If the primary purpose of business is to create customers, then the foundational functions should be marketing and innovation — the two essential entrepreneurial activities highlighted by Schumpeter, Drucker, Levitt, and McKittrick in the 1950s and 1960s.
However, these functions have evolved along significantly divergent paths. Marketing has matured into a vital, ubiquitous corporate function essential for both profit-driven and non-profit organizations. In contrast, innovation’s path has been more erratic and misunderstood, often regarded as a sporadic activity rather than a manageable capability that can be harnessed for organizational benefit.
Today, companies still grapple with the decision to fund innovation teams, scrutinizing and attempting to quantify innovation outputs while often viewing innovation expenditures as an easy budget reduction. Meanwhile, the necessity of marketing is unquestioned. Ironically, innovation, once seen as a critical driver of long-term profit, is frequently mischaracterized as a cost center. In some cases, it has become a tool for “innowashing,” a term coined by a colleague to describe superficial claims of innovation.
Isn’t it time to establish a persistent and integral innovation function that serves a clear organizational purpose, akin to marketing? Such a function could work alongside marketing to help organizations navigate intense and rapid change. Governance boards should actively support the establishment of a robust innovation framework that continuously enhances the organization’s sensing, seizing, and transforming capabilities, ultimately fostering long-term success.
Can Innovation Follow Marketing’s Lead?
The evolution of the innovation function mirrors that of marketing, albeit lagging by several decades. By learning from marketing’s journey, we can accelerate the development of innovation as a core corporate function. Innovation should evolve beyond isolated projects into a comprehensive capability — what I term “Innovation with a big ‘I'” — that fosters continuous agility, awareness, adaptability, and longevity throughout the organization.
The parallels between today’s state of innovation and marketing during its rise are striking.
Marketing has transitioned from a central function driven by one department to an organization-wide activity, emphasizing that its principles are too crucial to be confined to a single department. We see a similar trend in innovation, where teams and initiatives emerge in various corners of the organization. For instance, corporate accelerators have become models for replicating innovation processes on a smaller scale within the same firm. Yet, unlike marketing, innovation has not been established as a central function.
The Evolution of Marketing
The parallels between today’s state of innovation and marketing during its rise are striking. Both have historically been viewed as social and economic processes, rather than managerial disciplines. However, marketing’s transition to a recognized management function began much earlier and is now firmly established.
In the late 1980s, three dimensions of marketing were identified: marketing as culture, strategy, and tactics. We could easily replace “marketing” with “innovation” in this framework, as it aptly describes the current state of innovation activities. The evolution of marketing illustrates possible paths for enhancing innovation’s role within corporations.
Over time, marketing has become as indispensable as human resources or finance, fulfilling strategic roles that were unimaginable when it was primarily focused on sales transactions. Research shows that before the 1950s, marketing centered on commodities and mass production, with sales departments responsible for selling whatever was produced. From the 1950s to the 1970s, a shift occurred from firm-centric to customer-centric thinking, aligning the organization’s structure to better meet customer needs.
Academic researchers and practitioners contributed to marketing’s evolutionary shifts and further developed marketing as a practice. Philip Kotler introduced psychological insights to understand customer behavior, while Michael Porter advocated for a broader industry perspective. Leonard Berry’s concept of relationship marketing laid the groundwork for customer relationship management (CRM), emphasizing cooperative strategies over traditional confrontational ones. George Day’s inside-out and outside-in approaches considered both internal capabilities and external conditions in developing marketing strategies. The latest evolution emphasizes long-term customer relationships through concepts like Customer Lifetime Value (CLV) and Customer Equity, highlighting future income potential over immediate sales.
As marketing evolved, it became clear that it was no longer a mere microeconomic technique, but a multidisciplinary, relationship-driven domain of expertise integral to navigating complex ecosystems of alliances and networks. Marketing emerged as a key component in guiding organizational strategy and success.
Drawing Parallels Between Marketing and Innovation
The table below attempts to correlate the evolutionary shifts in marketing maturity with those in innovation. Harvey balls — those green and gray pie chart graphics — illustrate the extent of maturity for each dimension, providing a relative comparison based on current literature. This framework highlights innovation’s evolutionary lag relative to marketing and underscores the parallels in their maturation processes.
In the table above, I introduce some new terminology, inspired by terminology that has taken root in the marketing field. In marketing, customer equity is the value of the potential future income generated by a company’s customers over a lifetime.
Changing the definition slightly, innovation equity would be the value of the potential future income generated by a company’s original innovation investment. It’s the power a firm has to amplify its innovation investment dollars over time — the firm’s innovation multiplier.
Customer lifetime value (CLV) is defined as the total worth a customer brings to a company over the duration of their relationship. It reflects the long-term benefits of an initial investment made by the company, where upfront capital is spent and short-term profits are often sacrificed to build a lasting relationship.
Changing the definition slightly, innovation longevity value (ILV) would be the total worth innovation investments bring to a company beyond the duration of the innovation investments. The term reflects the long-term benefits of an initial investment made by the company, where upfront capital is spent and short-term profits are often sacrificed to build a disruptive innovation, as well as a lasting innovation capability.
Four Actionable Insights
Four key actionable insights emerge from this discussion for those who are working with, or within, corporations that hope to take advantage of current research to optimize innovation.
- Replicate and accelerate the openness and relationship-building processes that marketing has undergone. Establish and integrate the essential connections that allow innovation to spread and thrive across organizational boundaries.
- Foster stronger collaboration between marketing and innovation functions, ensuring their alignment accelerates innovation maturity and leverages the enhanced marketing intelligence gained through this symbiotic relationship.
- Shift the discourse from a short-term, transactional focus to one centered on long-term value creation. Innovation should be seen as a driver of sustainable value, not just immediate revenue, and this long-term perspective must become a continuous priority for the firm.
- Finally, ignite, support, and incentivize the widespread adoption of innovation mechanisms by creating practices that foster innovation at the department and team levels, similar to how marketing has evolved from a singular corporate function into a pervasive organizational practice.
Dr. Felipe Negritto has 26 years of experience in planning and portfolio management, product management, systems integration, and information technology management. He spent 16 years with The Walt Disney Company, in the corporate Enterprise Technology group. Prior to his tenure at Disney, Dr. Negritto consulted for 10 years with KPMG and a boutique independent consulting firm. He has taught college and graduate level courses over the past 10 years. Currently, he serves as head of research at the Corporate Accelerator Forum and an adjunct professor at the Claremont Graduate University, in Claremont, Calif.
Sources
- Day, G. S. (1992). Marketing’s Contribution to the Strategy Dialogue.
- Pellegrino, A. (2024). Evolution of Marketing. Decoding Digital Consumer Behavior.
- Webster, F. E. (1992). The Changing Role of Marketing in the Corporation.
- Rand, W., & Stummer, C. (2021). Agent‐based modeling of new product market diffusion: An overview of strengths and criticisms.
- Ponta, L., Puliga, G., Manzini, R., & Cincotti, S. (2024). Reacting and recovering after an innovation failure. An agent-based approach.
