Innovation Consulting at Strategy&

An Interview with Alexander Kandybin "At its simplest level, innovation is embodied by a product or service offering that contains a significant element of newness," according to Alexander Kandybin, a Partner and Vice President at global management consulting firm Strategy& (formerly Booz & Company).

However, he points out, "new" does not have to mean entirely new to the world line. "Line extensions of existing brands—i.e. Colgate Whitening toothpaste or White Chocolate Reese's Peanut Butter Cups—are a frequently profitable form of innovation. True innovation can take the form of a new product, technology, process, content, or even the presentation and marketing of an existing product or service."

Based in New York City, Kandybin specializes in growth strategy, value chain strategy, technology strategy, innovation and R&D for companies in the consumer, technology, healthcare and chemical industries. He is an author and frequent speaker on innovation, and a scheduled panelist on “Open Innovation Business Models” at the CoDev 2009 Conference in January in Scottsdale, AZ.

Kandybin recently spoke with IdeaConnection.com about Innovation and its significance to remain competitive in the marketplace.

Sandy Staggs (SS): What role and level does innovation play at Strategy&?

Alex Kandybin: We are a consulting company, so we advise our clients on innovation.

SS: What constitutes a good result in innovation?

Alex Kandybin: We do management efficiency consulting and work with quite a lot of new products from idea generation all the way to commercialization. I think that innovation is the reason that a company is able to compete in the marketplace and grow faster. Innovation needs to be linked to a growth strategy that will exceed market growth and your competition’s growth. Most of the time, innovation is tied one way or another to a higher rate of return and how you allocate resources overall to maximize new product market potential.

SS: Can you name some tools and techniques you have utilized—and with what result?

Alex Kandybin: Part of our innovation at Strategy& concerns our client’s growth strategies. What role innovation plays in a company’s growth strategies and priorities will determine which tools we use. Our approach is to understand what the client’s issues are and then develop a solution. So we have a very individualized approach, but we are not reinventing the wheel every time. If a client wanted to implement an ideation tool then we can do an evaluation of the tools on the market and advise them.

SS: How can a company benefit from outsourcing Innovation in its value chain strategy?

Alex Kandybin: Despite the academic fervor for outsourcing, though, companies need to think rigorously about what can be sent outside the four walls. Our experience with successful outsourcers persuades us that the innovation value chain presents natural opportunities for openness.

The first link in the chain, idea generation, is clearly ripe for outsourcing; a company should cast as wide a net as possible for ideas. Superior innovators create and institutionalize a direct link between strategic priorities and idea generation. They demonstrate market insight by understanding both how much novelty the market wants and will absorb, and how the right new ideas can create such benefits as category growth and gains in market share.

By contrast, the second link, project selection, cannot be outsourced. This critical step speaks to the heart of a firm’s strategy and its vision for its business—its corporate soul, if you will.

Link three, development, can certainly be outsourced. Taking an idea from concept to tangible product or service involves a multifunctional set of technical and managerial skills. To the extent a firm can find a product developer outside its walls that can speed up its time-to-market and execute formulation and product creation, there is no reason this capability has to remain in-house. Moreover, with superior product management skills, portions of product development certainly can move outside.

The final link in the innovation value chain, commercialization, cannot really be outsourced. Commercialization is the execution of the strategic vision for the product, and as such is an expression of the firm’s strategy. Although portions of the commercialization process have been outsourced for decades (e.g., advertising campaigns, market research), key decisions about a product’s goals, placement, pricing, rollout, features, and so forth, are intimately linked to a company’s core identity and are too vital to surrender to outsiders.

SS: Are you collaborative at Strategy&? Do you outsource?

Alex Kandybin: We are partnership and we have our large staff with senior associates and experts in many fields.

SS: What is the most exciting innovation you've been involved in developing?

Alex Kandybin: There isn’t one I can name here. I personally like developing business strategies for new products. We’ve done a number of projects where we have been working on a product or its marketing strategy from idea to commercialization, and it’s rewarding when I can go to a grocery store and actually see that product on the shelf.

SS: When you are stuck, what do you do?

Alex Kandybin: Whenever you are trying to find solutions, there is always difficulty. Our approach is a hypothesis-based approach. Sometimes we may need to do more research or obtain more insight from our clients. It’s always like solving a jigsaw puzzle and trying the piece by piece approach.

SS: Can you recommend any particular books on innovation that you or your staff have read?

Alex Kandybin: I do a lot of reading. I read two-thirds of books that come out on innovation. I also follow Harvard Business Review and MIT’s Sloan Management Review.

SS: What, if any, Ideation/Innovation software do you use?

Alex Kandybin: At Strategy&, we really do not use any particular software. Every client has different needs, so we will use whatever tools are necessary. We have experts in most areas. I have used some Real Options methodology but there is not one set of tools that we always rely on.

SS: Do you use ideation websites such as IdeaConnection.com?

Alex Kandybin: In our research, we often use commercial websites, but not necessarily for ideation.

Alexander Kandybin has 18 years of professional experience in consulting, industry and academia. His articles on innovation and healthcare business appeared in strategy+business and Forum magazines. Prior to his career at Strategy&, Alex served as Vice President R&D for Arbor Research Corporation, supervised a technology development project for the U.S. Air Force and worked as a chemistry professor. Alex holds Ph.D. and M.S. degrees with honors in applied chemistry from Moscow Mendeleev University of Chemical Technology and a MBA degree with high distinction from the University of Michigan Business School.