Excepts from "Beyond the Idea: How to Execute Innovation in Any Organization" by Vijay Govindarajan and Chris Trimble

CONCLUSION

KEY LESSONS LEARNED

To conclude, we list Beyond the Idea’s most fundamental principles for innovation:

  1  Companies must shift time and energy from this side to the other side of innovation—from a focus on ideas to a focus on execution.

  2  Organizations are not built for innovation, they are built for ongoing operations … and there are fundamental incompatibilities between the two.

  3  There are three powerful models for overcoming these incompatibilities and allowing innovation and ongoing operations to simultaneously thrive. All three models can coexist in a single company, but it is crucial to match each initiative to the proper model.

a. Model S, for Small initiatives, attempts to squeeze innovation into small slivers of slack time. It can deliver a very large number of very small initiatives.

b. Model R, for Repeatable initiatives, attempts to make innovation as repeatable and predictable as possible. It can deliver an ongoing series of similar initiatives, regardless of their size.

c. Model C, for Custom initiatives, is for all initiatives that are beyond the limitations of either Model S or Model R.

  4  Model C has two components: a Special Team and a Special Plan. Each Model C initiative requires its own custom-designed Special Team and Special Plan.

  5  The Special Team is a partnership between two groups of people—a Dedicated Team and a Shared Staff. The Dedicated Team is dedicated full-time or very nearly full-time to just one Model C initiative. The Shared Staff has simultaneous responsibilities for both the innovation initiative and ongoing operations.

  6  The Shared Staff may only take on familiar tasks or tasks that it can learn quickly and readily incorporate into day-to-day operations. Furthermore, the Shared Staff can only take on tasks that fit into existing roles, responsibilities, and workflows. The Dedicated Team must take on all other innovation tasks.

  7  Build the Dedicated Team as though you are building a new organization from the ground up, custom designed for the task at hand. This typically involves hiring outsiders, creating new roles, shaping a new hierarchy, and even creating a distinct culture.

  8  The partnership between the Dedicated Team and the Shared Staff is never an easy one. Keeping it healthy requires a positive and collaborative innovation leader, an engaged senior leadership team, and a Shared Staff that is adequately resourced to do both of its jobs.

  9  A Model C initiative requires a Special Plan, one that is written for disciplined experimentation and rapid learning.

10  Planning systems for established organizations are designed for administration of ongoing operations, not for disciplined experimentation. Therefore, Model C initiatives need both a separate plan and a separate forum for discussing results.

11  At the heart of the Special Plan is a clear hypothesis of record, one that lays out the conjectures about cause and effect that connect planned actions with hoped-for results.

12  Innovation leaders must be evaluated based on criteria that are demanding but distinct from the yardsticks used to assess leaders of ongoing operations. Innovation leaders must be evaluated based primarily on how well they run a disciplined experiment.

APPENDIX 1. STRATEGY

No Performance Engine lasts forever. That’s why innovation is so critical to the long-term vitality of any organizations. As such, over the long run, strategy and innovation are tightly coupled.

We have focused on the execution challenge in Beyond the Idea. In this appendix, however, we offer a framework that brings together both the front end and the back end of the innovation challenge: both strategy and execution, both thinking and doing.

At the core of that framework is an observation that everything that a company thinks and does can be put into one of the three boxes. Box 1 is: Manage the Present. Box 2 is: Selectively Forget the Past. Box 3 is: Create the Future.

Most companies expend almost all of their energies in Box 1. Of course, sustaining excellence in the Performance Engine is critically important. Box 1, however, does not give you transformation. It does not give companies the adaptability that is necessary to endure through mammoth changes in the business environment, such as globalization, technological advance, regulatory change, or demographic shifts. To get there, you need Box 2 and Box 3.

Perhaps the most challenging of the three boxes is Box 2. The word selectively in Box 2 is crucial. It’s not abandon the past, it is selectively forget the past. The Performance Engine will continue to operate on its current logic. It must continue to strive for the best possible performance.

That said, the first step in generating Box 3 ideas for breakthrough innovation is freeing one’s thinking from constraints. In other words, Box 2 is a prerequisite for Box 3. Box 2 requires challenging the enduring assumptions of the Performance Engine. At the most basic level: Who are your customers? What do they value? How do you deliver that value?

Box 2 also demands willingness to break your company’s rules or your industry’s rules. Instead of benchmarking what your competition is doing, you imagine what none of your competitors are doing. Instead of focusing only on the demands of your biggest customers, you pay heed to leading-edge customers, the ones who may define your industry’s future. Instead of containing your thinking within each of your corporation’s business units, you ask what is possible if the skills and assets within these units were combined in new ways for new purposes. Instead of asking what’s possible with current skills and assets, you imagine what your company could build in the long run. Instead of only imagining what is possible this year, you consider what’s possible in five years or ten.

If you completely break free of constraints, the world is wide open in Box 3. Such freedom can be both liberating and overwhelming. Progress can be accelerated by shaping thinking with a long-term, ambitious, aspirational goal—a strategic intent. The most effective statements of strategic intent combine a clear direction of travel with a challenge that seems almost impossible to achieve. Some good examples include Google’s intent to “organize the world’s information,” or, many decades back, Honda’s desire to put “six Hondas in a two-car garage” (by adding, say, a lawn mower, a motorcycle, a snowmobile, and a leaf blower).

Once you commit to a Box 3 idea, then comes the execution phase, the core focus in Beyond the Idea. Box 3 ideas always require Model C execution. (Box 1 ideas might require Model S, R, or C, depending on the nature of the initiative and the capabilities of the organization. As a Model C initiative proceeds, Box 2, selective forgetting, remains crucial. Where failure to challenge strategic orthodoxies is the front-end Box 2 problem, failure to challenge organizational norms and planning norms is the execution phase Box 2 problem. In fact, we have been talking about selectively forgetting throughout this book.

Consider, in particular, the discussion in chapter 7, forming the Dedicated Team. The primary error here is to create a Little Performance Engine rather than a Dedicated Team. This happens when companies fail to forget, instead defaulting to existing organizational routines. They use the same people, insist on the same titles and job descriptions, make no effort to shift the hierarchy, sustain the same culture, and stick with the existing policies in crucial functions like human resources. Creating a plan for a Model C initiative also requires selective forgetting, including the rhythm of reviews, the metrics used to assess progress, and the criteria by which the innovation leader is evaluated.

Box 3 thinking also remains important in the execution phase of a Model C initiative. Both the special kind of team and the special kind of plan are created from the ground up, from a blank page. This can seem daunting, just like coming up with Box 3 ideas. Identifying analogies can help, but it is essential to seek analogies from outside your company. If you are a manufacturing company that is expanding into value-added software, for example, the right place to look for inspiration for shaping the Special Team and the Special Plan is the software industry, not your own company.

APPENDIX 2. CHANGE

Innovation and change are similar challenges. They both involve encouraging employees to move in new directions. As a result, innovation initiatives and change initiatives often end up mixed together on the strategic agenda. This can be confusing, and we recommend separating the two.

Innovation is about experimentation. Innovation initiatives are launched with a full understanding that the outcome is uncertain. Failure is an option. The goal is to learn quickly, so that if failure comes, it comes fast and cheap.

Because of innovation’s experimental nature, it is crucial to take steps to avoid any impact on the Performance Engine. We have kept this objective at the top of our minds while writing this book. It is, for example, why we advise such caution in assigning tasks to the Shared Staff. The innovation mantra is: “Try it and see if it works … while doing no harm to our day-to-day business.”

Change initiatives are quite the opposite. Companies undertake change initiatives when the destination is clear and clearly desirable. Failure is not an option. Change is not, at its foundation, about experimentation. Further, while the innovation model we’ve outlined in Beyond the Idea avoids any impact on the Performance Engine, a change initiative strives forimpact on the Performance Engine. That’s the entire point, in fact. Instead of creating a Dedicated Team that operates differently from the rest of the company, you ask the entire companyto operate differently. The change mantra is not, “Try it and see if it works,” it is: “Just do it.”

That said, innovation and change are often interrelated. Consider these possibilities:

1  Sometimes innovation leads to change. For example, a company might launch a new business to serve existing customers. That’s an innovation initiative. Then, once the new business is proven, it might be very clear that a redesigned and combined sales process for both businesses would be more efficient. That’s a change initiative.

2  A change effort can sometimes include smaller innovation efforts. For example, a change effort to make a company more customer focused and less product focused might include an experimental launch of a new customer support service.

3  Change can sometimes lead to innovation. For example, a company could redesign its IT systems to be more Internet friendly. That’s a change initiative that might affect everyone in the company. Once the new systems are in place, many innovation initiatives might become newly possible.

Even though innovation and change are closely related and one often leads to the other, it’s quite helpful to differentiate your company’s innovation agenda from its change agenda. The prescriptions in Beyond the Idea apply only to innovation.