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Innovation Innovation ManagementManagement

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Make sure you’ve fixed Make sure you’ve fixed (or are at least aware of)(or are at least aware of)

the strategic problemthe strategic problem

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What can be done?What can be done? LeadLead::

– Build the “ambidextrous” senior team: Build the “ambidextrous” senior team: communicate the strategy, allocate resourcescommunicate the strategy, allocate resources

StructureStructure: : – Explore transitional and intermediate formsExplore transitional and intermediate forms

IncentIncent::– Explain “just what’s in this for me?”Explain “just what’s in this for me?”

BuildBuild: : – Lay the foundations for a new culture, new Lay the foundations for a new culture, new

expectationsexpectations

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What can be done?What can be done? LeadLead::

– Develop a clear strategyDevelop a clear strategy

– Generate energyGenerate energy

– Build an “ambidextrous” senior teamBuild an “ambidextrous” senior team

– Make decisionsMake decisions

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Develop a clear strategyDevelop a clear strategy

How will we Create value?

How will weCapture value?

How will weDeliver value?

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And allocate resources to it!And allocate resources to it!

How will we Create value?

How will weDeliver value?

How will weCapture value?

100%

80%

60%

40%

0%

20%

65431 2

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Generate EnergyGenerate Energy

Position the discontinuity as an urgent threat:Position the discontinuity as an urgent threat:– Flirt with bankruptcyFlirt with bankruptcy

– Make vivid the idea that the firm might flirt with Make vivid the idea that the firm might flirt with bankruptcybankruptcy

Position the discontinuity as an opportunityPosition the discontinuity as an opportunity– Generate some small successes: build enthusiasm and Generate some small successes: build enthusiasm and

“infect” the organization“infect” the organization

– Leap boldly into the futureLeap boldly into the future

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An established company which, An established company which, in an age demanding innovation, in an age demanding innovation, is not able to innovate, is doomed is not able to innovate, is doomed to decline and extinction.to decline and extinction.

-- Peter Drucker-- Peter Drucker

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Build ambidextrous organizations: Build ambidextrous organizations: Differentiation vs. integrationDifferentiation vs. integration

General Manager

Existing business Emerging business

Mfg Sales R&D Mfg Sales R&D

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The scope of the ambidextrous organizationThe scope of the ambidextrous organization

Alignment of:Alignment of: Exploitative Exploitative BusinessBusiness

Exploratory Exploratory BusinessBusiness

Strategic intentStrategic intent

Critical tasksCritical tasks

CompetenciesCompetencies

StructureStructure

Controls, rewardsControls, rewards

CultureCulture

Leadership roleLeadership role

Ambidextrous Leadership

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Build an Ambidextrous Senior TeamBuild an Ambidextrous Senior Team

Ambidextrous senior teams must manage Ambidextrous senior teams must manage – bothboth more mature, operationally focused businesses more mature, operationally focused businesses– andand higher growth, emerging businesses higher growth, emerging businesses

High performing senior teams show:High performing senior teams show:– High conflict, high respect decision making capabilitiesHigh conflict, high respect decision making capabilities– High levels of trust and truth tellingHigh levels of trust and truth telling– The ability to manage divergent incentive systems and The ability to manage divergent incentive systems and

career pathscareer paths Coupled with processes that support the divergent Coupled with processes that support the divergent

management of quite different business unitsmanagement of quite different business units– E.g. Resource allocation processes that allow for E.g. Resource allocation processes that allow for

different time horizons, milestones, rates of returndifferent time horizons, milestones, rates of return

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When you innovate, you've got to When you innovate, you've got to be prepared for everyone telling be prepared for everyone telling you you're nuts.you you're nuts.

--Larry Ellison--Larry Ellison

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If at first the idea is not absurd, If at first the idea is not absurd, then there is no hope for it. then there is no hope for it.

--Albert Einstein--Albert Einstein

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What can be done?What can be done? Lead:Lead: StructureStructure: :

– Implement appropriatelyImplement appropriately

– Choose the right peopleChoose the right people

– Manage linkagesManage linkages

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Control & Coordination

Balance entrepreneurial energy and Balance entrepreneurial energy and coordinationcoordination

EntrepreneurialEnergy Successful disruptive

innovation unites entrepreneurial insight with

effective coordination

StartupsStartups

B as UB as U

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Control & Coordination

Choose a structure that fits the firm’s Choose a structure that fits the firm’s strategic positioning and skillsstrategic positioning and skills

Jointventure/alliance

EntrepreneurialEnergy

Internalventure

Build insideexisting unit

Acquire

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What can be done?What can be done? LeadLead Structure: Structure: IncentIncent

– Explain “just what’s in this for me?”Explain “just what’s in this for me?”

– Manage the balance between:Manage the balance between:• Individual outcomes and team/firm outcomesIndividual outcomes and team/firm outcomes• ““Objective” and “subjective” measuresObjective” and “subjective” measures

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Control & Coordination

The incentive problem is an inherently The incentive problem is an inherently difficult one…difficult one…

EntrepreneurialDrive,Freedom from the “old ways”

StartupsStartups

B as UB as U

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Control & Coordination

Using “high powered” incentives may Using “high powered” incentives may reduce coordinationreduce coordination

Acquire

Build inside existing units

Jointventure/alliance

EntrepreneurialDrive,Freedom from the “old ways”

Internalventure

Build insideexisting unit

?

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Large corporations welcome Large corporations welcome innovation and individualism innovation and individualism in the same way the dinosaurs in the same way the dinosaurs welcomed large meteors.welcomed large meteors.

--Dilbert--Dilbert

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What can be done?What can be done? LeadLead Structure Structure IncentIncent Transform the culture:Transform the culture:

– Build on core valuesBuild on core values

– Practice thinking in new waysPractice thinking in new ways

– Manage from the heartManage from the heart

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Case Discussion: IBMCase Discussion: IBM

What was the situation facing Lou Gerstner as he What was the situation facing Lou Gerstner as he came in as IBM’s new CEO?came in as IBM’s new CEO?

What did Gerstner do to deal with IBM’s problems? Do What did Gerstner do to deal with IBM’s problems? Do you think Gerstner has really turned around IBM? you think Gerstner has really turned around IBM?