Creating a new step-out business is not easy

Achieving the revenue growth that markets expect can be challenging: growth by acquisition is expensive, and organic growth is often too slow and incremental. Therefore, a key priority for global corporations is to improve performance in breakthrough innovation to overcome the growth gap.

However, despite some successes, many companies fail to create sustainable new businesses of scale. For example, in our own breakthrough innovation survey 11 , more than 85 percent of companies were unsatisfied with their breakthrough innovation performances. Usually, this is not due to lack of good concepts, but because companies do not truly embrace the idea of investing in step-out business opportunities which involve commercial risks and require new competencies.

How the Breakthrough Incubator model can help

Arthur D. Little (ADL) has been working with clients using a powerful new external incubator approach to overcome these challenges and accelerate new business creation.

The Breakthrough Incubator (BI) is a model in which the entire end-to-end innovation process is externalized and conducted by a lead delivery partner managing a network of other players, from ideation through to launch and commercialization. In essence, this is a “build, operate, transfer” philosophy
applied specifically to innovation and product development.

The key features of the BI model are as follows:

• ADL holds full responsibility for delivery and acts as an “orchestrator”, conducting every part of new-business creation, with only a small client focalpoint guidance team involved in close, regular interactions with the team
• Once the scope and aims are defined, ADL commences the program with an initial strategic review aimed at establishing and confirming the feasibility of the proposition
• The product/service development process then proceeds using an agile approach with early testing and fast development cycles, including prototyping, scale-up and in-market testing stages
• The scope also includes supply chain sourcing, manufacturing/operational analysis and planning, pricing, brand strategy, channel strategy, business case and growth strategy

Once the development is complete, ADL transitions the proven and tested new business from the incubator back into the company.

Key features of the BI approach