One of the problems that makes innovation necessary is this: no matter how strong your current position is, if you don’t innovate, your business will eventually decline. And it might not be eventually – it might happen sooner. Why? The Think Tank blog quotes Gary Hamel to explain:

“Out there in some garage is an entrepreneur who’s forging a bullet with your company’s name on it,” Gary Hamel, a leading business strategy writer and consultant, has written. “You’ve got one option now — to shoot first. You’ve got to out-innovate the innovators.”

One good way to think about this is using the 3 horizons model – the very short description is that the first horizon involves implementing innovations that improve your current operations, horizon two innovations are those that extend your current competencies into new, related markets, and horizon three innovations are the ones that will change the nature of your industry. You can be innovating constantly in ways that improve what you’re currently doing – but if you ignore the longer time horizons, you have to watch out for that entrepreneur’s bullet.

The difficulty is that H2 in particular is difficult to manage. The problem here is that these extensions into new markets create products and services that look a whole lot like your current products and services, and the temptation is to treat them in the same way, rather than as new ideas that need some incubation to succeed. So I’m always interested to find good examples of horizon 2 innovations – and I ran across a great one today – McLaren.

Here are a couple of examples of how they are extending their various Formula 1 technologies into new fields. The first is from Wired UK, describing work that Peter Tomlinson, the man in charge of air traffic control at Heathrow airport, is doing with McLaren:

While attending a workshop on cross-industry collaboration at McLaren’s clinically silent technology centre in Surrey, Tomlinson reflected on his own project to predict landing times by mapping datastreams from aircraft flight plans, take-off times and other feeds, such as weather. McLaren’s proprietary software, he learned, could instantly analyse driver and car data captured from 200 racetrack sources, simulate and visualise alternative scenarios, and let pit-stop crews make informed split-second decisions. “The penny dropped,” he recalls in a spotless glass office during a visit McLaren’s Norman Foster-designed HQ. “The pit stop for Formula 1 cars is just like the aircraft turnaround. Why couldn’t we map the Formula 1 world onto the airport world?”

Since then, National Air Traffic Services (NATS) has been working with McLaren’s engineers to map Heathrow’s taxiways and runways much as they do a Formula 1 track — and then turn all the data into clear visualizations, so air-traffic controllers can plan in real time for the near future. When rolled out, says Tomlinson, the project will give him a more efficient airport, with less taxiway waiting time, fewer luggage-collection delays, and much more predictable schedules for departing passengers or those collecting others.

McLaren has actually created a spin-off software company to repackage this modeling program to sell to business.

And they’re not just selling software – McLaren is also using their technology in the design of health care goods, like the Ovei Wellbeing Capsule:

Willings Botha describes the software case as a good example of open innovation, which it is. But these are also great examples of managing an innovation portfolio, with initiatives across multiple time horizons. This is an essential thing to do if we are going to use innovation to sustain longer-term success.

It is relatively easy to support initiatives that make us better at what we’re currently doing. It is harder to figure out how to extend our current competencies into new fields. That’s what I love about these McLaren examples – selling scenario-planning software to management consultants is not an obvious move for a Formula 1 team. It takes imagination to see that possibility, and it is not an easy move to execute. But if you plan innovation as a portfolio across several time horizons, it can be easier to find opportunities like this for yourself.

We always knew that McLaren was fast, but they might even be fast enough to outrace the entrepreneur’s bullet!

(picture from flickr/AKinsey foto under a Creative Commons License)