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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.
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the other side of
innovationSOLVING THE EXECUTION CHALLENGE
Summary ByPeter Modigliani
Vijay GovindarajanChris Trimble
2
Genius is 1% inspiration and 99% perspiration
Thomas Edison
3
idealeader
team+ plan
innovation
Innovation Model
4
Ongoing OperationsRepeatable and Predictable
InnovationNonroutine and Uncertain
Address Fundamental Incompatibilities
Innovation Leaders Must Think Differently About Organizing and Planning
5
Beyond the idea
Real Innovation Challenge
Long journey fromimagination to
impact
6
• Powerful• Capable• Productive• Efficient• Growth Potential
Impossible to innovate
on its own
Performance Engine
Ongoing Operations
7
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