---
id: "framework-innovation-segmentation"
type: "framework"
source_timestamps: ["¶54", "¶55", "¶56", "¶60", "¶61"]
tags: ["innovation", "product-development", "resource-allocation"]
related: ["concept-innovation-as-science", "prereq-cpg-product-architecture", "entity-product-tostitos-scoops"]
speakers: ["Indra Nooyi"]
steps: ["\\\"Calculate the required net revenue growth (e.g.", "4-5% of total revenue).\\\"", "Calculate the required gross revenue growth by adding the expected financial fall-off from previous years' products to the net growth target.", "\\\"Allocate R&D to 'Line Extensions' for short-term", "low-stickiness growth (e.g.", "new flavors of existing chips).\\\"", "Allocate R&D to 'New Products' for medium-term growth.", "\\\"Commit significant R&D dollars and build new manufacturing capabilities for 'New Platforms' (e.g.", "Tostitos Scoops)", "which will subsequently spawn their own new products and line extensions.\\\""]
source_url: "https://hbr.org/2025/10/innovating-at-the-core-and-for-the-future"
source_title: "Innovating at the Core—and for the Future"
sources: ["futures"]
sourceVaultSlug: "hbr-seg-futures"
originDay: 2
articleStem: "hbr-cl-91-innovating-core-and-future"
sourceUrl: "https://hbr.org/2025/10/innovating-at-the-core-and-for-the-future"
sourceTitle: "Innovating at the Core—and for the Future"
---
# Innovation Segmentation Model

A mathematical approach to structuring R&D and product development so a company reliably hits its required growth targets, acknowledging that different innovation types yield different longevities and require different capabilities. It is the operational engine of [[concept-innovation-as-science]] and depends on the [[prereq-cpg-product-architecture]] distinction.

**Steps.**
1. Calculate the required **net** revenue growth (e.g., **4–5%** of total revenue).
2. Calculate the required **gross** revenue growth by adding the expected financial fall-off from previous years' products to the net target.
3. Allocate R&D to **line extensions** for short-term, low-stickiness growth (e.g., new flavors of existing chips).
4. Allocate R&D to **new products** for medium-term growth.
5. Commit significant R&D dollars and build new manufacturing capabilities for **new platforms** — e.g., [[entity-product-tostitos-scoops]] — which will subsequently spawn their own new products and line extensions.

**Enrichment.** Well aligned with CPG product-architecture and innovation-management literature (line extensions vs. brand extensions vs. platforms; platforms require new production/technology bases). Parallels McKinsey's Three Horizons of Growth. Tostitos Scoops fit cleanly as a platform example requiring new manufacturing.