the other side of innovation

the other side of

innovationSOLVING THE EXECUTION CHALLENGE

Summary ByPeter Modigliani

Vijay GovindarajanChris Trimble

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Genius is 1% inspiration and 99% perspiration

Thomas Edison

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idealeader

team+ plan

innovation

Innovation Model

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Ongoing OperationsRepeatable and Predictable

InnovationNonroutine and Uncertain

Address Fundamental Incompatibilities

Innovation Leaders Must Think Differently About Organizing and Planning

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Beyond the idea

Real Innovation Challenge

Long journey fromimagination to

impact

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• Powerful• Capable• Productive• Efficient• Growth Potential

Impossible to innovate

on its own

Performance Engine

Ongoing Operations

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Rebels Fighting the Bureaucracy

Innovation Leaders

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Each Innovation Initiative Requires

A team with a custom organizational model

A plan revised by a rigorous learning

process

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CompanyPerformance Engine

The Innovation Team

Dedicated TeamShared Staff

Partnership

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Performance Engine Limitations

Skills of the Individuals

Work Relationship Between Them

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1. Identify skills needed2. Hire the best people3. Match the organizational model to the team

Principles for Dedicated Team

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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

7 Common Mistakes

1.

2.3.

4.5.

6.7.

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• Pride

• Familiarity

• Comfort

• Expedience

• Compensation norms

• A desire to give attractive opportunities to your own employees

Trap 1: Having a Bias for Insiders

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• Skills Deficit Risk – Investors flock to start ups• Organizational Memory Risk – Little Performance Engine• Outsiders – Add New Perspectives, Challenge Org Memory

Trap 1: Having a Bias for Insiders

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• Use new and unfamiliar titles

• Write new job descriptions

• Create a separate physical space for the Team

Trap 2: Adopting Existing Roles and Responsibilities

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Avoid replicating power centers for new team

Achieve a power shift through:• Team hierarchy• Clear decision rights• Leadership choices

Trap 3: Reinforcing Performance Engine Power Centers

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Performance Engine metrics are rarely equally meaningful to Dedicated Team

Identify performance metrics that matter most for your specific innovation initiative

Trap 4: Assessing Performance From Established Metrics

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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

Trap 5: Failing to Create a Distinct Culture

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If identical processes truly worked, the initiative would be part of Performance Engine

Trap 6: Using Existing Processes

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HR, Finance, and IT drive standardization

Insist on being an exception to these standards

Trap 7: Succumbing to the Tyranny of Conformance

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• Create a team distinct from the Performance Engine• Treat the Performance Engine like a strategic partner

Take a Positive Approach

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You Will Face 3 Challenges

1. Competition for Scare Resources

2. Divided Attention of Shared Staff

3. Disharmony in the Partnership

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• Allocate resources through one plan

• Fund Shared Staff resources

• Discuss contingency plans in advance

1. Competition for Scare Resources

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• Internal transfer payments

• Special targets

• Added bonuses

2. Divided Attentions of Shared Staff

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3. Disharmony in the Partnership

• Clear responsibilities• Common values• Insider collaboration• Co-locate members• External collaboration

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1. Formalize the experiment

2. Break down the hypothesis

3. Seek the truth

Run a Disciplined Experiment

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WildGuesses

Predictions Improve With LearningPr

edic

tion

LearningTime

InformedEstimates

ReliableForecasts

Executives Demanding Results Over Learning Drive Failure

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Formalizing an Experiment

Compare predictions and outcomes, assess

lessons learned

Plan the experiment(or revise the plan)

Predict outcomes,document supportinglogic and assumptions

Execute experiment,record measurements,document observations

Learning Must Be a Rigorous Scientific Method – Not Intuition

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Invest heavily in planningCreate the plan and scorecard from scratchDiscuss data and assumptionsDocument a clear hypothesis of recordFind ways to spend a little, learn a lotCreate a separate forum for discussing resultsFrequently reassess the planAnalyze trendsAllow formal revisions to predictionsEvaluate innovation leaders subjectively

10 Planning Principles for Innovation

I

II

III

IV

V

VI

VII

VIII

IX

X

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Spreadsheets Cause and Effect

Conversational Models

A

B

C

DAction

Outcome

Subsequent outcome Additional

dependency

Sales

Trial Use

Advertisingspending

Productquality

Focus On Conversations, Not Spreadsheets with Complexity

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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.

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

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Resolve Critical Unknowns First

Certain Educated Guess Wild Guess

Most critical

unknowns

Leastcritical

unknownsMin

orM

oder

ate

Seve

re

How certain are we?

Wha

t are

the

cons

eque

nces

if w

e ar

e w

rong

?

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• Get off to a good start• Monitor interactions with Performance Engine• Stay engaged in a rigorous learning process• Shape the Endgame

Supervise an Innovation Initiative

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• Powerful• Broadly Experienced• Able to Serve Long-Term

Company Interests

Choose the Right Supervising Executive

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• Strategic objective• Form – New product/service launches• Core functions of Dedicated Teams required• Length of time• Scope of expense• Areas of uncertainty

Oversee a Family of Related Initiatives

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1. Innovation is all about ideas2. The great leader never fails3. Leaders are only fighting the system4. Everyone can be an innovator5. Innovation happens organically6. Can be inside an establish organization7. Requires wholesale organizational change8. Innovation can only happen in Skunk Works9. Innovation is unmanageable chaos10. Only start-ups can innovate

10 Common Innovation Myths

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1. Ideas are only the beginning2. Nothing simple about execution3. Primary leader virtue is humility4. Ideation is everyone’s job5. Initiatives require formal resource commitment6. Innovation is incompatible with ongoing operations7. Innovation requires only targeted change8. Innovation must be engaged with ongoing operations9. Innovation must be closely and carefully managed10. Many of the world’s biggest problems can be solved only by

large, established corporations

10 Innovation Truths

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Shape a More Innovative Company