Clayton Christensen introduced the idea of resources, process, and priorities, or RPP, in a 2006 HBR article, “Assessing Your Company’s Capabilities: Resources, Processes, and Priorities.”[1] Simply put, RPPs are the resources, priorities, and procedures that a company uses to get work done. RPPs evolve organically from a business’s strategy and core business, and for a good reason: They increase operational efficiency, keep things running smoothly, and optimize the core business. Their resistance to change or redirection is part and parcel of that optimization function—RPPs keep the company on track. The problem arises when the company tries to rely on its existing RPPs, which have been optimized for the company’s core business model, to support a transformational innovation business model. The result is a potentially fatal Company-Fit RPP mismatch.
Resources are the tangible and intangible assets a company uses to support its business; they include people, equipment, technology, product designs, brands, information, cash, and relationships with suppliers, distributors, and customers. Resources are comparatively easy to realign and tend to be the focus of big decisions.
Processes are patterns of interaction, coordination, communication, and decision making through which companies accomplish their work. Processes include both the ways that products are developed and made, or services are offered and the methods by which procurement, market research, budgeting, employee development, and resource allocation are accomplished.
Priorities emerge from the company’s core business model and strategy, and they provide the basis for individual and group incentives. Priorities reflect senior executives’ decisions to fund one new product proposal and kill another or a salesperson’s decisions about which customers to call on, which products to push with those customers, and which products to deemphasize. When an engineer makes a design choice, or a production scheduler puts one order ahead of another, he or she is making a prioritization decision.
Processes and priorities become embedded in the company’s culture and thus are very difficult, if not impossible, to change or realign. They create the tiny points of friction that, as they accumulate, can kill an innovation. Transformational innovations are particularly vulnerable to these frictions and pressures because they typically involve business model innovation, which demands changes in resources, processes or priorities.
We go into depth describing the significant implications that RPPs have on disruptive or transformative innovation efforts in our 3 part blog series on Digital Transformation. In it we use Digital Transformation as an example of an innovation effort that is distant from the core business to highlight the risks that unaliged RPPs create.
When Digital Transformation Collides with Operational Norms - Part 1 of 3
When Digital Transformation Collides with Operational Norms - Part 2 of 3
When Digital Transformation Collides with Operational Norms - Part 3 of 3
Even if an innovation projects are protected under the umbrella of a supportive leader with ambidextrous management, or an environment like a new business incubator or centralized innovation group, successful projects will eventually need to scale. When they scale there will be increasing pressure to leverage resources and competitencies from the core business for efficiencies or competitive advantage. This is another circumstance where misaligned RPPs will create challenges and risk. We examine this unique challenge with a composite case study from our years of experience within Intel.
Scaling Transformational New Businesses in Mature Companies: Part 1 - Introduction
Scaling Transformational New Businesses in Mature Companies: Part 2 - The Unique Challenges of Scaling
Scaling Transformational New Businesses in Mature Companies: Part 3 - What Went Wrong?
Scaling Transformational New Businesses in Mature Companies: Part 4 - Resolving the Transformational Innovation Dilemma
[1] C. M. Christensen and S. P. Kaugman, "Assessing Your Organization's Capabilities: Resources, Processes, and Priorities," Harvard Business Review, 13 September 2006. [Online]. Available: https://hbr.org/product/assessing-your-organization-s-capabilities-resources-processes-and-priorities/607014-PDF-ENG.
