The Secret To Innovation Is ‘Vertical Innovation’

If your company’s innovation efforts aren’t delivering the results you want, you’re not alone. Even with robust teams, innovation centers and substantial investment, most companies struggle to commercialize their ideas at scale.

But there is another way: Vertical Innovation. It’s a process Brent Duersch, Managing Director of Cleveland’s world-renowned EY-Nottingham Spirk Innovation Hub, and John Nottingham, Co-CEO of Nottingham Spirk, taught to the attendees of our recent Manufacturing Leadership Summit.

Why listen to these guys? The numbers tell the story: Of the roughly 12 million patents filed in the U.S., only 5 percent ever reach commercialization. But Nottingham Spirk’s “vertical innovation” process has flipped that equation, with an astonishing 95 percent commercialization rate across more than 1,350 patents over decades.

The secret, according to Nottingham and Duersch, is eliminating the siloed approach that dooms most corporate innovation efforts and replacing it with an integrated approach where cross-functional teams work together from start to finish, maintaining momentum throughout the development process.

“We have market research, design, engineering, prototyping, IoT, supply chain, AI—everybody’s in the vehicle together,” said Nottingham, using the metaphor of an SUV driving through quicksand. “Now we have enough gas in the tank to get us there. We have commitment through thick and thin that once we start and start getting into this quicksand, we don’t stop.”

The vertical innovation approach has powered Nottingham Spirk to thousands of remarkable commercial successes, including everyday items like the Little Tykes car and the Crest Spin Brush—the first affordable electric toothbrush that sold for just $5 retail. Engineers initially said creating a full-featured electric toothbrush at that price point was impossible. “We got it for $1.25,” Nottingham said. “We sold a billion of them. It’s the best-selling toothbrush in the world in 37 countries.”

Beyond the core process, Duersch highlighted several critical factors that determine innovation success:

1. Have a clear innovation strategy—not a slogan or wishlist. “If it looks good on a t-shirt, it’s not a strategy,” Duersch said. “If there’s no invalid alternative, it’s not a strategy.” Real strategy means making hard choices about what you will and won’t pursue.

2. Manage your innovation portfolio actively. Avoid both “pray” approaches (launching initiatives and hoping something works) and the tendency to chase shiny objects rather than business value. “Show me how that’s ringing the register,” Duersch said. “Show me how that’s improving productivity or quality or margin.”

3. Build teams with the right mindset and skills. “I look for someone who’s empathetic, curious and persistent,” said Duersch. “Persistence is the ability to wake up every day, run full speed ahead into a brick wall, dust yourself off the next morning and start running towards the next brick wall—because that’s what innovation is.”

The ideal innovators are “T-shaped people”—those with depth in a specific area but breadth across adjacent disciplines. Equally important is having dedicated innovation staff rather than asking everyone to devote a percentage of their time to innovation.

“If innovation is everybody’s job, it will always take a backseat to the operational fire drill of the day,” Duersch explained. “Everybody’s having a great day on the innovation front until the right truck doesn’t show up.”

4. Create the right environment for innovation. Nottingham Spirk houses its innovation hub in a converted 90-year-old church—a choice inspired by Pixar’s headquarters, which features a central core with five integrated floors housing different functions.

“Church architecture is designed for inspiration,” Nottingham said. “It’s designed to lift yourself up and to think you can do anything.”

5. Apply discipline to the process. A successful innovation journey typically takes 12 months from ideation to commercialization, with clear deadlines and accountability throughout.

“Get an SUV, get the people in it, and then give them a deadline,” advised Nottingham. “Have a budget to take it all the way to the end and make it a priority.”

The most dangerous innovation killer, according to Duersch, is the tendency to pull back during uncertain times. “Don’t give into the urge when times are uncertain to say, ‘I don’t want to invest in innovation now because my competitors are going to wait,'” he warned. “If we’re going to do something big, now’s the time.”