Ways to Grow Innovation Matrix
Balance your innovation portfolio across four quadrants of risk and reward
The Ways to Grow Matrix is a strategic tool developed by IDEO's Diego Rodriguez and Ryan Jacoby for evaluating and managing an organization's innovation portfolio. It maps innovation efforts along two axes: existing to new offerings (vertical) and existing to new users (horizontal), creating four quadrants that represent different levels of ambition, risk, and potential reward.
The bottom-left quadrant represents incremental innovation, close to existing offerings and existing users. This is where most companies invest most heavily: the next flavor of toothpaste, the annual car model refresh. The adjacent quadrants represent evolutionary innovation, either extending existing offerings to new users or creating new offerings for existing users. The top-right quadrant represents revolutionary innovation, where both the product and the users are new, creating entirely new markets.
The critical strategic insight is that companies need innovation across all four quadrants. Focusing only on incremental innovation leaves organizations vulnerable to Black Swan disruptions. Betting only on revolutionary innovation ignores the reliable base business. The matrix provides a visual tool for assessing balance and making deliberate portfolio decisions about where to invest creative energy and resources.
- A healthy innovation portfolio requires investment across all four quadrants, not just the comfortable incremental zone
- Revolutionary innovation creates entirely new markets but happens rarely and carries the highest risk
- Incremental-only strategies leave companies vulnerable to Black Swan disruptions
- Evolutionary innovation extends the base in new directions and provides the best risk-reward balance for most companies
- Even the most robust organizations should write themselves an innovation insurance policy by diversifying across quadrants
- Map Your Current Innovation PortfolioInventory all current innovation projects and plot each one on the matrix according to how new the offering is (vertical axis) and how new the target users are (horizontal axis). Be honest about which quadrant each project truly occupies.Pro tipMost organizations discover they are heavily concentrated in the bottom-left incremental quadrant. This is normal but dangerous.WarningTeams often overestimate how revolutionary their projects are. Truly new-to-the-world products for completely new users are extremely rare.
- Assess Portfolio BalanceEvaluate whether the distribution across quadrants matches your strategic aspirations and risk tolerance. Identify gaps where you have no active innovation and concentrations where you may be over-invested.Pro tipThe right balance depends on your industry and competitive position. A market leader can afford more incremental investment; a challenger may need more evolutionary or revolutionary bets.
- Deliberately Invest in Underrepresented QuadrantsAllocate resources to fill portfolio gaps. This typically means pushing some teams toward evolutionary or revolutionary innovation while maintaining the incremental base. Use different management approaches for different quadrants: tight controls for incremental, more freedom for evolutionary and revolutionary.Pro tipEvolutionary innovation along the user axis (existing product, new users) can be achieved by adapting existing offerings for lower cost or different contexts, as Tata Motors did with the Nano.
- Apply Different Success Metrics per QuadrantIncremental innovation can be measured by traditional business forecasts. Evolutionary innovation requires longer time horizons and different KPIs. Revolutionary innovation needs protection from premature ROI analysis and should be evaluated by learning velocity and option value.Pro tipDon't apply incremental metrics to revolutionary projects. Doing so will kill them before they have a chance to prove their worth.WarningThe financial meltdown of 2008 and disruptions like digital music dethroning Sony show that even the most cautious business plan can be upended. The next disruption could come from anywhere.
While American automakers pursued incremental innovation with ever-larger SUVs, Toyota invested in the evolutionary quadrant with the Prius hybrid. The real innovation was not just the hybrid motor but the information display that turned fuel efficiency into an engaging driver experience, creating a new value proposition for existing car buyers.
Neither the core technology of the iPod nor the concept of portable music was new. But Apple created an entirely new market by combining existing technology with a new experience of music ownership and consumption. Sony had achieved the same feat decades earlier with the Walkman. Both represent the rare revolutionary innovation where both product and user base are genuinely new.
Rodriguez and Jacoby developed this tool by combining their dual backgrounds in design and business (both hold MBAs in addition to design credentials). They analyzed IDEO's own case studies and client projects to identify patterns in how different types of innovation succeed or fail. The matrix was born from the recognition that business thinking is integral to design thinking, and that sophisticated analytical tools from the business sector can enhance design-led innovation strategy.