The Other Side of Innovation

the other side of innovationSOLVING THE EXECUTION CHALLENGE
Summary By
Peter Modigliani
Vijay Govindarajan
Chris Trimble

Genius is 1% inspiration and 99% perspiration
2
Thomas Edison

idea
leader
team
+ plan
innovation
3
Innovation Model

Ongoing Operations
Repeatable and Predictable
Innovation
Nonroutine and Uncertain
4
Address Fundamental Incompatibilities
Innovation Leaders Must Think Differently About Organizing and Planning

Beyond the idea
5
Real Innovation Challenge
Long journey fromimagination to impact

Powerful
Capable
Productive
Efficient
Growth Potential
Impossible to innovateon its own
6
Performance Engine
Ongoing Operations

Rebels Fighting the Bureaucracy
7
Innovation Leaders

8
Each Innovation Initiative Requires
A team with a custom organizational model
A plan revised by a rigorous learning process

Company
Performance Engine
9
The Innovation Team
Partnership
Dedicated Team
Shared Staff

10
Performance Engine Limitations
Skills of the Individuals
Work Relationship Between Them

Identify skills needed
Hire the best people
Match the organizational model to the team
11
Principles for Dedicated Team

Having a bias for insiders
Adopting existing formal roles & responsibilities
Reinforcing performance engine power centers
Assessing performance from established metrics
Failing to create a distinct culture
Using existing processes
Succumbing to the tyranny of conformance
12
7 Common Mistakes
1.
2.
3.
4.
5.
6.
7.

Pride
Familiarity
Comfort
Expedience
Compensation norms
A desire to give attractive opportunities to your own employees
13
Trap 1: Having a Bias for Insiders

Skills Deficit Risk – Investors flock to start ups
Organizational Memory Risk – Little Performance Engine
Outsiders – Add New Perspectives, Challenge Org Memory
14
Trap 1: Having a Bias for Insiders

Use new and unfamiliar titles
Write new job descriptions
Create a separate physical space for the Team
15
Trap 2: Adopting Existing Roles and Responsibilities

Avoid replicating power centers for new team
Achieve a power shift through:
Team hierarchy
Clear decision rights
Leadership choices
16
Trap 3: Reinforcing Performance Engine Power Centers

Performance Engine metrics are rarely equally meaningful to Dedicated Team
Identify performance metrics that matter most for your specific innovation initiative
17
Trap 4: Assessing Performance From Established Metrics

Common assumptions and company stories
Examine the company’s culture
Consciously adopt some elements of the culture
Avoid claiming a uniquely innovative culture which may offend the Performance Engine
18
Trap 5: Failing to Create a Distinct Culture

If identical processes truly worked, the initiative would be part of Performance Engine
19
Trap 6: Using Existing Processes

HR, Finance, and IT drive standardization
Insist on being an exception to these standards
20
Trap 7: Succumbing to the Tyranny of Conformance

Create a team distinct from the Performance Engine
Treat the Performance Engine like a strategic partner
21
Take a Positive Approach

22
You Will Face 3 Challenges
Competition for Scare Resources
Divided Attention of Shared Staff
Disharmony in the Partnership

Allocate resources through one plan
Fund Shared Staff resources
Discuss contingency plans in advance
23
1. Competition for Scare Resources

Internal transfer payments
Special targets
Added bonuses
24
2. Divided Attentions of Shared Staff

25
3. Disharmony in the Partnership
Clear responsibilities
Common values
Insider collaboration
Co-locate members
External collaboration

Formalize the experiment
Break down the hypothesis
Seek the truth
26
Run a Disciplined Experiment

Wild
Guesses
27
Predictions Improve With Learning
Informed
Estimates
Reliable
Forecasts
Prediction
Time
Learning
Executives Demanding Results Over Learning Drive Failure

28
Formalizing an Experiment
Plan the experiment(or revise the plan)
Compare predictions and outcomes, assess lessons learned
Predict outcomes,document supportinglogic and assumptions
Execute experiment,record measurements,
document observations
Learning Must Be a Rigorous Scientific Method – Not Intuition

Invest heavily in planning
Create the plan and scorecard from scratch
Discuss data and assumptions
Document a clear hypothesis of record
Find ways to spend a little, learn a lot
Create a separate forum for discussing results
Frequently reassess the plan
Analyze trends
Allow formal revisions to predictions
Evaluate innovation leaders subjectively
29
10 Planning Principles for Innovation
I
II
III
IV
V
VI
VII
VIII
IX
X

Spreadsheets
Cause and Effect
30
Conversational Models
Subsequent outcome
C
Additional
dependency
Outcome
Sales
B
D
Action
Trial Use
Product
quality
A
Advertising
spending
Focus On Conversations, Not Spreadsheets with Complexity

31
Hypothesis Creation Technique
Divide the budget for innovation into 5 or fewer categories.
Sketch a sequence of outcomes and subsequent outcomes.
Choose specific, unambiguous, measurable outcomes.
Identify additional factors that each outcome depends on.
1
2
3
4
Look for overlaps in category cause-and-effect chains.
Show how critical
non-spending decisions can impact outcomes
Keep it simple – One page diagrams.
5
6
7

32
Resolve Critical Unknowns First
Most critical unknowns
Severe
What are the consequences if we are wrong?
Moderate
Least
critical
unknowns
Minor
Certain
Educated Guess
Wild Guess
How certain are we?

Get off to a good start
Monitor interactions with Performance Engine
Stay engaged in a rigorous learning process
Shape the Endgame
33
Supervise an Innovation Initiative

Powerful
Broadly Experienced
Able to Serve Long-Term Company Interests
34
Choose the Right Supervising Executive

Strategic objective
Form – New product/service launches
Core functions of Dedicated Teams required
Length of time
Scope of expense
Areas of uncertainty
35
Oversee a Family of Related Initiatives

Innovation is all about ideas
The great leader never fails
Leaders are only fighting the system
Everyone can be an innovator
Innovation happens organically
Can be inside an establish organization
Requires wholesale organizational change
Innovation can only happen in Skunk Works
Innovation is unmanageable chaos
Only start-ups can innovate
36
10 Common Innovation Myths

Ideas are only the beginning
Nothing simple about execution
Primary leader virtue is humility
Ideation is everyone’s job
Initiatives require formal resource commitment
Innovation is incompatible with ongoing operations
Innovation requires only targeted change
Innovation must be engaged with ongoing operations
Innovation must be closely and carefully managed
Many of the world’s biggest problems can be solved only by large, established corporations
37
10 Innovation Truths

38
Shape a More Innovative Company

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The Other Side of Innovation

by Innovation Excellence on May 09, 2011

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The Other Side of Innovation — Presentation Transcript