Tuesday, November 10, 2015

10 Rules for Strategic Innovation (Vijay Govindarajan and Chris Trimble – Idea to Execution)


Rule 1: In all great innovation stories, the great idea is only Chapter 1. Building breakthrough businesses requires forgetting, borrowing, and learning. These central challenges demand more than just talented and ambitious leaders; they require leveraging the power of organisational DNA [staff, structure, system, culture].

Rule 2: Sources of organisational memory are powerful. Organisations naturally cling to CoreCo’s orthodoxy, even when moving into new environments. But NewCo needs to operate in fundamentally different ways [what got you here won’t get you there].

Rule 3: Large, established companies can beat start-ups if they can succeed in leveraging their enormous assets and capabilities.

Rule 4: Strategic experiments face critical unknowns. No amount of research can resolve these unknown before the business is lunched. Therefore, success depends more on an ability to experiment and learn than on the initial strategy. [OB is more important than strategy when it comes to innovation.]

Rule 5: The NewCo organisation must be built from scratch, with new choices in staffing, structure, systems, and culture. This is the only way to defeat the powerful forces of institutional memory. Conversational awareness of the differences between NewCo and CoreCo business models does not suffice.

Rule 6: Managing tensions is job number one for senior management. The health of the links between NewCo and CoreCo deteriorates easily. There are several natural sources of tension, driven by dynamic forces – particularly the changing demand for and supply of capital within the organisation.

Rule 7: NewCo needs its own planning process. CoreCo’s norms for evaluating business performance will disrupt NewCo’s learning.

Rule 8: Interest, influence, internal competition, and politics disrupt learning. To ensure learning, you must take a disciplined, detached, and analytical approach to making predictions and interpreting differences between predictions and outcomes.

Rule 9: Hold NewCo accountable for learning and not results. You can achieve accountability for learning by insisting on a disciplined learning process. Accountability for results against plan, while simpler to practise, is counterproductive.

Rule 10: Companies can build a capacity for breakthrough growth through strategic innovation. Skills in forgetting, borrowing, and learning are the foundation. Managers must start building these organisational skills early in a company’s life.

Book Summary - Andrew Hargadon “How Breakthroughs Happen: The Surprising Truth About How Companies Innovate” HBSP, 2003.


The gist: innovations = recombining (people+ideas+objects) in new ways
Critical success factors for innovations to work: two – envisaging non-existing combinations across teams/indutries AND building necessary networks to support executing ideas into products/results


The business of innovation
The strategy of technology brokering takes advantage of relatively simple but consistently overlooked characteristic of many breakthrough innovations - that innovations are the recombination of old people, objects and ideas in new ways. So before we consider the ways in which technology brokering works and organisations was first explored the complementary nature of innovation in more detail.

Recombinant innovation and the sources of invention
The revolution sparked by Henry Ford for systems of mass producing automobiles was a product of recombinant processes. The immediacy of his success came from the utilisation of existing technologies borrowed from other industries. Recombining previously disparate elements often creates a whole that is greater by far than the sum of its parts because the process enables innovation to pull the best people, ideas, and objects from different worlds.

The recombination of existing elements into novel and powerful new technologies, scientific theories, and social movements is a process that depends critically on the individuals and organisations involved. But hiring smart people, creating flat organisations and cross-functional teams, and engaging in brainstorming in rapid prototyping are not enough to make organisations innovative. It's not the free pinball or casual Fridays. To those in the automobile industry in 1910, engineers were not just thinking outside of the box, but they were thinking in different boxes.

Organisations pursuing innovation often unconsciously select individuals, organisational structures, and innovation strategies that would put them on the leading edge of their current markets and technologies. All the while, however, some of the most innovative technology can be found not in their focus on rivals, but to the side, in other worlds were potentially valuable but unknown technologies have already emerged.

Bridging small worlds
Acess to the people-ideas-objects of other worlds gives people an advantage in seeing how those resources can be used in new ways. But at the same time, bridging small worlds is not that simple. Small worlds, like the boxes people think in, see innovation in two very different ways. Because of the nature of small worlds, changes in any one part of the system needs assistance by the rest of the system. Small worlds also constraint inhabitants by limiting what they see as possible and appropriate, giving them the ties that bind them to other people, ideas, and objects inside the world and that, in the process, blind them to alternatives on the outside.

History is filled with examples of organisations and industries were swept away by the winds of creative destruction. It's easy to place the blame on nearsighted individuals who, unlike their farsighted counterparts (inventors), could not see or embrace the future. Technologies in one place may be valuable to both remain unseen and untapped by others. By bridging these worlds, one can develop the ability to see how these resources can be combined with others and put to new use.

Bridging activities bring the people of organisations into contact with problems and resources of many different worlds. There is no one right way. Technology brokering requires many simultaneous bridging activities because of these activities both presented and created to/by the open mind is necessary to see in new connections and new combinations.

The paradox inherent in the innovation process is that innovators need wide ranging ties across distant worlds to generate innovative ideas in the first place, yet they also need strong focused ties in communities around emerging innovations. Firms must commit resources to both. The answer is not to resolve the paradox, but rather to appreciate that each seemingly conflicting goal. Bridging brings the people ideas and objects of distant worlds into the organisation and into new combinations.


Building the new worlds
A birthday bash took place on October 21, 1929 on the 50th anniversary of Edison's introduction of the lightbulb. Henry Ford hosted the party, moving Edison's Menlo Park laboratory (and seven carloads of stuff) to Dearborn to become part of his Greenfield Village Museum. Edison's wife mentioned in her diary that Thomas was so much more than the light-bulb, but she thought this was a big PR for GE.

When innovation is seen as the work of a genius, we are in for trouble. Too many times entrepreuners attempted to walk in the footsteps of Edison and Ford - determined to be individualistic just like their role models. But they [Edison, Ford] weren't. What sets them apart, and what sets up technology brokers, is the recognition that innovation requires not just a new idea (built from combinations of old ones) but also the collective effort necessary to make that a new idea work against doubt and uncertainty of the process. Innovation requires building a community of like-minded and wholly committed individuals who see their shared future of the success of the emerging technologies and industries.

So to succeed, technology brokers actually must walk a delicate line between establishing the broad ranging and networks required to see and combine valuable new ideas across industries and, once innovations are constructed, building the necessary collective action community around those innovations. Technology brokers must pursue strategies that put them on the territory of existing worlds, yet retrain them to become the core of the new ones. Some are better at bridging multiple domains, others at building communities around their ideas. The lessons of technology brokers offer insights into balancing these two competing strategies.

Technology brokering as a firm
For some companies, like IDEO, innovation is not a deviation from the everyday work but rather the single process behind the survival. Although such technology brokers are rare, there is much they can teach us about how they have linked their innovation strategies to their structure, work practices, and culture.

A dedicated technology brokering strategy bridges small worlds, exploiting the position between different worlds to combine existing objects ideas and people in new adventurers, and building the necessary communities around these new experiments that will ensure their success. Such a strategy works because these firms are continuously moving into new worlds. This innovation strategy, together with their organisational structure of work practices, create internal marketplace of ideas and a culture of wisdom where in new ideas and artefacts can move around freely.
Technology brokering without the structure in practices and culture won't work any more than these structures practices and cultures will work without moving among multiple worlds. However, not all firms can dedicate themselves to the continuous pursuit of innovation. For the rest of us, it's more important to recognise when and where we can create groups within large organisations that can invoke technology brokering strategy or recognise and create communities around the new recombinant innovations when opportunities emerge.

Technology brokering within the firm
Inside large organisations, there are already the potential for existing ideas objects and people from one market to move to another in new combinations. Also within their walls, however, these firms have the barriers between divisions for responsible groups that make bridging worlds and building a new venture difficult.

For these firms the answer is to form internal technology brokering groups chartered to move across many small worlds of the firm rather than establish themselves in any specific. These groups main responsibility is neither performing in the presence nor the future but rather of redistributing the future that’s already here.

The benefits of internal technology brokers come from more than simply the dynamics of recumbent innovation they also come from multitiered markets at large firms create existing technologies can have potentially revolutionary impacts and the different markets, other can also have an impact on their organisational processes

The key to success is the realisation that technology brokering happens on the ground where people are most familiar with the existing technologies and the problems their markets present. Senior executives are crucial in a their position to link these otherwise disconnected visions.

Creating internal technology brokers requires creating the same conditions that exist in, eg, IDEO. This means postioning these groups outside of the individual divisions were they might be subject to the distractions and resources and strains of P&L within the single market. It means creating the conditions in which they are rewarded for introducing existing technologies into a different small worlds of an organisation-add not focusing their efforts within any single one.

Finally, not all firms are large enough or diversified enough to benefit from developing internal technology brokers around particular problems or technologies. For such companies committing the entire firm or even a single group is infeasible. The value of technology brokering for these firms lies in recognising when opportunities for recumbent innovation arise and the know-how to seize those opportunities.

Exploiting the emergent opportunities for technology brokering
In firms that are focused on a single or a few markets were success depends on building competencies and on building close relationships with a few key suppliers and customers, accidental insights into potentially valuable technologies usually go unnoticed or if recognised are dismissed by critical others.

Most firms won’t have senior executives to turn to when valuable ideas get dismissed by those who are simply protecting their own expertise. Organisations need to develop the capability to recognise the value of technologies in other domains and to quickly build bridges necessary to these new ideas. They also need to develop the ability to quickly build the network connections around these technologies to make them successful first within themselves and then in the market.

Looking back moving forward
Common sense, it's been said, is the genius in its dotage (Einstein: “Common sense is the collection of prejudices acquired by age eighteen”). We now hold [given] believes that previously were considered revolutionary. And while it's easy to look back and see the obvious discovery, it's more useful to try to understand why that finding was not obvious beforehand. Elements of various inventions were in use long before the revolution began.
For these breakthroughs to happen someone somewhere had to make connections nobody else had made before. The very existence of these technologies made them revolutionary when they were introduced elsewhere, but their very existence also made it difficult for those most familiar with them to take them apart and put them together in new ways to complete the circle.

Just as genius turns to common sense common sense turns to prejudice. The same innovative people of previous generation will become the ones to suppress the next. Starting a new cycle requires building new combinations of people, ideas and objects. And building those new combinations requires bridging distant worlds in order to find and exploit existing resources within them. It may take a genius to see the potential for a breakthrough innovation across a fragmented landscape, but the genius depends more on the network that allows us to see across worlds than on any inherent talents.

../End