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The other side of innovation

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The other side of innovation

  1. 1. the other side of innovationSOLVING THE EXECUTION CHALLENGE<br />Summary By<br />Peter Modigliani<br />Vijay Govindarajan<br />Chris Trimble<br />
  2. 2. Genius is 1% inspiration and 99% perspiration<br />2<br />Thomas Edison<br />
  3. 3. idea<br />leader<br />team<br />+ plan<br />innovation<br />3<br />Innovation Model<br />
  4. 4. Ongoing Operations<br />Repeatable and Predictable<br />Innovation<br />Nonroutine and Uncertain<br />4<br />Address Fundamental Incompatibilities<br />Innovation Leaders Must Think Differently About Organizing and Planning<br />
  5. 5. Beyond the idea<br />5<br />Real Innovation Challenge<br />Long journey fromimagination to impact<br />
  6. 6. Powerful<br />Capable<br />Productive<br />Efficient<br />Growth Potential<br />Impossible to innovateon its own<br />6<br />Performance Engine<br />Ongoing Operations<br />
  7. 7. Rebels Fighting the Bureaucracy<br />7<br />Innovation Leaders<br />
  8. 8. 8<br />Each Innovation Initiative Requires <br />A team with a custom organizational model<br />A plan revised by a rigorous learning process<br />
  9. 9. Company<br />Performance Engine<br />9<br />The Innovation Team<br />Partnership<br />Dedicated Team<br />Shared Staff<br />
  10. 10. 10<br />Performance Engine Limitations<br />Skills of the Individuals<br />Work Relationship Between Them<br />
  11. 11. Identify skills needed<br />Hire the best people<br />Match the organizational model to the team<br />11<br />Principles for Dedicated Team<br />
  12. 12. Having a bias for insiders<br />Adopting existing formal roles & responsibilities<br />Reinforcing performance engine power centers<br />Assessing performance from established metrics<br />Failing to create a distinct culture<br />Using existing processes<br />Succumbing to the tyranny of conformance<br />12<br />7 Common Mistakes<br />1.<br />2.<br />3.<br />4.<br />5.<br />6.<br />7.<br />
  13. 13. Pride<br />Familiarity<br />Comfort<br />Expedience<br />Compensation norms<br />A desire to give attractive opportunities to your own employees<br />13<br />Trap 1: Having a Bias for Insiders<br />
  14. 14. Skills Deficit Risk – Investors flock to start ups<br />Organizational Memory Risk – Little Performance Engine<br />Outsiders – Add New Perspectives, Challenge Org Memory<br />14<br />Trap 1: Having a Bias for Insiders<br />
  15. 15. Use new and unfamiliar titles<br />Write new job descriptions<br />Create a separate physical space for the Team<br />15<br />Trap 2: Adopting Existing Roles and Responsibilities<br />
  16. 16. Avoid replicating power centers for new team<br />Achieve a power shift through:<br />Team hierarchy<br />Clear decision rights<br />Leadership choices<br />16<br />Trap 3: Reinforcing Performance Engine Power Centers<br />
  17. 17. Performance Engine metrics are rarely equally meaningful to Dedicated Team<br />Identify performance metrics that matter most for your specific innovation initiative<br />17<br />Trap 4: Assessing Performance From Established Metrics <br />
  18. 18. Common assumptions and company stories<br />Examine the company’s culture<br />Consciously adopt some elements of the culture<br />Avoid claiming a uniquely innovative culture which may offend the Performance Engine<br />18<br />Trap 5: Failing to Create a Distinct Culture <br />
  19. 19. If identical processes truly worked, the initiative would be part of Performance Engine<br />19<br />Trap 6: Using Existing Processes<br />
  20. 20. HR, Finance, and IT drive standardization<br />Insist on being an exception to these standards<br />20<br />Trap 7: Succumbing to the Tyranny of Conformance<br />
  21. 21. Create a team distinct from the Performance Engine<br />Treat the Performance Engine like a strategic partner<br />21<br />Take a Positive Approach<br />
  22. 22. 22<br />You Will Face 3 Challenges<br />Competition for Scare Resources<br />Divided Attention of Shared Staff<br />Disharmony in the Partnership<br />
  23. 23. Allocate resources through one plan<br />Fund Shared Staff resources<br />Discuss contingency plans in advance<br />23<br />1. Competition for Scare Resources<br />
  24. 24. Internal transfer payments<br />Special targets<br />Added bonuses<br />24<br />2. Divided Attentions of Shared Staff<br />
  25. 25. 25<br />3. Disharmony in the Partnership<br />Clear responsibilities<br />Common values<br />Insider collaboration<br />Co-locate members<br />External collaboration<br />
  26. 26. Formalize the experiment<br />Break down the hypothesis<br />Seek the truth<br />26<br />Run a Disciplined Experiment<br />
  27. 27. Wild<br />Guesses<br />27<br />Predictions Improve With Learning<br />Informed<br />Estimates<br />Reliable<br />Forecasts<br />Prediction<br />Time<br />Learning<br />Executives Demanding Results Over Learning Drive Failure<br />
  28. 28. 28<br />Formalizing an Experiment<br />Plan the experiment(or revise the plan)<br />Compare predictions and outcomes, assess lessons learned<br />Predict outcomes,document supportinglogic and assumptions<br />Execute experiment,record measurements,<br />document observations<br />Learning Must Be a Rigorous Scientific Method – Not Intuition<br />
  29. 29. Invest heavily in planning<br />Create the plan and scorecard from scratch<br />Discuss data and assumptions<br />Document a clear hypothesis of record<br />Find ways to spend a little, learn a lot<br />Create a separate forum for discussing results<br />Frequently reassess the plan<br />Analyze trends<br />Allow formal revisions to predictions<br />Evaluate innovation leaders subjectively<br />29<br />10 Planning Principles for Innovation<br />I<br />II<br />III<br />IV<br />V<br />VI<br />VII<br />VIII<br />IX<br />X<br />
  30. 30. Spreadsheets<br />Cause and Effect<br />30<br />Conversational Models<br />Subsequent outcome<br />C<br />Additional<br />dependency<br />Outcome<br />Sales<br />B<br />D<br />Action<br />Trial Use<br />Product<br />quality<br />A<br />Advertising<br />spending<br />Focus On Conversations, Not Spreadsheets with Complexity<br />
  31. 31. 31<br />Hypothesis Creation Technique<br /> Divide the budget for innovation into 5 or fewer categories.<br /> Sketch a sequence of outcomes and subsequent outcomes.<br /> Choose specific, unambiguous, measurable outcomes.<br /> Identify additional factors that each outcome depends on.<br />1<br />2<br />3<br />4<br /> Look for overlaps in category cause-and-effect chains.<br /> Show how critical <br />non-spending decisions can impact outcomes<br /> Keep it simple – One page diagrams.<br />5<br />6<br />7<br />
  32. 32. 32<br />Resolve Critical Unknowns First<br />Most critical unknowns<br />Severe<br />What are the consequences if we are wrong?<br />Moderate<br />Least<br />critical<br />unknowns<br />Minor<br />Certain<br />Educated Guess<br />Wild Guess<br />How certain are we?<br />
  33. 33. Get off to a good start<br />Monitor interactions with Performance Engine<br />Stay engaged in a rigorous learning process<br />Shape the Endgame<br />33<br />Supervise an Innovation Initiative<br />
  34. 34. Powerful<br />Broadly Experienced<br />Able to Serve Long-Term Company Interests<br />34<br />Choose the Right Supervising Executive<br />
  35. 35. Strategic objective<br />Form – New product/service launches<br />Core functions of Dedicated Teams required<br />Length of time<br />Scope of expense<br />Areas of uncertainty<br />35<br />Oversee a Family of Related Initiatives<br />
  36. 36. Innovation is all about ideas<br />The great leader never fails<br />Leaders are only fighting the system<br />Everyone can be an innovator<br />Innovation happens organically<br />Can be inside an establish organization<br />Requires wholesale organizational change<br />Innovation can only happen in Skunk Works<br />Innovation is unmanageable chaos<br />Only start-ups can innovate<br />36<br />10 Common Innovation Myths<br />
  37. 37. Ideas are only the beginning<br />Nothing simple about execution<br />Primary leader virtue is humility<br />Ideation is everyone’s job<br />Initiatives require formal resource commitment<br />Innovation is incompatible with ongoing operations<br />Innovation requires only targeted change<br />Innovation must be engaged with ongoing operations<br />Innovation must be closely and carefully managed<br />Many of the world’s biggest problems can be solved only by large, established corporations<br />37<br />10 Innovation Truths<br />
  38. 38. 38<br />Shape a More Innovative Company<br />
  39. 39. 39<br />