Seth Godin once commented: “your job is to foster innovation…. Fostering innovation is a discipline, a profession in fact. It involves making difficult choices and causing important things to get shipped out the door.”
‘The Other Side of Innovation: Solving the Execution Challenge,’ a book by by professors Vijay Govindarajan and Chris Trimble, two faculty professors of the Tuck School of Business at Dartmouth University, is based on years of research. The authors provide the best practices to effect a product or service breakthrough that can satisfy customers and grow your business.
In the Other Side of Innovation, the main premise is:
Your organization won’t innovate productively unless some underlying factors are in good shape.
It is pointed out that in attempting an innovation program, many companies make one of several mistakes, which can include:
- Bias for Insiders who work in the Performance Engine;
- Adopting Existing Formal Definition of Roles and Responsibilities, instead of adopting roles to fit the innovation;
- Assessing Performance based on Established Metrics, instead of measuring success or failure by trends fit for the innovation
Professors Vijay Govindarajan and Chris Trimble emphasize a shared understanding of objectives to develop solutions.
“Quick learning is most likely when there is a clear hypothesis of record that everyone involved in evaluating the initiatives shares and uses as a frame of reference in any discussion of the initiative’s progress.”
“Too often, we see extraordinary efforts to build the perfect spreadsheet to prove the case for investment. We’d like to shift much of the effort that goes into perfecting the spreadsheet models to improving conversations about the underlying assumptions.”
The Other Side of Innovation asserts a key premise of balance between ongoing activity and strategic needs.
Companies are “Performance Engines,” pressed to deliver profits.
A side effect of such profit-creating activity pressures, which shape companies as they mature, can be a reduced capacity for accomplishing some innovative projects.
Professors Govindarajan and Trimble, recommend establishing a Dedicated Team with best practices and targetd metrics, and maintaining a balanced collaborative relationship between the team and various stakeholders from the Performance Engine.
“A dedicated team’s purpose…is not to overcome organizational memory. It is to execute part of the innovation initiative. To do so, the Dedicated Team needs both insiders and outsiders, and it needs a healthy partnership with the Performance Engine.”
Professors Govindarajan and Trimble offer success stories from well-known corporations, including Timberland, BMW, Nucor and Harley Davidson. Each case shows clear results and takeaways that avoid critical mistakes.
If “10” is outstanding and “1” is poor, how do you rate your organization on each of these?
Mark Sebell and Jay Terwilliger, managing partners at Creative Realities, Inc., a Boston-based innovation management collaborative, lay out the survey issues:
1. A compelling case for innovation. Unless people understand why innovation is necessary, it always loses to core business or the performance engine in the battle for resources. The performance engine is bigger, is the center of power, and can justify resources based on short term financial results. So the case for innovation has to be made, and it better be compelling.
2. An inspiring, shared vision of the future. Most companies anticipate the future based upon the past. Not surprisingly, the company always looks relevant in that future. However, if the past is suspended and a holistic view of the future is envisioned, then it’s easier to recognize tidal forces of change and (surprise!) the company may not look so relevant in that future. For this process, it is best to take a 10-20-year perspective. It is not about predicting the future. It is about developing hypotheses about the future.
3. A fully aligned strategic innovation agenda. As the Cheshire Cat said to Alice, “If you don’t know where you’re going, any road will get you there.” Innovation is a journey into the unknown and there are many paths open to the innovator. Before starting it is essential to know things like: 1) What business are we in now and want to be in going forward? 2) What is our risk tolerance for pursuing big, game-changing ideas? In our experience, the #1 reason why game-changing innovation fails is because time is not invested up front to align the organization behind one strategic innovation agenda.
4. Visible senior management involvement. Incremental innovation can be pushed down into the organization where the strategy is clear, decision metrics are understood, and management models like Stage-Gate create a level playing field. However, for game-changing innovation it’s the opposite. The strategy is fuzzy, and traditional metrics can’t be applied early in the process, because that which is truly new has no frame of reference nor benchmark. So Stage-Gate models can unintentionally kill potentially big ideas. The pursuit of game-changing innovation only works when the person who can say yes to big spending visibly sponsors and participates in the work and provides air cover to the work team.
5. A decision-making model that fosters teamwork in support of passionate champions. Breakthroughs cannot survive without a decision-making model that is different from the one used for incremental innovation. It’s not about metrics; it’s about “the educated gut.” Old models don’t work. Autocratic decision-making fails to engage all of the critical stakeholders, while consensus sinks every decision to its lowest possible common denominator. It doesn’t work without a passionate champion who can make decisions and engage the team to support those decisions.
6. A creatively resourced, multi-functional dedicated team. The best teams have three ingredients: project champions who can make decisions during working sessions and advocate for them with executive sponsors, relevant capabilities and expertise, and naïve, seemingly irrelevant diversity. Most often a breakthrough starts with the naïve and then the experts determine how to do it.
7. Open-minded exploration of the marketplace drivers of innovation. Organizational change is driven by marketplace factors: customers, competition, government regulation, and science and technology. Only by exploring these drivers of change can a company begin to recognize what it must do to be relevant in its envisioned future.
8. Willingness to take risk and see value in absurdity. Albert Einstein once said, “If at first an idea doesn’t seem totally absurd there’s no hope for it.” Innovators understand that you have no choice; you must take risks, often big ones, by moving toward the absurd, the “seemingly” irrelevant, in order to create pre-emptive competitive advantage while competitors move in the “obvious” direction.
9. A well-defined yet flexible execution process. Companies that have been in business for a while are good at executing on small, incremental changes. And that’s challenging enough. What they don’t know how to do is nurture, support, and modify potentially big new ideas with a more flexible execution process. There are three elements to innovation execution. First, build a dedicated team for innovation. Breakthroughs cannot happen inside the performance engine — it is built for efficiency, not for innovation. Second, link the dedicated team to the performance engine so that it can leverage key assets of the core business. Third, evaluate the innovation leader for managing disciplined experiments, not for hitting short-term profit goals.
If your personal ratings total more than 70, you work in a pretty innovative environment. If your ratings fall below 70, then you may want to think about how well you are poised for the future.
Finally, professors Govindarajan and Trimble emphasize the need to treat innovation properly throughout a development process:
- Invest in planning;
- Create the innovation plan and scorecard;
- Find ways to spend a little and learn a lot
Taking on board the approaches of ‘The Other Side of Innovation,’ your odds to service customers better and ultimately improve profitability will be much greater.
In concluding we ought to note that due to his Indian heritage, professor Vijay Govindarajan is a great exponent of “frugal innovation”— radically reducing the cost of products while also delivering top value.
General Electric has reduced the cost of an electrocardiogram machine from $2,000 to $400. Tata Chemicals has produced a $24 purifier that can provide a family with pure water for a year. Girish Bharadwaj, an engineer, has perfected a technique for producing cheap footbridges that are transforming life in rural India.