By Vijay Govindarajan and Chris Trimble
In The Other Side of Innovation, you will learn how to execute an innovation initiative within your organization. You will learn the importance of building a dedicated team and how current operations can limit progress. An understanding of how to test ideas and use the results to improve will help you get the most out of your efforts. You will learn detailed steps to take an idea and see it through the challenges of getting it into the marketplace.
Most articles and books on innovation focus on the "creative" aspects of coming up with new ideas. Much of the focus over the past few years has been on the supply side, with little attention paid to the execution team. However, no innovative effort is complete until a product goes to market. Turning a new idea into a new offering requires the ability to execute.
"Ongoing operations is a world of 90% data, 10% unknowns. A bold innovation initiative, on the other hand, might be just the reverse: 10% data and 90% unknowns."
Making Innovation Happen
“Most companies have plenty of creativity and plenty of technology. What they lack are the managerial skills to convert ideas into impact.”
Innovation initiatives are new projects that have unproven outcomes. These initiatives disrupt routines, challenge current ways of doing business, and create uncertainty. It is these elements of unpredictability and disruption that call for a disciplined approach to innovating within a large organization. Innovating isn't about trying out many ideas and seeing what sticks, it is about following practical steps proven to work.
Most successful companies focus on making daily routines consistent, predictable, and efficient. However, these routines are obstacles for executing new ideas. Doing things the way they have always been done is in direct conflict with innovative efforts. Successful companies must have consistent, reliable operations, but if they want to create something new, then they have to come up with different processes.
The pressure for most companies to be operationally efficient makes it hard for them to embrace the risks of change. The significant degree of accountability involved makes it difficult to accept the risk of creative change. Successful companies typically have optimized "performance engine." These performance engines are composed of all the work streams and established ways of doing things consistently that are predictable, profitable, and optimal. These performance engines are necessary to maintain ongoing operations, but they are a barrier to change. Innovators need the resources of these performance engines, so they have to create change alongside the established ways of doing business.
“Each innovation initiative requires a team with a custom organizational model and a plan that is revised only through a rigorous learning process.”
Divide the Labor
Innovation projects require a dedicated team, a group of people committed to a single project. This dedicated team needs the support of the shared staff, people who can handle the routine tasks of a new project while maintaining the performance engine(s) they are responsible for. Creating this division of labor between the dedicated team and the shared staff is critical when starting up a new project. The shared staff must be responsible for maintaining existing operations, just as they always have. But they must also take on the extra task of supporting the dedicated team. The dedicated team requires free rein, sufficient time and resources, and a high level of flexibility.
Assemble the Dedicated Team
Assembling a dedicated team is not akin to creating a humbler and nimbler performance engine. This common trap of duplicating existing processes results in a team that is not ready to innovate. To stay out of the little performance engine trap, be aware of these important elements:
Bias for insiders — There's a good chance that a team comprised of “insiders” only will be afflicted with organizational memory, the tendency to do things the traditional way instead of creating change. Bringing in "outsiders" can minimize some of the impacts of organizational memory, but it is important to keep in mind that "insiders" can help create good relations between the dedicated team and the shared staff.
Roles and responsibilities — The dedicated team must perform differently than other teams. The way to differentiate the new team and avoid having them become just another “performance engine” is to change existing roles and relationships. Changing these work relationships could be as simple as creating new job descriptions.
Assessment criteria — New efforts and processes require new ways to measure effectiveness. Different performance standards must be created because the dedicated team can't be measured the same way as other performance engine teams are.
Conformance — Standard policies, typically designed to limit expenses and provide proven results, don't support innovation. The restrictions of standard systems that work so well for a performance engine can prevent a dedicated team from making progress. Dedicated teams require their own set of rules.
Manage the Partnership
The dedicated team and shared staff must form a productive relationship and learn how to work together in an unfamiliar environment. By anticipating conflicts and obstacles, the group's leaders can promote collaboration between the two groups. Leaders must monitor this new relationship and keep everyone focused on their responsibilities. Most of the issues between the two groups will fall into three categories:
Competition for scarce resources — The innovation team and the existing teams will be competing for the same resources, so it's important to keep everyone aligned with the same goal. Keeping this battle for resources from becoming a problem requires persuasion and positive feedback to keep things on track.
Divided attentions of the shared staff — The shared staff is pulling double duty. They have to support the dedicated team and maintain the existing operations running smoothly. It's important to understand that the pressures of maintaining the current systems can make it hard for the shared staff to handle their new responsibilities.
Disharmony in the partnership — Leaders have to keep their eye out for team members who may feel resentment towards the other team. When a team member feels that the other team is more highly valued or receives special treatment, then the partnership can begin to fall apart.
“The first rule of innovation is simple: Innovation and ongoing operations are always and inevitably in conflict.”
Run a disciplined experiment
Innovation requires disciplined experimentation and leaders who are willing to learn. The ability to experiment with ideas and turn predictions into positive outcomes calls for a particular type of learning. These leaders must be able to understand the difference between knowledge that benefits established processes and knowledge that helps the process of innovation. Innovators must learn to analyze and identify the disparity between predictions and results and adjust their efforts frequently.
Assumptions are a necessary part of innovating and naturally create some uncertainty. All innovation efforts should include a scorecard for measuring progress. Creating an effective scorecard requires an understanding of the predictions and assumptions that affect outcomes. By measuring progress consistently, it becomes possible to bridge the gap between assumptions and predictions for steady advancement.
“Trying something experimental is easy. Learning from the experiment is not.”
Break Down the Hypothesis
Numbers drive the performance engine, but causes-and-effects drive innovation efforts. The numbers that apply to a successful performance engine do not contribute much insight for an innovative team. A clear picture of how the causes-and-effects of a hypothesis relate is a much better metric for innovation teams than numbers. Innovative leaders should take these causes-and-effects and use them to focus conversations on finding out what works. By analyzing and testing each set of causes-and-effects, the innovation team can build better experiments and continue to progress. Not only do better experiments advance efforts, but they also help uncover critical unknowns, outcomes that could lead to problems if left unchecked.
“Most problems are not because people screwed up; they are because there is something happening that nobody anticipated.”
Seek the Truth
A disciplined experiment requires the ability to avoid biases that can affect the interpretation of results. An innovation leader who takes credit for success but faults the process for failure is guilty of “ego bias.” Emphasizing short-term successes instead of long-term results is known as “recency bias.” Perhaps the most dangerous bias is “overconfidence in predictions,” the tendency to blame failures on poor execution instead of faulty assumptions. All of these biases limit learning and create flawed conclusions.
Learning from experimentation and being willing to change the focus is hard for innovation leaders because they are accountable for results. cannot, it's important to focus accountability on actions and lessons learned. This type of responsibility requires more time and commitment from the innovation team leader. The team leader has to monitor progress more frequently than with other teams and be able to provide relevant feedback.
“The strong inclination to explain shortfalls as bad execution rather than bad predictions is both innovation’s most omnipresent enemy and its most dangerous one.”
Innovation efforts with dedicated teams are hard to execute because they are so different from the typical performance engines that keep a company running smoothly. As you execute on an innovation effort, be prepared to spend time maintaining the relationship between the dedicated team and the shared staff running smoothly. Beware the tendency to default back to company "norms" when making decisions. Remember, what's good for the performance engine is typically bad for the dedicated team focused on innovation. Keep the focus on execution rather than the prevailing attitudes towards innovation.