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Before a company constructs a factory to manufacture a product, it must decide what specifically it wants to produce. The same holds for a growth factory: before constructing one, a company must define clearly the different types of growth it ought to produce. This clarification is important because, as discussed in other sections of this e-book, sustainable growth through innovation requires a company to pursue multiple types of growth at the same time. The company needs to measure, manage, and staff these different types in different ways. A lack of clearly defined growth types almost always suboptimizes one type of idea to the detriment of the whole enterprise.

A theme that we will repeat throughout is that there isn’t one perfect way to categorize different types of growth pursuits. For example, P&G has identified four distinct growth types:

1 Commercial—efforts to increase trial and usage of existing products without changing the product itself. P&G’s innovative Old Spice marketing campaign involving actor Isaiah Mustafa that generated close to 2 billion public relations impressions and propelled the deodorant into category leadership in 2010 was a powerful commercial innovation.

2 Sustaining—the “er” innovations that take existing solutions and make them better, faster, cheaper, and so on. Sustaining innovations like new scents or formulations for different washing machines helped the Tide brand grow significantly even in mature markets over the past decade.

3 Transformational—step-changes whose dramatic improvements reframe a category. An example of this form of innovation is Crest 3D White, a line of advanced oral care products, including one that whitens teeth in two hours.

4 Disruptive—new brands or business models that win through simplicity or affordability. P&G’s quick cleaning line of Swiffer products disrupted the staid mop-and-broom industry.

Citi has defined a different (though somewhat related) set of growth types to guide its innovation initiatives. Specifically, in 2011, Citi defined three types of innovation:

1 Core—improvements to existing offerings in existing markets or internal process improvements that increase efficiencies within the current business model. For example, the “Citi for Cities” team helps government clients improve service levels, efficiency, and security.

2 Adjacent—“new to Citi” innovations that either extend existing products to new markets or leverage existing Citi capabilities, assets, or relationships to bring new-to-Citi solutions to market. For example, in 2011, Citi launched “Citi Velocity,” a new online information channel that allows traders and clients to have instant access to Citi research and real-time market information.

3 Disruptive—“new to the world” innovations that reframe markets and create new ones. For example, Citi recently partnered with Jumio, a Silicon Valley start-up that leverages cameras in any mobile phone, tablet, or laptop to increase the security of remote payments.

Setting these definitions was an important step in Citi’s efforts to manage innovation more systematically. Common definitions enable each of Citi’s diverse business units to assess and describe their innovation portfolios consistently, positioning Citi to deliver against an important strategic goal of former CEO Pandit: the creation of a Citi-wide innovation portfolio view.

Despite differences in nomenclature, these two organizations define their growth types in ways that share important commonalities:

1 At least one type explicitly focuses on “noncore” growth from new markets or new customer segments.

2 There are explicit and well-documented differences between types. P&G has simple checklists that help teams ensure they are following the strategy they want to follow. Citi developed a tool to help teams categorize and evaluate innovation projects by answering a straightforward set of questions.

3 The types are integrated into other elements of the growth factory. For example, Citi Transaction Services uses the growth types to organize and optimize initiatives and investments for greatest impact and scale.

It’s impossible to imagine building a factory without first defining what that factory is going to produce. Detailing growth types is an important step on the road to the systematic pursuit of growth.

Diagnostic Questions for Leaders

 Do we have clear definitions of the different types of growth we will pursue?

 Does at least one type focus on sources of growth beyond today’s core business?

 Do all our leaders understand these definitions, are they aligned on them, and are they using them to manage innovation efforts?

 Are our growth types integrated into other management systems?

Warning Signs

 Definitions with significant “wiggle room” in interpretation

 Purely internal definitions that lack a market lens

 Disconnects between growth types and critical governance and controls systems

Further Reading

 Brown, Bruce, and Scott D. Anthony. “How P&G Tripled Its Innovation Success Rate.” Harvard Business Review, June 2011.