Unrelenting Innovation: A book review by Bob Morris

Unrelenting Innovation: How to Build a Culture for Market Dominance
Gerard J. Tellis
Jossey-Bass/A Wiley Imprint (2013)

How to avoid or overcome “the incumbent’s curse” to achieve market dominance

By nature, books about innovation should contribute something new and/or something better to our understanding of what innovation is and isn’t as well as how to develop a mindset and skills that will enable us to (yes) contribute something new and/or something better. Gerard Tellis makes such a contribution as he explains how to build and then sustain a culture for market dominance. As Vijay Govindarajan suggests in the Foreword, “I like the central argument in this book: success breeds complacency, lethargy, or arrogance – in short, a culture that embraces the status quo instead of the future abhors risk and protects current successful products.”

This is what Tellis characterizes as “the incumbent’s curse”: Becoming successful hampers continued innovation and hinders continued leadership. He identifies three defining traits: “First, incumbents fear cannibalizing their current successful products…Second, incumbents are risk averse…Third, incumbents focus too much on the present” and probably the past. Hence a paradox: To paraphrase Marshall Goldsmith, whatever got an organization to its current success (however defined) will not only be able to sustain that success; worse yet, it will almost certainly eliminate that success in weeks and months (probably not years) to come.

Simply stated, “unrelenting innovation” is constant effort to make something new and/or make something better.” Odd are that, more often than not, innovation will not be the result. The process “fails” only when it does not continue. Every so-called “failure” is in fact a precious learning opportunity. I agree with Tellis that a culture within which innovation thrives must have defining characteristics that include the three he identifies: a willingness to “cannibalize” incumbent products and/or services, embracing risk, and a focus on the future. Organizations that aspire to establish and nourish such a culture must (a) provide appropriate incentives (i.e. strong for successful innovation but weak penalties for anything less), (b) establish internal competitive markets, and (c) empower innovation “champions” who not only create but also develop (with others) whatever is new or better.

These are among the dozens of passages I found to be of greatest interest and value, also listed to suggest the range of subjects covered during the course of the book’s narrative:

o Why Incumbents Fail to Innovate Unrelentingly (Pages 3-17)
o Understanding Technological Evolution (33-37)
o The Reflection, Hot-Stove, and The Expectation Effects (63-69)
o Availability Bias (114-121)
o Incentives for Enterprise (143-155)
o Four Characteristics of Markets (181-192)
o Four Characteristics of “Champions” (208-210)
o Steps in Empowering Champions (235-236)
o Micro Theories (238-250)
o Macro Theories (250-260)

With rare exception, the best business books are driven by research and that is certainly true of this one. Check out the list of major studies Tellis co0nsulted on Pages 17-19, the additional details in Chapter 8, his Notes (263-288), and his Bibliography (289-306. Exemplar innovation cultures include IBM, Samsung, P&G, and General Motors. However different they may be in most respects, all of them demonstrate highly developed communication, cooperation, and most important of all, collaboration. This book is also a major collaborative effort, as Tellis gratefully acknowledges on Page 307.

No brief commentary such as mine can possibly do full justice to the scope of material that Gerald Tellis provides in this volume but I hope that I have at least suggested why I think so highly of it. Also, I hope that those who read this commentary will be better prepared to determine whether or not they wish to read the book and, in that event, will have at least some idea of how to build and then nourish a culture for market dominance, an achievement that would be of substantial benefit to his readers’ professional development as well as to the success of their organization.

Those who share my high regard for this volume are urged to check out as well as Josh Lerner’s The Architecture of Innovation: The Economics of Creative Organizations as well as Reverse Innovation: Create Far From Home, Win Everywhere co-authored by Vijay Govindarajan and Chris Trimble with Indra K. Nooyi and The Other Side of Innovation: Solving the Execution Challenge co-authored by Govindarajan and Trimble; also, Steven Johnson’s Where Good Ideas Come From: The Natural History of Innovation and two co-authored by Tom Kelley and Jonathan Littman: The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm and The Ten Faces of Innovation: IDEO’s Strategies for Defeating the Devil’s Advocate and Driving Creativity Throughout Your Organization.

Confronting the Pain of Innovation

Here is an article written by Michael Schrage and published in Harvard Business Review. To read the complete article, check out all the other resources, sign in or sign up for HBR email alerts, and obtain discount information, please click here.

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Working “out of your comfort zone” is the euphemism; the organizational reality is “working through pain.” Innovation hurts.

Every organization I’ve observed that’s serious about being innovative is filled with people in genuine pain — not just stress or anxiety or deadline pressure, and certainly not discomfort. Pain. This can be the physical strain of consecutive all-nighters to test every meaningful configuration of a website before it goes live, to the emotional pain of subordinating your vision of the innovation to the vicissitudes of customer taste. Ideally, innovators go through pain so their customers and clients won’t have to

The International Association for the Study of Pain Management defines pain as “an unpleasant sensory and emotional experience…” That fairly captures a dominant innovation sensation at world-class innovators. The innovation cultures of Google, Samsung or Steve Jobs’ Apple or Andy Grove’s Intel, for example, make painfully clear that successful innovators have high thresholds for pain. Unpleasant sensory and emotional experiences abound. Yes, there’s also fun and exhilaration. But innovation leadership is less about clichés celebrating creativity, compelling visions or getting the best out of people than successfully helping innovators beat what hurts. Overcoming resistance is not the same as pushing through pain.

That shouldn’t surprise. Confronting pain is integral to most other elite endeavors. World-class athletes and dancers explicitly train for pain even beyond the point of injury. Special Forces operators such as the Navy SEALs are expected to “Embrace the Suck.” Arguably one of the great flaws of formal business and technical education is that inculcating disciplined self-awareness around pain management is neither part of the culture nor the curriculum. But elite innovators, not unlike their athletic counterparts, understand and accept that they will likely hurt themselves and/or their colleagues on the path to innovation excellence. As Joseph Schumpeter of “creative destruction” fame notably observed, “successful innovation requires an act of will, not of intellect.

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To read the complete article, please click here.

Michael Schrage, a research fellow at MIT Sloan School’s Center for Digital Business, is the author of Serious Play and the forthcoming HBR Single Who Do You Want Your Customers to Become? To check out his other blog posts, please click here.

The Power of Design

Here is an abbreviated version of an article written by the staff of Fast Company magazine that appeared in its June 2005 issue. It anticipates the subsequent publication of so many books (e.g. Roger Martin’s The Design of Business, Tim Brown’s Change by Design, and Thomas Lockwood’s Design Thinking) and an even greater number of articles on a subject that has yet to be fully explored.

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Look around you: The evidence of design’s power is everywhere. Customers expect, even demand, more from the design of everything they buy. Companies as varied as Adobe, Nokia, Toyota, and Virgin understand that great design is a prerequisite for turning consumers into customers. Whether it’s software or sippy cups, when something works right, looks right, and feels right, it sparks an emotional connection. People come to love it and loyalty soon follows, along with the three Rs: repurchase, reuse, and recommendations — benefits that fall directly to the bottom line. Such is the power of design.

Design is shaping the way we communicate and educate; it’s a catalyst for reinventing cities and reimagining nonprofits. Look at how companies such as Whirlpool are leveraging design as a competitive weapon — and stealing market share from formidable foes. Or how companies like Procter & Gamble and Samsung are using design thinking to recast their strategic thinking. As Ideo CEO Tim Brown puts it, “Where you innovate, how you innovate, and what you innovate are design problems. When you bring design thinking into that strategic discussion, you introduce a powerful tool to the purpose of the entire endeavor, which is to grow.”

Even a quick look at the design world shows that many of today’s designers defy easy categorization. They might have expertise in architecture, the graphic arts, or industrial design, but increasingly their work takes in many other fields: animation, anthropology, biology — just follow the alphabet. That’s why we devised five categories that encompass all of the design world and reflect this need to break through old boundaries.

Peak Performers have innovated over the long haul; they are design’s leaders and influential thinkers. Impact Players are those who, over the past year or so, have demonstrated design’s capacity to shape strategy.Game Changers are the agitators who are transforming the way we think about design. Collaborators are allies from outside the design world who work with designers to reinvent their organizations and even their cities. Next Generation billboards the rising stars who are creating design’s future.

If you are leading a team or company, mapping out a marketing strategy, innovating part of a supply chain, or streamlining a manufacturing operation — that is, if you are a decision maker facing a problem — think about this question: What are you and your organization doing to fully seize on design’s power and promise?

William J. Holstein on the five “gates to innovation” at Corning Inc.

Here is an excerpt from article written by William J. Holstein for strategy + business magazine. To read the complete article, check out other articles and resources, and/or sign up for a subscription to strategy+business, please visit http://www.strategy-business.com/article/00021.

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Corning Inc.’s process for developing inventive products actually works, a claim that few companies can make.

By 2007, some cell phone makers were at their wit’s end about the screens on their devices. The plastic screens broke too easily when the handsets were dropped, and keys and other objects left deep scratches. Sensing a business opportunity, a small team in the specialty materials division of Corning Inc. dug out of the company’s archives the formula for a superstrong but flexible glass — something called Chemcor, which Corning had unsuccessfully attempted to introduce in 1962 for automobile windshields — and sought to test it for mobile phones.

But just producing an experimental batch was slated to cost as much as US$300,000, enough for the division to miss its budget target for the year. Primarily for this reason, the team’s boss, Senior Vice President and General Manager James Steiner, was opposed to the idea. But he concedes he had another reason as well: “I didn’t really get the concept of using glass on cell phones,” Steiner recalls.

However, team leader Mark Matthews was persistent — and his hunches had been right before. In 2003, Matthews had led the charge at Corning to sell a specialized glass product to Texas Instruments (TI) for its digital light processing projectors, considered a highly chancy venture at the time because sales of high-tech items had slowed after the dot-com bust. But TI’s product proved to be a hit, and Matthews’ risk taking made his boss, Steiner, look savvy.

Trusting Matthews’ instincts once again, Steiner finally relented and gave the go-ahead for the cell phone glass test run at a company facility in Danville, Va. Matthews “took all the risk, knowing I wasn’t thrilled about it,” Steiner says.

Today, after only a couple of years on the market, Corning’s cell phone glass — now known as Gorilla — is a huge success. Samsung, I.G, and Motorola have placed it in three dozen handheld models, and Dell has chosen it for some of its laptops. Gorilla is selling at an annual rate of $100 million and is projected to become a $500 million business by 2015. That will make it a significant revenue stream for Corning, whose sales in 2009 totaled $5.4 billion.

In Record Time

Like other top companies, Corning has a rigorous system for managing ideas through a stage-gate process in which they are embryonic in Stage 1 and commercially marketed in Stage 5. But in Corning’s case, the system actually produces consistent results; few organizations could move a product from concept to commercial success in the short time that it took Gorilla to reach customers. “If I have 100 students in a class and I ask them, ‘How many of you have a stage-gate process in your company?’ about 95 raise their hands,” says Rebecca M. Henderson, a Harvard Business School professor who has studied innovation and knows Corning well. “But if I ask, ‘How many of you have a stage-gate process that really works?’ only about 15 raise their hands. For a company of its size and complexity, Corning is exceptional.”

What Corning appears to do better than most is insist that innovation be managed not by individual inventors or small teams in silos, begging for scraps of support from the parent corporation, but by multidisciplinary groups throughout the organization. Overseeing this process and making sure that Corning departments cooperate in product development efforts sanctioned by management are two bodies: the Corporate Technology Council, led by Executive Vice President and Chief Technology Officer Joseph Miller, and the Growth and Strategy Council, co-chaired by Corning Chairman and CEO Wendell Weeks and President and Chief Operating Officer Peter Volanakis. The former unit concentrates on early-stage ideas, and the latter takes over when an idea is nearing commercialization.

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To read the complete article, check out other articles and resources, and/or sign up for a free subscription to strategy + business, please visit http://www.strategy-business.com/article/00021.

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William J. Holstein is a veteran business journalist and author based in New York. For more of his work, visit www.williamholstein.com.

Roberto Verganti on why “one size does not fit all” in innovation

Here is an excerpt from article written by Roberto Verganti for the Harvard Business blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

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One Size Does Not Fit All in Innovation (and Never Will)

I’m worried that the discussion about innovation is losing its vitality and that a handful of beliefs are becoming dangerous dogmas. Two that worry me the most are:

Innovation and design should be user-centered — i.e., users are the first and foremost source of insights. Innovation processes should, therefore, start from observation of mainstream or extreme users.

The crowd outperforms the elite — i.e., thanks to the web, firms may now leverage the power of communities of scientists, creatives, and users to develop innovations. Many ideas from large communities are better than a good idea from an outstanding innovation team.

In a recent blog, I questioned the universal effectiveness of user-centered processes. My point was that user-centered innovation is ineffective to deal with environmental sustainability. I was surprised to notice that instead of focusing on the specific subject at hand (sustainability), many of the people who participated in the discussion defended user-centricity as an incontrovertible principle.

I fear the same narrow-mindedness is dominating the debate about the value of crowdsourcing vs. elite thinkers. If you try to argue that in some situations an elite thinker is better than the crowd, you’ll be quickly derided.

Is the discussion and the practice of innovation at risk of becoming static and mono-tone? Is the community in search of a Holy Grail of innovation — i.e., the one perfect model that works in any situation and forever? Given that innovation is about differentiation and evolution, this would be dangerous for corporations.

The reality is:

One size does not fit all in innovation. Different innovation problems require different approaches. There is no method that is always good. In a 2008 article in the Harvard Business Review, Gary Pisano and I demonstrated that crowdsourcing is not always the best approach to collaboration. What is the best approach depends on several factors, including the distribution of talent among scientists and the cost of testing a proposed solution.

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To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

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Roberto Verganti is the author of Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean and has pioneered research on the intersection of strategy, design and technology management. A professor of the management of innovation at Politecnico di Milano, Verganti also is a member of the board of the European Institute for Advanced Studies in Management. He has served as an executive advisor, coach, and educator at a variety of firms, including Ferrari, Ducati, Whirlpool, Xerox, Samsung, Hewlett-Packard, Barilla, Nestlè, STMicroelectronics, and Intuit.

Roberto Verganti on having ideas versus having a vision

Here is an article written by Roberto Verganti for the Harvard Business blog. (It looks much longer than it reads. Also, frankly, I did not know what to delete.) To check out other articles and resources and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

Having Ideas Versus Having a Vision

In the past decade, firms have been praised for ideas. Experts have celebrated the power of brainstorming and idea-generation techniques. Eureka light bulbs have populated the covers of many books. Businessmen have been asked to improve their creative attitudes. And 2009 was named the “Year of Creativity and Innovation” by the European Union.

One consequence of a decade focused on idea generation is ideas are now more easily accessible, which has also made idea generation less of a differentiator in competition than it has traditionally been. When more than 30% of the population belongs to the creative class, as Richard Florida suggested in his 2003 book The Rise of the Creative Class, ideas are not in short supply. And with the diffusion of open innovation processes, ideas competitions, and the like, executives are increasingly exposed to a wealth of ideas.

What is in short supply, I’m afraid, are visionary thinkers who will be capable of making sense of this abundance of stimuli — visionaries who will build the arenas to unleash the power of ideas and transform them into actions.

Could the next decade be the decade of vision building? If so, we will witness a significant shift in the way we think about innovation, creativity, and leadership. Popular studies of creativity have suggested that the fast generation of numerous ideas (the more, the better); in contrast, visionary leadership requires a relentless exploration of one direction (the deeper and more robust, the better). Idea generation values a neophyte perspective; vision building is based on research and deep understanding. To generate fresh ideas we have been told to think outside of the box and then jump back in; vision building destroys the box and builds a new one. It does not play with the existing paradigms; it changes them. Studies of idea generation have lingered on variety and divergence, but vision building is based on convergence, on bringing others onboard. Ideas are culturally neutral as long as they help solve problems; visions are intrinsically ideological and biased towards a clear aspiration of how the world should be: They strongly reflect the personal culture of the thinker.

I’m certainly not questioning the essential value of ideas. They will still ignite the innovation process. Tossing around a large number of ideas will still be important, especially for incremental improvements. It is not one or the other. It is a shift in the most rare and precious asset that will drive competitive advantage: visions. It’s time for thought leaders to move beyond post-its and embrace a more advanced form of creativity. A radical form of think-action that somewhat resembles that of researchers and entrepreneurs fighting to implement their vision.

What do you think? Is it time to call for a new form of creativity? If last decade was the decade of idea generation, will the new one be the decade of vision building?

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To check out other articles and resources and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

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Roberto Verganti is the author of Design-Driven Innovation: Changing the Rules of Competition by Radically Innovating what Things Mean and has pioneered research on the intersection of strategy, design and technology management. A professor of the management of innovation at Politecnico di Milano, Verganti also is a member of the board of the European Institute for Advanced Studies in Management. He has served as an executive advisor, coach, and educator at a variety of firms, including Ferrari, Ducati, Whirlpool, Xerox, Samsung, Hewlett-Packard, Barilla, Nestlè, STMicroelectronics, and Intuit.