizations from integrating meaningful and continuous innovation, and
recommend a set of approaches for
developing your innovation mix.

Put simply, innovation is the process of

creating value for people through new
or improved products or services.
And while companies do innovate
regularly, many still struggle with the

OUR PERSPECTIVES

Innovation myths
Its worth debunking a few of the
common myths about innovation,
starting with the idea that innovation
only pertains to the introduction of
breakthrough or disruptive products or
services. This is not always the case.
Incremental innovation (the improvement of current products, services, and
processes) can be hugely valuable.
A second myth suggests that innovation requires a focus on key, new
products. But ranges and types of
innovation can flow from different types
of attention to people, business, or
technology. Instead of one imagined
scale and a single object, we see varieties of scales and differentiation in the
focus of innovation: external to internal,
product to system, and incremental
to disruptive.
With so much innovation present in
the innovation process itself, the third
myth is that there is a single approach
to innovation. As youll see, there is
actually a range that enables different
types of agility to increase the hit rate
of innovation at every level.

Innovation approaches
Along the range from incremental to
breakthrough, we see four main approaches to innovation in large organizations (see Figure 1): analytics-driven
optimization, hybrid agile, labs and pilots, and the spinout of a (lean) start-up.

Analytics and optimization

Analytics and optimization are often
seen as necessary evils rather than
opportunities for innovation. Driving
value from this approach assumes rapid
implementation of changes and a team
with a test-and-learn attitude. Aggregating a series of apparently minor A/B analytics-driven tweaks in a programmatic
way can be shockingly beneficial. Its a
tremendous way to evolve your current
business and platform to maximize performance. SapientNitros Global Lead
of Analytics, Simon James, calls this the
war of marginal gains.
For a recent client, our analytics teams
identified more than 100 potential
improvements to digital touchpoints,
which we projected to result in a total

FIGURE01

Different innovation approaches offer different attributes

There is a range of innovation approaches available depending on your objectives.
For some, incremental approaches focused on optimization and platform evolution
make sense. For others, labs, pilots, and start-ups are a better approaches. Each
has different criteria for planning, scaling, and agility.

Analytics &
Optimization
Evolve
Platform

Hybrid
Agile
Build/Evolve
Platform

Labs &
Pilots
Identify New
Platforms

Incremental

(Lean)
Start-up
Identify New
Businesses

Breakthrough

Planning
Scale
Agility

Analytics &
Optimization

OUR PERSPECTIVES

Hybrid Agile

Labs & Pilots

(Lean) Start-up

uplift of over $46 million. For a

separate client, we hypothesized that
a persistent shopping cart would
improve customer satisfaction and
increase conversion.
The brand actively improved this (and
several other original recommendations), driving an additional $25 million
in annual revenue. These incremental
innovations only come if the analytics-driven approach (along with the
team) is understood, valued, and
included in the innovation portfolio.

Hybrid agile
The second approach, hybrid agile,
seeks to deliver the benefits found in
agile development, while also permitting the long-term horizons typical in
large companies. Unlike more traditional agile (e.g., Scrum), hybrid agile
is a better fit for large programs with
dependencies across multiple groups.
We often see large organizations
with heavy planning processes built
around quarterly (or even less frequent)
releases. Internal teams are doing more
in each release, thereby accumulating
risk without value with every unreleased
change rather than splitting the risk and
value introduced over smaller releases.
Moving to a hybrid agile approach might
break a set of what would originally be
three releases over eight months to one
release per month (see Figure 2).
For a top retailer, we led a program
to redesign across the brands digital
touchpoints, re-platform its core capabilities, and move the organization from
a quarterly release cycle to a monthly
hybrid agile model. The hybrid part

OUR PERSPECTIVES

of hybrid agile allows for the introduction of milestones around each agile
delivery release (ADR), which enables
reprioritization both within and between
ADRs. Key enhancements were introduced within a month of re-launch,
increasing conversion and sales while
simultaneously minimizing risk for
later enhancements.
The bulk of major enhancements or
platform builds that companies execute
would be best achieved through a
hybrid agile approach. Ultimately, these
enhancements can flow from different
types of innovation, such as identified
customer needs, industry improvements in core capabilities, or internal
process evolution.

FIGURE02

Typical release schedules versus a hybrid agile approach

Moving from a typical quarterly release schedule to a monthly hybrid agile
approach reduces risk and speeds the release of enhancements to the market.
Ultimately, this allows more innovation, sooner.
Typical Release Schedule
Release 1
Release 2
Release 3

Release 1

Release 2 Release 3

Hybrid Agile Release Schedule

Release 4

Release 5

Release 6

Release 7

Release 8

SECOND STORY

Labs & pilots

The next two approaches share similar
intents, but assign differing levels of
autonomy and responsibility to teams.
The lab approach marries a dedicated
team to a distinct physical environment,
purpose-built with state-of-the-art tools.
As an organization, a lab understands
opportunity spaces in a usefully ambiguous way, organizing explorations around
an open-ended hunt with high standards,
but loosely defined goals (see Figure 3).
This can be a tricky line to walk, and doing
it well requires a willingness to kill your
darlings before the rabbit hole gets
too deep.

FIGURE03

Lab-based approach for a partner innovation lab

Lab-based approaches use a traditional top-down methodology. Hypothesisdriven, they are organized around an open-ended hunt for solutions. Unlike
the Second Story approach (see Figure 5, right), this traditional approach
starts with the hunt, not the technology.
Opportunity
Spaces

Ask
Driven

Context Building

Self
Directed

Knowledge Artifacts:
Basic Knowledge

Idea
Driven

Hunt

Discovery
Idea Generation
Test, Learn, Iterate
Package

Executable Idea
Drive Adoption

OUR PERSPECTIVES

Knowledge Artifacts:
Learning & Perspectives

Over the past two years, SapientNitro

has invested in a series of labs across
five North American offices, building
off of capabilities from our acquisition of Second Story.
Second Story was, initially, a small
interdisciplinary design studio that
was tackling critical areas with
explicitly lab-based approaches and
obsessed with the intersection of
digital and environments blended
physical-digital worlds which were
becoming ever more prevalent and
not well understood. Needless to
say, this is a critical new space for
those in retail, hospitality, financial
services, and sports.
With the expansion across North
America, Second Story is poised
to help a much broader set of our
clients innovate.
Second Storys approach is different
because it recognizes that there are
few, if any, best practices which
exist in this new world of blended
physical-digital environments. They
have deep relationships with display
and other pertinent hardware manufacturers, as well as a blend of architects, content strategists, designers,
and technologists.
Rather than rigidly trying to solve a
business challenge, they leverage an
understanding of an organizations
mission, and use this to explore how
technology and story can be woven
together in an environment to address business problems and provide
distinct value. This approach can
produce incredible results, but it also
forces clients and teams to accept
less-bounded problems.
For example, Second Storys labbased approach for a consumer brand
addressed the unique challenge of
explaining what technology and
benefits exist under the skin of a
product in this category.

Rather than creating a big touch screen

to walk customers through the product
details, Second Story created a series
of functional spike solutions based on
the latest capabilities found in the lab.
While there were hits and misses, one
specific interaction suggested a pattern
not just for the specific industry, but
also for the future of retail itself.

customers in. This not-yet-interactive

scene then transformed once a customer
picked up the product. As he/she turned
the product to inspect different aspects
of its construction, corresponding information was displayed on the screen
behind it.

The chosen solution (see Figure 4)

embedded gyroscopic sensors in the
products (such as an electronic device or
jewelry) on wall shelves and connected
them to a screen sitting behind the
physical display.

In this way, the actual product for sale

the electronics device or piece of jewelry
became the primary interface for the
interactive experience. This birthed
the core in-store design paradigm of
product as interface, and were seeing
the relevance of this notion play out in a
variety of categories.

When no products were touched, the

display cycled through videos and imagery that activated the space and drew

Second Storys lab-based conditions for

success enable this type of innovation
to occur.

FIGURE04

Second Storys product-as-Interface

proof of concept
One specific innovation created in
the Second Story lab was a product-asinterface proof of concept. In this example, the shoe controlled a digital interface that highlighted relevant features.

FIGURE05

Second Storys lab-based approach incubates by creating spike solutions in areas where there are no best practices
Second Storys lab-based approach starts with technology experimentation for example laser projection and product
scanning and then links it to an overall experience vision, which ultimately links to a business challenge. This flips the
traditional approach of business problem to application on its head, helping to ensure that the chosen vision is achievable,
while still being cutting-edge.

APPROACHES TO INNOVATION
Incubation Focused

SPIKE SOLUTION

DESIGN/IMPLEMENT
THE EXPERIENCE

(Lets Experiment with Pico

Projectors on different surfaces:
I bet some will look cool!)

SPIKE SOLUTION
(Laser projection looks awesome.
Lets figure that out.)

SPIKE SOLUTION
(Lets learn how to scan stuff
because scanning is a fascinating
technology.)

OUR PERSPECTIVES

UNIQUE EXPERIENCE VISION

(We can use these technologies to
bring traditional utilitarian e-commerce paradigms into the physical
space as a delightful experience!)

BUSINESS CHALLENGE
(This may help us combat Amazon
by using one of our greatest
strengths: the store.)

Inventing something entirely new is

not the only worthwhile output of a lab.
In a retail lab, we examined a start-up
that claimed its technology could
drive a recommendation engine that
would radically increase revenue on
our clients massive e-commerce site.
The lab was able to quickly create a
large-scale, working proof of concept
with the technology to determine if the
start-up was everything it said it was or
if it was too good to be true. Unfortunately, it proved to be the latter. The
lab protected a tremendous amount of
resources by being able to evaluate the
new platform.

SapientNitro is involved with various

sector-focused client labs that are
seeking to identify new platforms or
adjacent businesses germane to an
industry. Weve helped retailers explore
retail, insurers explore health, and
banks explore financial services, all
with the explicit intent of discovering
technology-based platforms or adjacent
businesses.The opportunity spaces
and hunts explored have been focused
on the context of the industries
themselves, combined with the latest
technology, and applied to the problems and opportunities that we see in
peoples behavior.

Lean start-up
The last approach is focused on a single opportunity space. Lean start-ups
are undertaken with the idea of creating
both a business and a product. A
great example of a successful start-up
stemming from a large organization is
giffgaff, spun out of the UK mobile
telecom, O2, in 2009. Leaders at 02
recognized an opportunity for a mobile
carrier built on a new business model.
Created in late 2009, giffgaff is a
SIM-only mobile network targeting
price-sensitive, digital-savvy customers
who avoid traditional networks. The
network attempts to reward its customers
for doing much of the work normally
done by employees namely, customer
service and promotion.1

This customer-driven business model is

something O2 could not execute within
the company itself given its managements focus on incremental growth.
As a separate entity, however, it had a
definite market impact. And giffgaff
continues to be successful. Its financial
performance was helped by a loyal
customer base and it was named Best
Telecom Provider in 2014.2
Most major corporations could use this
lean start-up approach when they
identify a key opportunity within the
market, but dont see a way to pull it
off within their current structure.

Wikipedia. "giffgaff." https://en.wikipedia.org/wiki/Giffgaff.

Which? Tech Daily. Why giffgaff is our Best Telecom Services Provider 2014." http://blogs.which.co.uk/technology/
phone-networks/why-giffgaff-is-our-best-telecom-services-provider-which-awards-2014/.
2

OUR PERSPECTIVES

VENATOR
Venator is SapientNitros internal
innovation team. Its a small, highly specialized group that integrates
business, technology, user experience,
and data science expertise with a core
mission to identify, create, and invest in
breakthrough innovation. Venator, Latin
for hunter, focuses on discovering key
innovation trends and understanding
what impact they will have on the
intersection of technology and story.
The group is a driving force for stewarding clients to see around corners toward
whats next.
The inspiration behind Venator came
from co-running an innovation center
with a client. We realized that a similar
model, operating independent of any
single client, could act as a vehicle in
defining our industrys future. The team
focuses on three main areas:
Sourcing and assessing innovative
start-ups to discover companies that
are solving business problems in new
and unique ways, but are likely not
on the radar of our corporate clients.

We see Venator as another key differentiator that reinforces our position

as a new breed of agency, breaking
boundaries where technology and story
meet. With the momentum of our recent
recognition as a leader in the Forrester
Innovation Wave, Venator has become
more relevant than ever before.

FIGURE06

Set of concepts and enablers

Venator focuses on exploring opportunity spaces areas or trends that we
believe will have a substantial impact on our digitally-enabled world. Opportunity
spaces are on two levels: Concepts, which are high-level categories that combine
different emerging technologies toward a solution, and Enablers (the emerging
technologies themselves).

CONCEPTS
Digital Augmentation
of Physical Worlds

Virtual Reality

Inspiration
& Discovery

Engaging in research and development activities that employ emerging

technologies to explore key topics of
interest that are trending and relevant to our clients thinking.

Participatory
Economy

Internet of Things

Alternative
Distribution

Evaluating potential strategic investments in start-ups that SapientNitro

should consider.

Advanced
Analytics/Insights

Real-Time
Experience
Optimization

Customizable
Products/Services

Multisensory
Recognition

Machine
Learning

Robotics

Sensors

Non-Conventional
Interfaces

Cognitive
Science

Wearable
Computing

3-D Printing

Location
Detection

The opportunity areas that Venator

focuses on include a set of concepts and
enablers that run across our business
and clients (see Figure 6).
Venator regularly collaborates with
leading venture capital firms and the
investment community, top universities,
and corporate innovation labs. The team
will also collaborate internally with
other hubs of innovation, such as the
Second Story Labs, Instrumented Intelligence, and client teams.

OUR PERSPECTIVES

ENABLERS

Six innovation principles

While each approach is capable
of attacking opportunities with
differing scales, time horizons,
and concreteness, there are six
innovation principles that can be
applied in any context:

PORTFOLIOS NOT PROJECTS

Innovation in large organizations is
maximized by understanding which
problems align with which approaches.
Consider how your set of opportunities
aligns to potential teams and approaches.

MOVE THROUGH THE

INSIGHT
MAKE
MEASURE CYCLE QUICKLY
At every level of innovation, the
faster a team can move to drive
change and then measure its
effect, the better it will perform.

BEST PRACTICES
DO NOT DRIVE LEADERSHIP
If your goal is to drive leadership or breakthrough
innovation, then perhaps asking your teams or
partners to produce best practice reports is not
the best solution. Breakthrough innovation comes
from focus directed at your customers ecosystems
and larger journeys, the exploration of new technologies, or the experimentation of new business
models. It doesnt necessarily come from what
your competitors are already doing.

INNOVATION MUST
BE PEOPLE-CENTRIC
(EVENTUALLY)
Innovation can be effectively
driven by technology and
organizational work, but
it is ultimately realized by
understanding how it solves
problems for people.

NOT EVERY TEAM

MEMBER IS READY
OR WILLING TO MOVE
AT LAB PACE
Labs may sound exciting, but
they can be tremendously
difficult. They require constant
reprioritization, and ask team
members for a level of rigor and
focus that many cannot or do
not wish to invest.

THINK BEYOND THE

FOUR WALLS OF YOUR
ORGANIZATION
Dont think that a problem has to
be solved only within your team.
The culture of experimenters in
the innovation space lends itself
to collaboration and idea-sharing.
Creating an innovation network is
an important component of creating an internal innovation offering.
OUR PERSPECTIVES

Conclusion
Every day, large organizations struggle
with how to maximize innovation, not
realizing that their struggle stems
primarily from the singularity of mindset
and process with which they approach
problems and opportunities. What
they might need, in fact, is a portfolio
of approaches that enables different
altitudes of investigation and types
of agility.
Each of the four approaches has its
benefits in specific scenarios. Focusing
even obsessing over analytics and
optimization can garner real rewards.
The hybrid agile approach can be
used to accelerate delivery of complex
enhancements more quickly. Labs and
pilots are good ways of exploring new
technology platforms and collaborating
with start-ups. And the ability to spin
out start-ups allows for the quick testing of entirely new business models.
There is no one-size-fits-all to innovation;
however, by varying their approaches,
companies can maximize the potential
hit-rate of their innovation investments.

OUR PERSPECTIVES

John Cain
Vice President, Strategy and Analysis,
SapientNitro Chicago
jcain@sapient.com
Based in Chicago, John plays an active role in experience
and innovation research to increase our understanding
of consumer behavior. He provides expertise in advanced
analytics and data visualization, data modeling,
measurement, and reporting that shapes business
innovation and design strategy.

Zachary Jean Paradis

Director Experience Strategy,
SapientNitro Chicago
zparadis@sapient.com
Zachary is a strategist, professor, and writer obsessed
with transforming lives through customer experience. He
acts as co-lead for the firms Experience Strategy domain,
supports the companys innovation efforts, and teaches at
the IIT Institute of Design.

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