Better Innovation Architecting
Here is an excerpt from an article written by Scott Anthony for the Harvard Business Review blog. To read the complete article, check out the wealth of free resources, and sign up for a subscription to HBR email alerts, please click here.
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One tried-and-true innovation trick is to look for analogies.
When you feel like you’re working on an intractable problem, find someone who has already solved the problem, but in a different context. Apply their learning to your situation, and see where it takes you.
Let’s practice by using this approach on the act of innovation itself. What do innovators do? At a basic level, they transform a blank piece of paper into a successful growth business. Can you think of anyone else who faces the same challenge? Architects would seem to fit the bill.
Think about how architects approach the blank-sheet-of-paper challenge. They don’t just start by building a business. Instead they sketch or create physical or computer models to bring their ideas to life. The design community calls this “rapid prototyping.”
Consider an example in Peter Sims’ excellent book Little Bets, describing how the famous architect Frank Gehry comes up with designs for new buildings. Sims writes that Gehry starts the design process by “literally cutting up, crumpling, and folding pieces of paper or corrugated cardboard with colleagues.”
“The initial prototype that emerges over an hour or so barely looks like a building,” Sims writes. “But it’s merely a starting point. They have begun and can work quickly and inexpensively to explore dozens of initial possibilities. Staring at it, Gehry smiles and says, ‘That is so stupid looking, it’s great.’”
Of course, truly great architects don’t just create compelling prototypes, or we’d consider Dr. Seuss one of the world’s great architects.
The mark of a great architect is a building that looks great when it is actually built. Gehry wouldn’t be considered such a legend unless he designed notable buildings like the Guggenheim Museum in Bilbao and the Walt Disney Concert Hall in downtown Los Angeles.
The same is true of innovation. I’ve seen many a would-be innovator work endlessly to polish or perfect their business plan. But the plan isn’t the thing. The business is the thing. Clever plans that can’t be commercialized are nothing more than dead trees.
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To read the complete article, please click here.
Scott Anthony is the Managing Director of Innosight Ventures. Scott has written three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times.
The Silver Lining: A book review by Bob Morris
The Silver Lining: An Innovation Playbook for Uncertain Times
Scott D. Anthony
Harvard Business Press (2009)
According to Scott Anthony, the “Great Disruption” refers to the current time when tumultuous change is “ripping through markets at unprecedented pace. Competitive advantage that took decades to build disappears seemingly overnight. While output might shrink and unemployment is sure to rise, companies that master these forces still have a chance to thrive; those that don’t are sure to struggle.” As Richard Florida suggests in The Great Reset, there have been three periods (in the 1870s, the 1930s, and now) when a tumultuous economy destroyed many companies but also created abundant opportunities for others. The key to survival during a process that bears striking resemblance to Charles Darwin’s concept of natural selection was and continues to be the ability to adapt and the methodology for adaptation is innovation.
Anthony observes that “every crisis presents opportunities” and cites several examples of companies that took full advantage of theirs: “3M, General Electric, Microsoft, and Walt Disney were formed in a year that featured an economic downturn.” Those that were founded during a recession include Black & Decker, ConAgra, Dow Chemical, Electronic Arts, Eli Lilly, Enterprise Rent-A-Car, Harley-Davidson, McKinsey & Company, Texas Instruments, and Whole Foods Market.
So what? A great deal. “The biggest silver lining for innovation is the scarcity that is sure to result from the current economic climate is actually a good thing for innovation.” Why? “Abundance is actually the root cause of many corporate struggles with innovation. Too much time or money allows companies to continue to follow fatally flawed strategies for too long or create overly complicated solutions that actually overshoot customer needs.” I wholly agree with Anthony that constant innovation need not be expensive and probably is most productive when initiated under limitations of hours and dollars. That’s why I also agree with him “there’s never been a better time for innovators to face tighter purse strings.” While the bears are ensconced in their caves awaiting better economic conditions, the bulls create (something new) and innovate (make something better). Finally, I agree with Anthony that “guidance about innovating in uncertain times is actually guidance for innovating in any economic climate.” During good times and bad, the most important question to ask remains the same: “Is this the right business decision to make?”
I commend Anthony’s relentless focus on explaining how to
• Identify the “different approach to take when prudently “pruning” by obtaining the answers to five questions (Pages 30-31)
• Recognize the four business unit portfolio “traps” and know to avoid or escape from them (Pages 34-35)
• Conduct four specific analyses that can help to determine the degree to which an existing business has unexploited or under-developed potential (Pages 38-39)
• Learn from three important lessons for cost cutting as revealed by the basic pattern of disruptive innovation (Page 52)
• Follow the three-step process to drive “intelligent cost cutting” (Pages 52-63)
• Follow the three-step process that innovators have used to drive disruption to create “spectacular success” (Pages 75-82)
Note: Table 4-1 (“Identifying constraints on consumption”) on Page 76, all by itself, is worth much more than the cost of the book. The same is true of Tool 4-1 on Pages 88-89
• Recognize and avoid the four common strategic traps that may appear (Pages 96-98)
Here’s the challenge that all business leaders face: Invention or re-invention and transformation. “Perpetual transformation [i.e. constant adaptation] is the only way to thrive during the Great Disruption…Unfortunately, the brutal reality is that most efforts at transformation fail.” There are exceptions (e.g. Apple, IBM, Procter & Gamble, and Nokia. “More often than not, companies fail when they try to go beyond their core business. But in the Great Disruption, companies don’t really have a choice. Investing in transformational efforts in a brutal market appears difficult, but the alternative isn’t stagnation, it is extinction.”
As the book’s narrative clearly indicates, Anthony is a relentless empiricist and a world-class pragmatist who is determined to understand and then share with others what works, what doesn’t, and why when companies attempt to survive – if not thrive — during the current Great Disruption. Innovation offers a “silver lining,” albeit a slim one more often than not, but an opportunity nonetheless. And Anthony offers a “tool kit” (enclosed within a bound volume) for those who refuse to accept the current economic situation as “the beginning of the end.” He also provides a “kick start to transformation” but, obviously, what happens next is up to his reader. Anthony concludes, “The choice is yours.”
Scott Anthony offers “An Innovation Lesson from Dr. Seuss”
Here is an an article written by Scott Anthony for the Harvard Business Review blog. To check out other articles and resources and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.
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Dartmouth College graduates are generally big supporters of our most famous alumni — Theodor Geisel (Class of 1925) known better as Dr. Seuss. On Sunday evening, my son pleasantly surprised me by picking one of my favorite Dr. Seuss stories, The Sneetches [click here] from the shelf for his bed time reading. Reading the story helped me visualize why a company I recently visited was approaching innovation the wrong way.
For those of you who don’t remember the story, the sneetches (yellow characters that vaguely resemble ostriches) start the book as a divided crowd. One group of sneetches has stars on their stomachs. They consider themselves superior to the sneetches without “stars upon thars.” Then Sylvester McMonkey McBean arrives with a machine that can put a star on a sneetch’s chest. Much to the star-bellied sneetches dismay, the non-starred sneetches go through the procedure. Then, of course, the star isn’t special anymore, so McBean unveils a star removal machine. Hilarity ensues.
By the end of the book, the sneetches have all lost their money but can no longer remember who had a star and who didn’t. The story carries obvious lessons about the dangers of conformity, and upon basing social status on silly, superficial things.
But what the heck does this have to do with innovation?
First, when you are setting up innovation groups, you have to avoid simply putting “stars upon thars.” Sometimes members of these groups begin preening, thinking they are the chosen ones within the organization. As Vijay Govindarajan and Chris Trimble point out their new book The Other Side of Innovation [click here], the resentment that typically follows is dangerous because innovation success almost always requires support from the base business (who of course provides the money to make innovation happen).
The other problem relates to how companies structure for innovation. The company I was with was working on a highly disruptive business model. I asked how they planned to commercialize their idea.
“We’ve read the literature, so we know if we run this from inside the mainstream organization, we’ll screw it up,” one leader told me. “So, we’re going to create an autonomous group to commercialize the innovation.”
So far, so good.
“Who is going to staff this autonomous group?” I asked. “And how will you measure progress?”
They told me that the team would all come from the core business. And the metrics, not surprisingly, would be the kinds of metrics that would typically govern the core business.
All they had done was put stars on some Sneetches’ bellies. Sure, superficially it might look different, but the reality was the group would work, and think, like the base business, which wouldn’t help foster disruptive innovation.
Autonomy isn’t just about making a team separate, physically or organizationally. A truly autonomous team has the ability to hire the right people for the job, whether they are in the organization or not. And they have the freedom to work with leadership to craft different, appropriate metrics for their initiative.
If you forget this imperative, I suggest you reread The Sneetches.
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Scott Anthony is the Managing Director of Innosight Ventures. Scott has written three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times, published by Harvard University Press (2009). To check it out, click here.
Scott Anthony on “when failure is intolerable “
Here is an excerpt from an article written by Scott Anthony for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.
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I read with interest David Simms’ recent post about the power of positive failure [click here]. I of course agree with the general perspective — given the probabilistic nature of innovation, failure isn’t always a bad thing, and all things being equal, you’d support someone who has tried, failed, and learned over someone who has never tried.
The interesting thing to me is that this isn’t a particularly new perspective. Failure has long been a badge of honor in Silicon Valley; thought leaders like Henry Mintzberg, Rita McGrath, and Tim Brown note how failure is an essential part of successful innovation. Yet, in most organizations a fear of failure persists. [click here]. Too frequently people reward (or punish) outcomes when they should reward (or punish) behaviors. I suspect another part of the problem is that we just don’t have a good way to categorize “failure.”
In reality, there are three types of failures that bother me:
[Here’s one.]
• When someone could have easily discovered that they were doing the wrong thing. I see this happen in corporations all too frequently, particularly those that are trying to create new revenue streams or use unique go-to-market approaches. The right phone call or the right research could have quickly highlighted a flaw in a plan. But an internal bias led to action without investigation. I remember a couple of years ago counseling a team that had built a seemingly solid plan to sell to academic universities. My guidance was pretty simple — pick up the phone and call some people who had sold to those universities. That simple activity highlighted how the team had a flawed assumption about the speed of the sales cycle. Had the team executed without that simple research it would be a punishable mistake.
On the other hand, the tolerable mistake is learning in a resource-efficient manner where what my colleagues term “deal killing” assumption is false. In fact, I wonder how different things would be if leaders asked innovators to frame negative hypotheses. In other words, imagine setting a metric such as: “We will shut this project down in 90 days because we will have sold to fewer than 100 customers.”
If it turns out you were “right,” then you celebrate effective learning. If you are positively surprised, you celebrate as well.
I’m not a scientist by training, but it seems like this approach of trying to disprove a “null hypothesis” might be a way to change the tenor of the debate by making what we might have historically viewed as failure a good result. What do you think?
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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 Review’s Daily Alerts, please click here.
Scott Anthony is the Managing Director of Innosight Ventures. Scott has written three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times
Scott Anthony on grooming leaders to handle ambiguity
Here is an excerpt from an article written by Scott Anthony for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please click here.* * *
How would you identify the up-and-coming leaders in a company about which you knew nothing? You’d likely start by pinpointing the executives who control the most employees or revenues. You might give bonus points to relatively young mangers. If you had consulting DNA you might create a sophisticated ratio combining the span of control and age to identify the leader in the horse race to be the next big boss.
You are working off a simple hypothesis that’s right in almost every company — that size matters. Power flows from financial contributions and legions of employees. You groom leaders by giving them progressively larger, more challenging opportunities.
This approach seems logical. The bigger the business, the more it matters to a company’s near-term performance. And certainly, larger businesses tend to be more complex. Tomorrow’s leaders surely need to be able to deal with complexity!
But I wonder if companies might be approaching leadership development the wrong way. It’s pretty clear that tomorrow’s leaders are going to face the “new normal” of constant change. It is no longer enough to be an operator that can master today’s complexity. You have to be prepared to deal with tomorrow’s complexity, ” [click here], sudden shifts in the basis of competition in your industry, competitors springing up around the globe, and more.
I’ve never run a multi-billion dollar company, but I’m willing to bet the difference in complexity between managing $1 billion and $10 billion in revenues, or 1,000 versus 10,000 employees isn’t that great. In other words, giving up-and-comers more responsibility helps them to refine skills they already have, when what they need to do is to develop the capability to flexibly respond to unanticipated challenges.
A related challenge is that size-matters-grooming companies can find it hard to convince talented managers to work on new growth initiatives. After all, those initiatives typically start small, both in terms of headcount and revenue. Managers with their eye on their next assignment naturally want to work on projects that will “look good” on their internal resume.
Perhaps it is time to rethink this approach. Instead of giving up-and-comers larger assignments, consider intentionally giving them smaller, more ambiguous ones. Have them crack into a new geographic market. Ask them to lead the development of a completely new business model. Force them to think creatively about how they will access or assemble the resources to solve the challenge.
Facing highly ambiguous challenges will help managers develop a set of tools that prepare them for the uncertainties they will increasingly encounter as they ascend up the corporate ladder.
Shifting from size-matters to ambiguity-matters development requires rethinking other key assumptions. Most companies, for example, look to what a manager has achieved to assess their performance. But in ambiguous circumstances with uncertain outcomes, you need to look at how a manager has acted. Sometimes you can do everything right and forces beyond your control lead to “failure.” I’ll write more about this topic in a future post.
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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 Review’s Daily Alerts, please click here.
Scott Anthony is the Managing Director of Innosight Ventures. Scott has written three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times.
Scott Anthony on “Three Critical Innovation Lessons from Apple”
Here is an excerpt from article written by Scott Anthony for the Harvard Business Review blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Review’s Daily Alerts, please visit dailyalert@email.harvardbusiness.org.* * *
Over the past decade, Apple has launched five legitimately game-changing innovations:
• The iPod. The elegant MP3 player that started Apple’s decade of disruption.
• iTunes. Beautiful software with a powerful business model that showed that people would in fact pay for music if the price was right and the interface was simple enough.
• The iPhone. Dubbed the “Jesus Phone” by supporters, a smartphone that three years later still hasn’t been matched by rivals.
• The AppExchange. Sure, no one needs 98 percent of the apps that Apple offers, but wow, what a selection.
• The Apple Store. The quietest part of Apple’s revolution, today close to $2 billion worth of goods move through Apple revolutionary stores.
Many expect the iPad to be Apple’s sixth big success. It’s still too early to tell (and, as noted before, I’m waiting for the twist), but watching my four- and two-year old children play around with our iPad leads me to believe the device has only scratched the surface of its disruptive potential.
That’s not to say the next decade will be as great for Apple as the past decade. It now has to think hard about how to manage conflicts that will emerge at the intersections of its businesses. The company will inevitably find it hard to maintain its growth rate as revenues approach $100 billion.
Looking back, my mistake in dismissing Matt was pretty simple. I didn’t count on the impact of items three through five on the list above. It’s a natural enough mistake. The number of companies that have organically created three distinct multi-billion dollar new businesses in a decade is pretty short.
And if Apple had indeed stopped at the iPod, my advice to Matt would have appeared smarter. After all, iPod sales have slowed over the past few years as that market has approached saturation. But Apple’s brilliance has been to relentlessly push the pace of innovation.
Reflecting on Apple’s decade of disruption highlights three critical lessons:
1. Don’t just focus on building beautiful products. Build beautiful business models, new ways to create, deliver, and capture value. The iPod and iPhone would not have had nearly as much impact if they hadn’t been matched with iTunes and the AppExchange respectively.
2. Think in terms of platforms and pipelines. Competitors that chase Apple’s latest release find themselves behind when six months later Apple introduces its latest and greatest offering.
3. Take a portfolio approach. While Apple has been on a phenomenal run, not everything it has introduced has been a home run. For example, Apple TV hasn’t had the “revolutionary” impact that Jobs predicted upon its launch in 2007.
Many companies I’ve spoken to dismiss the learning from Apple’s success. “Apple has Steve Jobs,” they’ll note. “We don’t.”
Of course, Jobs has been a central player in Apple’s success. It’s indeed unlikely that Apple could have been as successful without such a visionary, charismatic leader. But my own view is that the “black box” of innovation has cracked open, making innovation success more widely available.
Innovators around the world — whether they are intraprenreurs working for large companies or entrepreneurs set out to create the next great business — can meaningfully increase their odds of success by drawing on the increasingly deep pool of academic research and case examples. Whether they wear mock black turtlenecks is up to them.
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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 Review’s Daily Alerts, please visit dailyalert@email.harvardbusiness.org.
Scott Anthony is the Managing Director of Innosight Ventures. He has written three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times.
Scott Anthony on the key to spotting disruption before it happens
Here is an excerpt from article written by Scott Anthony for the Harvard Business Review 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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The April 15 issue of The Economist published a simple chart that gave me chills. Look at it for a minute. What looks scary to you?
http://www.economist.com/business finance/displaystory.cfm?story_id=15911952
The chart displayed the number of pieces of mail sent by year over the last decade. When you look at the chart, the first thing you probably noticed was the precipitous decline in mail volume over the past few years. Indeed, mail volume has sagged 17 percent since 2006. Even though the postal service has furiously cut staff over that time period, it’s still pleading with regulators to allow it to consider additional strategic responses to address the disruption clearly affecting its business.
That’s not what scared me though. I found the years from 2000 to 2006 to be particularly frightening, when nothing much was happening in mail volume.
How could a relatively flat line be scary?
It just looked so eerily familiar. Go back and look at what happened to CD sales from 1996 to 2001. Or check out newspaper company revenues from 1996 to 2005. Or Kodak’s film sales during the 1990s. Or Blockbuster’s revenues in the early part of the 2000s. Or Digital Equipment Corporation’s revenues in the 1980s. And on and on and on.
In the early days of transformation, market leaders tend not to feel deep pain. The transformation takes root away from the mainstream, or in a seemingly non-connected market. It’s not yet good enough for mainstream markets. Or, the overall increase in consumption acts as a “rising tide” that lifts the boats in the mainstream market. This makes it easy for executives to say, “I get what you are talking about. But my business is healthy! It’s all overblown.”
It’s only after the not-good-enough transformation gets better that a “Big Switch” begins. And when that magic tipping point hits, the switch accelerates rapidly.
The lesson for executives is that it’s important to look beyond revenue or basic market share data to determine whether or not a would-be disruption is a legitimate threat. If the U.S. Postal Service had measured its market share of “pieces of communication” (which, it very well might have) it would have noticed sharp share declines even as its revenue was increasing. Similarly, while Digital Equipment Corp. might have felt great that its revenues went up from $3 billion to $11 billion during the 1980s, that growth paled in comparison to the explosive growth in the personal computer market.
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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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Scott Anthony is the Managing Director of Innosight Ventures. He has written three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times.
Scott Anthony on how to kill innovation
Here is an article written by Scott Anthony for the Harvard Business blog. (It looks much longer than it reads. Also, frankly, I could not decide 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.
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I had an epiphany recently. The setting: a multi-billion dollar global giant. The topic of discussion: innovation. My epiphany: A simple two-word phrase that can hamstring innovation.
“What about.…”
I was helping a cross-functional group review a few ideas to create new growth businesses. Like many early-stage propositions, the ideas blended intriguing potential with high degrees of uncertainty.
About 15 minutes into the review, the questions began to come in.
What about the competitive landscape? Can we model the impact of someone entering the space early?
What about the market size? Are we sure these numbers are right?” another wondered.
What about the regulatory regime. Are these timelines really realistic?
They were important questions, and robust answers would help bring each opportunity into sharper focus. And the group’s intentions were good — figure out which opportunity was the most attractive so that the company could direct its resources appropriately.
The problem, though, is what follows “What about…” questions. The next step from almost any discussion like this one is to conduct further research. And, “What about…” questions never stop. Each answer generates questions whose answers lead to further questions. It could become infinite.
Even if you do analyze your questions, frequently the analytical work, no matter how robust, proves wrong because of something that can’t be anticipated. To borrow a phrase from the great military strategist Helmuth von Moltke: “No business plan ever survived its first encounter with the market.”
Further, the greater the demands for comprehensive answers to “What about…” questions, the greater the pull of existing markets populated by powerful incumbents. After all, it’s difficult to question the size of the market that already exists — even if history shows that those markets aren’t the best targets for growth-seeking companies.
It’s just hard to have robust answers about an unknown future state. Too frequently, taking the time to answer “What about…” questions doesn’t bring you any closer to achieving the goal of creating booming growth businesses.
This is part of a category of “abundance” problems that makes it paradoxically hard for resource-rich companies to “pave the first mile” of growth (a broader theme I’ll be exploring more deeply in future posts).
Resource-rich companies have the “luxury” of researching and researching problems. That can be a huge benefit in known markets where precision matters. But it can be a huge deficit in unknown markets where precision is impossible and attempts to create it through analysis are quixotic. Entrepreneurs don’t have the luxury of asking “What about…” questions, and in disruptive circumstances that works in their favor.
So what’s the alternative? Substitute early action for never-ending analysis. Figure out the quickest, cheapest way to do something market-facing to start the iterative process that so frequently typifies innovation. Be prepared to make quick decisions, but have the driver of the decision be in-market data, not conceptual analysis. In other words, go small and learn. Pitch (or even sell) your idea to colleagues. Open up a kiosk in a shopping mall for a week. Create a quick-and-dirty website describing your idea. Be prepared to make quick decisions.
The future can’t be analytically derived. Of course it’s almost always valuable to think comprehensively about a new idea. But maintain a healthy balance between analysis and action. If you get stuck in “What about…” loops, you’ll never get the results you seek.
Scott Anthony is the Managing Director of Innosight Ventures and author of three books on innovation, the latest being The Silver Lining: An Innovation Playbook for Uncertain Times.









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