In The Other Side of Innovation, Vijay Govindarajan and Chris Trimble reveal how to execute an innovation initiative. This is my summary of this invaluable read.

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

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

3. idea leader team + plan innovation 3 Innovation Model

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 fromimagination to impact

6. Powerful Capable Productive Efficient Growth Potential Impossible to innovateon 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 Partnership Dedicated Team Shared Staff

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

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

12. 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.

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 Competition for Scare Resources Divided Attention of Shared Staff 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. Formalize the experiment Break down the hypothesis Seek the truth 26 Run a Disciplined Experiment

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

28. 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

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 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. 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. 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?

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. 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

37. 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. 38 Shape a More Innovative Company

39. 39