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The Other Side of Innovation
- 1. the other side of innovation SOLVING THE EXECUTION CHALLENGE Summary By Peter Modigliani Vijay Govindarajan Chris Trimble
- 2. Genius is 1% inspiration and 99% perspiration 2 Thomas Edison
- 4. Ongoing Operations Repeatable and Predictable Innovation Nonroutine and Uncertain 4 Address Fundamental Incompatibilities Innovation Leaders Must Think Differently About Organizing and Planning
- 5. Beyond the idea 5 Real Innovation Challenge Long journey from imagination to impact
- 6. • Powerful • Capable • Productive • Efficient • Growth Potential Impossible to innovate on its own 6 Performance Engine Ongoing Operations
- 7. Rebels Fighting the Bureaucracy 7 Innovation Leaders
- 8. 8 Each Innovation Initiative Requires A team with a custom organizational model A plan revised by a rigorous learning process
- 9. Company Performance Engine 9 The Innovation Team Dedicated Team Shared Staff Partnership
- 10. 10 Performance Engine Limitations Skills of the Individuals Work Relationship Between Them
- 11. 1. Identify skills needed 2. Hire the best people 3. Match the organizational model to the team 11 Principles for Dedicated Team
- 12. 1. Having a bias for insiders 2. Adopting existing formal roles & responsibilities 3. Reinforcing performance engine power centers 4. Assessing performance from established metrics 5. Failing to create a distinct culture 6. Using existing processes 7. Succumbing to the tyranny of conformance 12 7 Common Mistakes
- 13. • Pride • Familiarity • Comfort • Expedience • Compensation norms • A desire to give attractive opportunities to your own employees 13 Trap 1: Having a Bias for Insiders
- 14. • 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
- 15. • 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
- 16. 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
- 17. 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
- 18. 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
- 19. If identical processes truly worked, the initiative would be part of Performance Engine 19 Trap 6: Using Existing Processes
- 20. HR, Finance, and IT drive standardization Insist on being an exception to these standards 20 Trap 7: Succumbing to the Tyranny of Conformance
- 21. • Create a team distinct from the Performance Engine • Treat the Performance Engine like a strategic partner 21 Take a Positive Approach
- 22. 22 You Will Face 3 Challenges 1. Competition for Scare Resources 2. Divided Attention of Shared Staff 3. Disharmony in the Partnership
- 23. • Allocate resources through one plan • Fund Shared Staff resources • Discuss contingency plans in advance 23 1. Competition for Scare Resources
- 24. • Internal transfer payments • Special targets • Added bonuses 24 2. Divided Attentions of Shared Staff
- 25. 25 3. Disharmony in the Partnership • Clear responsibilities • Common values • Insider collaboration • Co-locate members • External collaboration
- 26. 1. Formalize the experiment 2. Break down the hypothesis 3. Seek the truth 26 Run a Disciplined Experiment
- 27. Wild Guesses 27 Predictions Improve With Learning Prediction Learning Time Informed Estimates Reliable Forecasts Executives Demanding Results Over Learning Drive Failure
- 28. 28 Formalizing an Experiment Compare predictions and outcomes, assess lessons learned Plan the experiment (or revise the plan) Predict outcomes, document supporting logic and assumptions Execute experiment, record measurements, document observations Learning Must Be a Rigorous Scientific Method – Not Intuition
- 29. 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
- 30. Spreadsheets Cause and Effect 30 Conversational Models A B C D Action Outcome Subsequent outcome Sales Trial Use Advertising spending Product quality Focus On Conversations, Not Spreadsheets with Complexity
- 31. 31 Hypothesis Creation Technique Divide the budget for innovation into 5 or fewer categories. Sketch a sequence of outcomes and subsequent outcomes. Choose specific, unambi guous, measura ble outcomes. Identify additional factors that each outcome depends on. Look for overlaps in category cause- and-effect chains. Show how critical non-spending decisions can impact outcomes Keep it simple – One page diagrams. 1 2 3 4 5 6 7
- 32. 32 Resolve Critical Unknowns First Certain Educated Guess Wild Guess Most critical unknowns Least critical unknowns Minor Moderate Severe How certain are we? What are the consequences if we are wrong?
- 33. • 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
- 34. • Powerful • Broadly Experienced • Able to Serve Long-Term Company Interests 34 Choose the Right Supervising Executive
- 35. • 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
- 36. 1. Innovation is all about ideas 2. The great leader never fails 3. Leaders are only fighting the system 4. Everyone can be an innovator 5. Innovation happens organically 6. Can be inside an establish organization 7. Requires wholesale organizational change 8. Innovation can only happen in Skunk Works 9. Innovation is unmanageable chaos 10.Only start-ups can innovate 36 10 Common Innovation Myths
- 37. 1. Ideas are only the beginning 2. Nothing simple about execution 3. Primary leader virtue is humility 4. Ideation is everyone’s job 5. Initiatives require formal resource commitment 6. Innovation is incompatible with ongoing operations 7. Innovation requires only targeted change 8. Innovation must be engaged with ongoing operations 9. Innovation must be closely and carefully managed 10. Many of the world’s biggest problems can be solved only by large, established corporations 37 10 Innovation Truths
- 38. 38 Shape a More Innovative Company
- 39. 39