roadmap to sustainable value creation
using strategy-driven innovation sm
The DeSai Group
Learning, Innovation and Values
by Mr. Jatin DeSai - The DeSai Group
199 oakwood avenue - west hartford - connecticut - 06119 - p: 860-233-0011 - e: firstname.lastname@example.org
roadmap to sustainable value creation
using strategy-driven innovation sm
To succeed and thrive, a business cannot accidentally
or occasionally be innovative. It must innovate at a rate
faster than current (or future) competitors – with a high
degree of predictability.
There are many definitions of innovation one can adopt. At DeSai, our working definition of
“Harvesting the deep insights of an organization’s human spirit and
knowledge, generating a pipeline of ideas that are evaluated, selected,
and ventured using disciplined tools, methods and processes that
advances growth objectives for an organization.”
the relationship between innovation and sustainable value creation
Innovation makes big difference. But some companies are much more successful in
innovating than their industry counterparts. Companies that focus on the innovation with
focused management and rigor greatly improve their business performance compared to
companies that see innovation as something best left to chance.
In our work with CEOs and executive leaders, it’s not that they don’t understand the
nature of innovation itself. Most would agree with a vision of successful innovation as the
transformation of a company’s business vision and strategy into profitable products, services
and/or solutions delivered to the customer. Much of the frustration, instead, points to lack of
clarity around purpose of innovation. Leaders are not explicitly clear about what exact value
a given company’s innovation investment is supposed to yield.
In our experience, innovation excellence means making a clear choice between three
sources of value creation and then aligning innovation efforts towards one of those choices.
Each one requires unique approaches to be successful towards building a predictable
innovation engine (See Figure-1).
The right choice for innovation for value creation depends on the business strategy. Two
companies in the same industry can make very different choices.
We argue that successful innovation is not about how much you spend, but why and how you
spend it. In other words, it’s about knowing what kind of value your business is aiming to
create, and then managing innovation in the most appropriate way given the context in which
your business actually operates.
Therefore, innovation must be targeted towards a clearly defined value creation focus:
1) Top-Line growth - innovation activities that primarily generate revenue.
2) Bottom-Line optimization growth – innovation activities that yield profit.
3) Shareholder value growth – innovation activities that increase the value of the
company – elements that will increase Net Present Value (NPV).
the unforgiving markets
Along with productivity and cost control, the imperative to innovate transcends economic
cycles and remains constant as the only long-term means of creating and maintaining the
value of the enterprise.
Over the last three decades, focus and attention on quality, strategy execution, process
automation, etc. have given business leaders strong results in achieving cost containment,
process improvement and operational efficiencies – all tools for improving corporate
performance. The hard truth is that there is only one roadmap to long-term sustainable value
generation – continuous, profitable, top-line growth. Historically, the market has consistently
rewarded profitable companies with higher values than those organizations that achieve their
growth primarily through cost-cutting.
“Profitable Grower” companies were rewarded 26% Market Value using a Compound Annual
Growth Rate formula, while “Cost Cutters” were rewarded only 16% in Market Value CAGR.1
Accepting that profitable growth drives shareholder value, the next logical question is: What
are the primary drivers for profitable growth? While the list of growth levers – addition of
product lines, expansion into new markets, acquisitions, strategic alliances and partnerships,
joint marketing, to name just few – is certainly large, research indicates that innovation sits at
the heart of profitable growth strategies. In fact, Return on Invested Capital (ROIC) is achieved
best when an innovation framework is aligned to corporate strategy and when it is enabled
with the voice of the customer (VoC) every step of the way.2
In a recent report3, and in DeSai’s own applied field experience, the data pattern can be used
to conclude a direct correlation between innovation and sustainable growth. According to the
report, a study of large U.S. and European companies found that discontinuous growth (the
opposite of modest, gradational, ongoing, incremental growth) initiatives represented 14% of
total projects but fully 38% of new revenues and 61% of new profits.
Just as discontinuous growth (generally attributed to discontinuous innovation ) is
a major component of overall corporate growth, corporate growth is a major piece of overall
shareholder value. A company’s market value can be thought of as the sum of the expected
value of the company’s current operations extended into the future, plus a “growth premium”
– in other words, investors’ expectations regarding the company’s growth opportunities. The
growth premium of GE in 1999, for example, was a full 60% of overall market value (Value of
Current Business at GE=$230B, while Total Market Capitalization was $482B in 1999, a 60% 1 - 2005 Mercer Management Consulting report
difference). For GE, investors were sending a clear signal that the value they ascribed to was 2 - Booze Allen December 2007 Report: The
driven largely by the prospects for future growth through innovation. Customer Connection: The Global Innovation 1000
3 -“Value Innovation: The Strategic Logic of High
Growth” published in Harvard Business Review
(January-February 1997) by W. Chan Kim and Renee
Mauborgne (authors of popular business book “Blue
What’s true at GE is true at most of the Fortune 1000. Nearly two thirds of the
world’s largest companies derive a material percentage of their market value from
investors’ expectations of continued growth. In other words, 30% or more of their
market value is represented by the growth premiums. This obviously creates
very tangible benefits, such as the ability to use equity capital to acquire assets
and fuel further innovation. Also, this clearly illustrates the innovation imperative.
Growth, whether driven by company promises or investor expectations or both, is
at the center of most companies’ long-term value-creation strategies.
Consider the incredible growth of Cisco Systems since early 1990s. As the
NASDAQ swung from historical highs to dramatic lows across the board, Cisco’s
growth premium changed significantly. What’s more interesting is how high it
remained between 1995 and 2000, despite the company’s loss of some $386
billion in market value. While down from a peak of 90%, Cisco’s growth premium
of 70% signified that investors still expected that almost three-quarters of its value
would be derived from growth and innovation.
Consider the examples of unforgiving markets where value often is destroyed with
surprising severity and swiftness:
In October 2000, Intel lost $91 Billion in market value because it issued
guidance on 10/14/2000, predicting that its quarterly revenue would
increase just 3-5 percent from the second quarter, well below the 9-12
percent increase analysts expected. The one-day loss equaled 22% in
During December 2000, Cisco lost $83 Billion because Merrill Lynch issued
a downgrade, citing fears regarding slowing capital spending in information
technology. The four-day loss equaled 24% in market cap.5
Corning lost $32 Billion around October 21, 2000 due to Nortel Networks
reporting disappointing third quarter revenue gains, igniting a sell-off among
fiber-optics and communication-equipment stocks. The four-day loss equaled
34% in market cap.6
Home Depot lost $33 Billion when it warned that third quarter earnings
would fall below expectations due to slower-than-expected sales growth on
October 12, 2000. The one-day loss = 29% in market cap.7
Therefore, it is clear that sustainable, profitable growth drives value creation; this
principal holds true regardless of economic conditions or legitimate focus on cost
4 - Wall Street Journal, September 25, 2000
containment and productivity in the near term. Still, relying on growth to justify
5 - Wall Street Journal, December 18, 2000
market values is a high-stakes game. With so much value tied up in the promise
of future continued growth, companies cannot afford to lose sight of the growth 6 - Wall Street Journal, October 26, 2000
imperatives; because when they do, or when they miss their growth targets, the 7 - Wall Street Journal, October 13, 2000
punishment by the markets is swift and severe.
value creation through organic growth
“Today, organic growth is absolutely the biggest task. I want
imagination breakthroughs… I want game changers… If we
don’t hit our organic revenue targets, people are not going to
get paid!… We are just a moment away from commodity hell!”
Jeff ImmelT, CeO Of General eleCTrIC
Why organic growth? The other major source of growth in the past has been acquisitions,
which often proved a valuable way to complement and consolidate existing offerings and
expand into new markets. But many companies are finding an acquisition strategy inadequate
to meet growth targets.
Majority of companies have found that most of the attractive acquisitions (from a value
perspective) are gone. Since 2005, the stock market has advanced prices, and there is over
$150 billion of “dry powder” in the hands of private equity firms, the leading competitor to
strategic investment by companies.
Strategic investors have typically paid one or two multiples of EBITDA (earnings before interest
depreciation taxes and amortization) higher than have private equity firms, depressing Return
on Invested Capital (ROIC), which is further depressed by changes in GAAP and the tax code.
This has had the effect of depressing shareholder returns. Further, research data has found
that only 23% of acquisitions are ultimately successful.8
There is one substantial difference in acquisition vs. innovation strategies to grow: Acquisitions
are an all-or-nothing path since they require the company to commit completely at the time
of acquisition. Innovation and the subsequent organic growth, if done right, allows the
company to place smaller bets with similar payoff. While focused acquisitions will always be
an important option for increasing market footprint, companies will have to rely on organic
growth to a far larger extent to sustain above-average shareholder returns.
We argue this critical principal – innovation and growth are central to value creation – remains
true regardless of economic cycles or the industry. While the absolute size of the growth
premium clearly changes as market conditions change, the larger point holds.
8 - Tom Copeland in the book Valuation
burning platform: institutionalizing innovation
So, sustainable growth through innovation is not only not optional — it is central to the valuations
of large commercial enterprises, regardless of economic conditions. While large companies
possess resources, and capabilities, that give them unique opportunities to innovate, very
concrete roadblocks often stand in the way.
The central questions relating to the innovation imperative, then, are not whether to
innovate, or even how to, but rather how to institutionalize innovation -- especially in a large
- company environment; that is, how to build a climate and culture of innovation, agility,
and entrepreneurship while maintaining standards and controls necessary for ongoing
The DeSai Group believes that the framework presented below maps the major opportunities
and challenges, along with best practices, to successfully achieve the highest organizational
maturity level from innovation activities.
for ceos, what are the innovation barriers ?
Knowing that the markets are very unforgiving and will always continue to be unfriendly, and
that embracing innovation is not an option, the next logical question might be obvious. What
must CEOs do to embrace innovation while managing the associated risk and overcoming
First, answer lies in developing a clear innovation mandate - a strategic statement
that describes innovation in the context of your business, the value it promises to generate for
growth and disciplined process by which to get there (See Figure-2).
innovation mandate must be vividly clear for everyone in your organization; it must
be concise to help drive alignment to business unit initiatives, and it must help articulate
specific employee behaviors necessary at all levels for innovation climate to take root. When
designed correctly, it is clearly linked and driven by the business strategy.
Additionally, keys to become innovative are highly dependent on your ability to
address four critical barriers that are incumbent in most organizations. When not
addressed together, the journey towards sustainability and value creation invites a
higher risk of failure, potentially minimizing the results of innovation investments.
The first barrier is that most organizations do not have the mindset
to harvest ideas and manage those ideas as Venture Capitalists do. The
sole role of Silicon Valley was to quickly take the best ideas and apply
entrepreneurship and agility to turn those ideas into commercial ventures.
Silicon Valley did this because they recognized that large corporations are
unwilling to abandon the tightly-knit safety net of resource allocation. It is
clear that the amount of “innovation opportunities” available to large
companies dwarfs the potential available to small companies. So the myth
that only small, nimble businesses can be most agile and innovative is
completely false. In fact, here’s case in point (not to mention hundreds of
other such examples): Medtronic, a Fortune 500 Minneapolis based global
leader in medical technology, on average, earns 70% of its sales from
products introduced in the previous two years alone. This has resulted in
long term sustainable growth of 20% and has created a high barrier for its
competition to enter into Medtronic’s markets. the bottom line: new
ideas are easy to find in every corporation; it’s the distinctive capability of
turning them into commercial ventures that most companies fall short on.
The second barrier is not recognizing and then not aligning the
abundance of resources available to large organizations for investment in
innovation. Even when overwhelming evidence shows that the companies
who invest in innovation consistently outperform their peer groups, why
haven’t most organizations taken innovation seriously? The challenge is not
that an organization does not have resources to invest in innovation; rather
it’s where to most effectively funnel those resources. Innovation in most
organizations is a mandate that cuts across functional areas, making effective
resource allocation decisions very difficult. The few common themes that
arise are: prioritizing effectively for the same competing resources across
business units, designing solutions that may be ideal for a single business
unit but not for the corporation as a whole, and balancing between the need
to build markets while servicing existing customers. the bottom line:
resources are available, but the allocation and ownership for innovation is
fragmented responsibility across most companies.
The third barrier is to recognize the sheer size of the human capital
assets that are under-utilized and disengaged from an organization’s
creative capacity. The opportunity for most organizations is to dedicate
talented “New Game Teams”, focused on harvesting the creative ideas and
leadership competencies, to build new top-line growth capacity. Proctor
and Gamble’s global research and development organization employs over
7,500 scientists; GE trains 10,000 managers every year and performs
over 5,000 detail performance reviews of its senior-most employees; and
Cisco has increased its engineering workforce by 300% since 2000. the
bottom line: developing a holistic and integrated human capital strategy
for innovation is critical so it promotes “value creators” and rewards them to
continue to create value while staying in workable compensation systems.
The fourth and final barrier relates to the broad product and delivery
capabilities that large-scale organizations possess. For example, since the
mid-1980’s in the financial services industry, the typical company has
gone from handful of delivery channels (Branches, Relationship Managers)
to literally 15-20 channels (Branches, Direct Mail, Internet, National Sales
Force, Business ATMs, Corporate Cards, Affinity Marketing, Wireless,
etc.); all the while expanding its product offerings by ten-fold. “Anytime,
Anywhere” banking has become the price of entry across the industry as
providers strive to meet the need of large and diverse customer bases.
This has created a huge challenge, since those dedicated assets to serve
the wide variety of customers are not fully leveraged for new innovation.
The complexity of providing the right product to the right customer through
the right delivery channel in real-time – in a way that doesn’t destroy the
economics of the company – becomes a monumental challenge with each
new innovation. Add to this, the overwhelming issue of tying the employment
brand to the product brand in the marketplace and the various components
of talent acquisition. the bottom line: the accomplishment of end-to-
end alignment between products, channels, and talent acquisition
(employment offers) is the single largest challenge facing large companies
The DeSai Group has developed diagnostics and alignment processes
to help you create your own roadmap for continuous value creation
using innovation. Our tools helps you quickly identify your propensity
to overcome these barriers, and calibrate your innovation activities with
the game of innovation
It takes many elements to nurture innovation. Innovation is elusive; it cannot be produced
on demand, nor can it be corralled or scheduled. Real innovation that matters and has a
major impact in practice is extremely difficult to achieve. At best, the organization can create
an environment in which innovation seeds are planted and nurtured— so the fruits can be
harvested quickly thereafter.
A famous innovation myth is the one about Newton’s discovery of gravity. Of course,
gravity always existed before that – the pyramids were already built as were many other
beautiful structures by the ancient cultures in every corner of the world before Sir Isaac
Newton walked on Earth. It was not the apple that caused Newton to automatically discover
gravity, but decades of research and experiments in physics and math that led him to that
‘final’ moment. This last piece of the puzzle he was looking for, represented by the falling
apple, gave him the needed insight to declare the definition of gravity.
There are thousands of such innovation myths that are misunderstood. For each, it took
deep conviction, persistence, and a nurturing climate for successful innovations to arise.
Also, most innovations were developed from existing innovations already available. A classic
example is the computer keyboard we all use – created by engineering variety of plastics,
language, semiconductors, electronics, electricity, metal, USB cable, etc. It took the right
climate for innovation and discipline for it to become a computer keyboard.
harvesting internal innovation: Innovation needs to be nurtured at every level
of the organization and, most of all, by each person deep within himself or herself. Each
person may not create as unique innovations such as the understanding of gravity or
a keyboard everyday. But, each person can, contribute to ideas and elements of
future innovations yet to be discovered for your organization – if there is a climate and
culture for them to successfully innovate!
building external innovation networks: Innovation is also not just about
harvesting from within, but creating future competitive advantage by depending on “innovation
networks” -- individuals and organizations outside a company that can help it solve problems
and find new ideas for creating growth.
Larry Huston was vice president of knowledge and innovation for many years at Procter
& Gamble, where he was the architect of its connect + develop program, an
approach that helped extend the company’s innovation process to include 1.5 million
people outside of P&G.
Boeing has implemented a collaborative innovation network for its new commercial 787
dreamliner, particularly around building supply networks that are solving critical
Microsoft has implemented external software developer ecosystems – called
microsoft solution providers, as has IBM and others.
In the near future, successful innovation opportunities will be to figure out how an organization
can build growth-platforms utilizing ideas outside the company for remarkable disruption in
Like a game of soccer or ice-hockey, innovation is arduous, difficult and tricky. Be prepared
to score a game-winning hat-trick once, maybe twice – but only if you are ‘in the game of
risk, employee engagement and innovation
Innovation always involves risk. It can be hedged, mitigated, insured against, and shared with
others, but — by definition — risk can never be eliminated from innovation, nor should it be.
Leaders and companies that will not take enough risk will never be able to achieve payback
through innovation. Companies that say they want to innovate, but then do everything possible
to remove all the risk, will confound the process and drive innovative people away.
In our experience, the company that learns to assess and live with risk will achieve a significantly
higher rate of return than companies that do not. An idea that is chosen deliberately, whose
goals are clearly defined, and that is commercialized and realized with rigor, but still does not
produce the desired return can rarely be considered a complete failure. “Intelligent failure is
the way you react and learn—you learn more from failure than success,” said Peter Dubreil of
Renault. 9 “But if you want to learn, you have to work at it. You have to spend sufficient time
and intelligence in checking why the failure occurred to understand it completely.”
Therefore, as a leadership issue, the primary risk for innovation is the disengaged
workforce. With employee engagement, comes creativity; with creativity, comes ideas;
and with ideas comes innovation. Without engaged employees – no sustainable innovation.
Risk-tolerance and employee engagement are two sides of the same coin. Intelligent failures
require employees to take risks. When they do; engagement and productivity can improve.
Also, it is important to remember that employee engagement arises from corporate culture.
Engagement cannot be cultivated or rooted in a ‘corporate program’. It happens only when
you remove barriers to work, and those barriers are unique to every work group. Recent
findings strongly suggest that when companies emphasize strengths development through
organized learning and talent management strategies, the chances are greater that a culture
of innovation and creativity will exist. In recent Gallup research, 30% of respondents strongly
agreed that their organization is committed to building the strengths of each associate. Of
9 - Interview on January 21, 2006
those, a majority (54%) also strongly agreed that their current job brings out their most
creative ideas. In contrast, of the nearly 50% of respondents who disagreed that their 10 - The Gallup Study, May 10, 2007
organization is committed to building the strengths of each associate, only 1 in 10 strongly
agreed that their current job brings out their most creative ideas.10 When examined through
the employee engagement lens, the impact of focusing on strengths and encouraging new
ideas for innovation is even more evident: 65% of all engaged employees stated that their
organization is committed to building employee strengths and encouraging new ideas that
defy conventional wisdom. Among actively disengaged employees, this number plummets to
a mere 2%.
It is also a well-known fact that managers play a significant role in the “talent development +
engagement = innovation” equation. Fifty-two percent of workers who said their supervisor
“focuses on my strengths or positive characteristics” also said that “My current job brings out
my most creative ideas.” Previous Gallup research has shown that higher levels of engagement
are strongly related to higher levels of innovation.
strategy-driven innovation sm framework
So, how do you play this game? The DeSai Group has discovered that organizations can
approach and get into the game of innovation using four different approaches or
“Levers”. To truly create a sustainable long-term, value-creating engine, a company must
achieve mastery in all four dimensions outlined in the framework below.
To restate, you must first start with choosing what value (Top-Line, Bottom Line, or Shareholder)
are you driving towards; which is generally governed by your business strategy. Based on that
as your target, you must define your organization’s innovation mandate – at corporate level
and at each business unit level. Next, you must learn about the game of innovation and
associated risks and rewards to help you make informed decisions about moving forward.
Finally, then you will need to make investments to manage innovation activities.
STRATEGY- DRIVEN INNOVATION FRAMEWORK Figure-3
desai’s strategy-driven innovation sm framework (sdi) is based on 25 years
of innovation experience with our regional and global clients across numerous industries. SDI,
using systematic execution methods, directly addresses your specific mandate for innovation,
and therefore moves your organization towards the value target you are trying to hit. (See
Managing innovation is like, but also unlike, managing anything else. It is similar because it does respond to planning,
motivation, investment, measurement and training. However, it is dissimilar in that it is found everywhere in the
business, and is volatile, and is easy to cripple.
The SDI framework can help you design a customized roadmap for innovation. Specifically, it offers four different
entry points (SDI Levers) showing barriers, opportunities, and outcomes that should be considered as best practices
for your innovation journey (See Table-1). It is supported by tools, methods, training, and technology platform from
Within desai’s strategy-driven innovation sm framework (sdi), each sdi lever has numerous
solution dimensions to help overcome the challenges and barriers based on overall strategic intent and organizational
imperatives you are addressing (See Table-1).
sdi levers: lever - i lever - ii lever - iii lever - iv
lever venturing for agility for speed behaviors for
description: best growth
“We have established
opportunity “We have an endless “We have resources “We have large talent
variety of products,
for number of ideas and available for pool and resourceful
innovation is size of new revenue investments in workforce”
within grasp: distributional and
“What do we
“How do we overcome “No one owns “Our rewards are
need to address
our internal barriers innovation – it is misaligned with
barriers and overwhelming
to turning ideas into fragmented. How do entrepreneurial
challenges complexities of
behaviors we need for
to overcome: commercial products we fix that?” aligning products,
or services?” innovation. How do we
solve for this?”
Organizing design for Building and Climate and Culture
Developing the Venture
Innovation and Agility integrating model for sustainable
target Market mindset and
outcome: Entrepreneurial innovation
methods for new
Behaviors to support
As an organization begins to develop the innovation muscle after initial prototyping with one of the Levers, it can
accelerate innovation activities by pulling other Levers for expansion and impact towards sustainable culture of
lever - i: venturing for best
Here, the Company adopts a more efficient internal market for capital and ideas. Since
it is crucial to leverage all internal resources to sustain growth, with Lever-I, the organization
can identify and explore opportunities by replicating external market mechanisms so that the
organization’s capital, talent and ideas are always achieving their highest possible return.
In order to achieve this, companies must clarify and reengineer the way investments and
resource allocation decisions are made.
As an example, here is a typical venture capital funding process that can be adopted:
1. Potential investment opportunities are solicited for consideration.
2. These opportunities are then screened using a robust set of evaluative criteria.
3. The best of those opportunities are then selected for funding.
Using stage-gated, or incremental, funding resources are provided towards each stage-
gate goal. If the venture falls short at any stage-gate, the funding is ceased. This internal
funding process closely resembles the external venture capital process with entirely
independent decision-making powers and budgetary authority.
The process is open to all employees and to all types of ideas.
A universal database captures all ideas, which then can be used by all employees as
the basis for further idea development.
Training and coaching to develop innovation and entrepreneurial skills are also
designed to improve business focus and to foster innovation among all employees, and
This approach of soliciting and developing internal ideas is a powerful method of unlocking
value creation by employees and can lead to significant development of products and
services. The Lever-I process is very useful for developing both new business opportunities
and new working methods or solutions to improve internal operations. This approach also
boosts employment brand, resulting in improving the attraction and retention of top talent in
bottom line questions for inquiry:
Does your corporation have clearly defined ways for innovators to obtain funding,
staffing and other resources in order to pursue new ideas that would be of benefit?
Is it at least as easy for your employees to obtain funding for their new ideas internally
as it is externally from venture capitalists?
Do your employees collaborate with one another on the development of new ideas such
that the collective knowledge and expertise of the organization is fully leveraged?
Do new ideas and knowledge flow quickly within your organization as quickly and
completely as they do among individuals and organizations externally?
lever - ii: agility for speed
Most organizations have come to realize that organizational structure and, more
importantly, organizational decision-making processes are primary determinants
of whether the organization will be innovative and agile.
Successful companies make an explicit determination to remove the organizational
barriers to innovation and agility. Based on our research and experience, it is
evident that standardized approaches to organizational management – where
all business units in a corporation required to adhering to the same set of
organizational policies, practices compensation system and the like – can stand
in the way of innovation and agility.
Since the mid-1990s, there has been a surge of ‘horizontal soft structures’–
teams, councils, task-forces, etc. -- in most organizations. The purpose of such
structures has been to be better connected across functional silos to optimize
customer service, reduce cycle-times, etc. Such strategies have provided agility
and speed-to-market. In contrast, the management and governance of internal
business systems continue to be more vertically aligned – creating continuous
chaos and increased friction between lines of business and functional support
areas. This is a sure formula to prevent innovation to grow.
In order to develop a climate and culture of innovation, successful organizations
have recognized the transformational migration from vertical to horizontal methods
will yield higher performance returns. These companies have successfully designed
organizational structures - teams and groups - to support a conduit between each
new venture and the organization’s overall governance process, with the specific
mandate to help launch, align, and learn from the ventures.
For innovation, the ongoing debate regarding “best” organizational structures,
no matter how complex, often returns to a single dilemma: centralization or
decentralization of decision-making. Successful companies have developed an
innovative answer to this question – it is all about the way in which you decentralize
decision making that makes all the difference in the world.
bottom line questions for inquiry:
Are new ventures and initiatives able to quickly and easily obtain necessary
resources and support from across the corporation?
Do you have an explicit strategy and approach for ensuring synergies
between new and old lines of business – particularly between the traditional
organization and eBusiness initiatives?
Does your business have a method for ensuring that “lessons learned”
by new ventures and initiatives are transferred back to other parts of the
lever - iii: behaviors for growth
Here the focus is on how culture and behaviors factor into building a culture of innovation and
an entrepreneurial enterprise.
The premise is that innovation and adaptiveness are not things that can be mandated from
headquarters or from the top-leadership team. The business’s ability to innovate and adapt
depends on employees who are creative, engaged and seeking to drive change. In other
words, corporations need their workforce to behave like agile entrepreneurs.
There are at least two fundamental requirements that a corporation must fulfill in order for its
employees, and the company’s culture, to become more innovative:
First, the company must identify, make explicit and communicate the behaviors that
employees are expected to exhibit. Enterprise cannot expect employees, particularly
those who have spent their formative working years in command-and-control
corporate environments, to spontaneous change and exhibit the new behaviors
expected of them.
Second, corporations need to provide a work environment that fosters and supports
creativity and engagement among employees. Critical here is the role that managers
and senior executives play in creating this kind of environment.
Examples exist of a high-tech global company who has translated its core values into a set of
innovation and entrepreneurial behaviors. These 30 behaviors are tied to the company’s four
core values. For each of the 30 behaviors, an in-depth definition was developed with set of
examples in order to make each behavior concrete. These behaviors are then integrated into
other Business and HR Systems to assure integrity and success for innovation and agility –
including recruiting and selection systems.
bottom line questions for inquiry:
Does your company’s performance management system explicitly identify a set of
behaviors and attitudes expected of employees to drive innovation?
Are employees promoted, recognized and rewarded for exhibiting and supporting
positive innovation behaviors and attitudes?
Are new hires selected on the basis of having previously exhibited innovation
and entrepreneurial behaviors and whether they will thrive in an entrepreneurial
Are line managers held accountable for the extent to which their employees are creative,
engaged and committed?
lever - iii: climate and culture for success
In this Lever, the most fundamental lesson and focus is the importance of adopting an
integrated, comprehensive approach to building a culture of innovation and entrepreneurial
spirit – where the result is agility and actualization of strategic intent – to generate wealth and
increase market valuation.
Put simply, if implemented correctly, Lever-IV can ensure that all of the enterprise “cockpit”
elements – design elements such as strategies, resource allocation mechanisms, delegation
of authority, information management, organization of work and roles, organizational
structure, etc. – and all of the corporation’s workforce management systems are aligned to
foster innovation and agility.
Traditionally, this approach is for those corporations who have recognized that they must
transform from the old economy to the new economy; for example, from a formerly highly-
regulatory industry to take advantage of new deregulation, or from a national player to a
global marketer, or from a product company to a service company, etc. One consistent theme
here is the need for overhauling, antiquated processes and replacing them with practices that
prioritize, enable and reward innovation, speed and adaptiveness.
The DeSai Group has developed five practices to promote innovation and agility for
organizations that are ready to realize rewards from such an engine:
1. internal venture fund – providing everyone access to venture funding to
test new ideas
2. talent mobilization – assuring that each business or division is achieving
maximum “return on people (ROP)”
3. enterprise ideation – assuring that executives have access and visibility to all
the ideas from everywhere within the organization for maximizing leverage
4. universal 360-degree reviews – establishing clear and individual priorities
and accountability for each employee and their manager
5. employee branding through engagement – creating clear and
consistent messages that emphasize the company’s entrepreneurial environment
and communicates this message to target audiences
The creation of a successful and sustainable enterprise absolutely requires an integrated and
holistic approach; isolated, one-off practices are likely to have little (or even negative) effect.
bottom line questions for inquiry:
Does your Company’s organizational design elements (structure, delegation of power,
information flows and access, resource allocation systems, workloads and roles,) work
together to foster greater innovation and agility?
Does your Company’s workforce management systems (performance management,
compensation, staffing, internal labor market, leadership and executive development,
employment branding) work together to foster greater innovation and agility?
Does the CEO of your organization and senior executives publicly embrace and support
efforts to create a more entrepreneurial culture and work environment?
Do meaningful opportunities exist for managers and employees to constructively
challenge the status quo within the Company?
Are frontline supervisors and employee provided with the business information that they
need in order to have the strategic context for their decisions and actions?
the innovation opportunity:
“Innovation can happen - can be made to happen -
anywhere and everywhere in your organization.
Insights that lead to innovative ideas are being
discovered everyday - right under our organizational
You can achieve radical growth with innovation. It
will require entrepreneurial behaviors, agile climate,
execution discipline, and courageous leadership – the
critical predispositions for innovation performance.
are you ready to fully harvest your organization’s
creative power already within your grasp to jettison for
the next growth level? Will you do it fast enough? Can
you do it before the market forces you to?
The key to innovation success has nothing to do with
how much money you spend. It is directly related to the
effort expended to align innovation with strategy and
your customers, and to manage people and the entire
process with discipline and transparency.”
JaTIn desaI, fOunder & CeO The desaI GrOup
the promise of strategy-driven innovation sm
The challenge that corporations face is moving from the legacy of yesterday’s industrial-
era management model (marked by command-and-control governance, top-down strategy
formulation and the need to minimize risk) to a very different management model in which:
Decision-making and strategy formulation is distributed throughout the organization.
The goal is to achieve the highest possible return from every newly-emerging
Workforce is more resilient - for constant change - while highly engaged in performing
what is most meaningful for personal and professional growth.
With strategy-driven innovation sm, you should expect to move from the Old
Economy Model to the Innovation-Driven Economy Model of business:
old economy innovation-driven economy
competitive environment competitive environment
- General stability - Creative destruction
- Gradual, predictable change - Frequent, discontinuous change
- Power from incumbency - Competitive advantage hard to sustain
- Employee loyalty - Employee free-agency
business imperatives business imperatives
- Internal orchestration and - External focus
coordination - Discontinuous innovation
- Incremental improvements - Speed-to-market
- Consistency and control - Continuous improvement
- Quality - Operational excellence
- Mass customization - Distinctive customer service
- Routine customer service - Strategic partnering
- Value chain dominance
management model management model
- Command-and-control governance - Distributed decision- making
- Top-down strategy formulation - Emergent strategy formulation
- Risk minimization - Opportunity maximization
- Limited access to information - Empowerment through information
- Workforce conformity - Employee creativity and engagement
hr’s focus hr’s focus
- Job descriptions and org charts - Organizational design
- Ensuring “internal equity” - Market management
- Policy development - Culture management
- Employee advocacy - Internal communication management
- Performance review administration - Workforce environmental diagnostics
- Recruitment management - Transitioning the workforce
- Skill-based screening - Behavior-based screening
- Training administration - Employment brand management
about the author:
jatin h. desai
co-founder & ceo, the desai group
Jatin is a seasoned business executive, strategic advisor, and a coach for senior leadership
teams. Jatin has extensive field experience in the areas of strategy alignment, corporate
innovation, talent management, culture development, and information technology.
Jatin has been active in leadership and operating roles since 1983, and as a consultant in pre
and post-IPO companies. Throughout his career Jatin has found that one of the things he truly
enjoys and is most passionate about is creating opportunities for others, empowering them
and seeing them fully realize their potential. He has successfully led, coached, mentored and
consulted with many management teams from small family owned business to Fortune 100
Jatin has experience in large scale change initiatives as an advisor and a consultant to
organization in the areas of innovation, creativity, values, executive development, and
organizational effectiveness. His firm’s clients are mostly Fortune 1000 companies such as
The Hartford, Aetna, Cigna, Merck, Wal-Mart, Ketchum, Infosys, Prudential, ESPN, Duracell,
United Technologies Corporation, Pratt & Whitney, Carrier Corporation, Sikorsky Aircraft,
Hamilton Sundstrand, MassMutual, and many more.
Jatin has written papers, speaks at numerous conferences, and gives training workshops
on Strategic Alignment for Executive Teams, Enterprise Innovation, Enterprise Learning,
Organizational Effectiveness, Values and Leadership, Living with Human Values, and
Spirituality in the Workplace.
Jatin was born and raised in Gujarat, India and immigrated to United States at a young
age in 1973. Jatin holds B.S. degrees in Electrical Engineering and Computer Science from
University of Connecticut. He currently lives with his wife and three children in Hartford,