Innovation Management

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Innovation Management
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Make sure youve fixed (or are at least aware
of)the strategic problem
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What can be done?

• Lead
• Build the ambidextrous senior team
  communicate the strategy, allocate resources
• Structure
• Explore transitional and intermediate forms
• Incent
• Explain just whats in this for me?
• Build
• Lay the foundations for a new culture, new
  expectations

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What can be done?

• Lead
• Develop a clear strategy
• Generate energy
• Build an ambidextrous senior team
• Make decisions

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Develop a clear strategy
How will we Create value?
How will we Capture value?
How will we Deliver value?
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And allocate resources to it!
How will we Create value?
How will we Deliver value?
How will we Capture value?
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Generate Energy

• Position the discontinuity as an urgent threat
• Flirt with bankruptcy
• Make vivid the idea that the firm might flirt
  with bankruptcy
• Position the discontinuity as an opportunity
• Generate some small successes build enthusiasm
  and infect the organization
• Leap boldly into the future

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• An established company which, in an age
  demanding innovation, is not able to innovate, is
  doomed to decline and extinction.
• -- Peter Drucker

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Build ambidextrous organizations
Differentiation vs. integration
General Manager
Existing business
Emerging business
Mfg
Sales
RD
Mfg
Sales
RD
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The scope of the ambidextrous organization
Alignment of Exploitative Business Exploratory Business
Strategic intent
Critical tasks
Competencies
Structure
Controls, rewards
Culture
Leadership role
Ambidextrous Leadership
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Build an Ambidextrous Senior Team

• Ambidextrous senior teams must manage
• both more mature, operationally focused
  businesses
• and higher growth, emerging businesses
• High performing senior teams show
• High conflict, high respect decision making
  capabilities
• High levels of trust and truth telling
• The ability to manage divergent incentive systems
  and career paths
• Coupled with processes that support the divergent
  management of quite different business units
• E.g. Resource allocation processes that allow for
  different time horizons, milestones, rates of
  return

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• When you innovate, you've got to be prepared for
  everyone telling you you're nuts.
• --Larry Ellison

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• If at first the idea is not absurd, then there
  is no hope for it.
• --Albert Einstein

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What can be done?

• Lead
• Structure
• Implement appropriately
• Choose the right people
• Manage linkages

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Balance entrepreneurial energy and coordination
Successful disruptive innovation unites
entrepreneurial insight with effective
coordination
Entrepreneurial Energy
Startups
B as U
Control Coordination
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Choose a structure that fits the firms strategic
positioning and skills
Entrepreneurial Energy
Acquire
Joint venture/ alliance
Internal venture
Build inside existing unit
Control Coordination
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What can be done?

• Lead
• Structure
• Incent
• Explain just whats in this for me?
• Manage the balance between
• Individual outcomes and team/firm outcomes
• Objective and subjective measures

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The incentive problem is an inherently difficult
one
Entrepreneurial Drive, Freedom from the old
ways
Startups
B as U
Control Coordination
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Using high powered incentives may reduce
coordination
Entrepreneurial Drive, Freedom from the old
ways
?
Acquire
Joint venture/ alliance
Internal venture
Build inside existing unit
Build inside existing units
Control Coordination
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• Large corporations welcome innovation and
  individualism in the same way the dinosaurs
  welcomed large meteors.
• --Dilbert

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What can be done?

• Lead
• Structure
• Incent
• Transform the culture
• Build on core values
• Practice thinking in new ways
• Manage from the heart

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Case Discussion IBM

• What was the situation facing Lou Gerstner as he
  came in as IBMs new CEO?
• What did Gerstner do to deal with IBMs problems?
  Do you think Gerstner has really turned around
  IBM?