To Innovate, Find What’s Hiding in Plain Sight

Here is an excerpt from an article written by Vijay Govindarajan and Srikanth Srinivas for Harvard Business Review and the HBR Blog Network. 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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In our last post, we asked the question, “What’s the connection between counting squares and innovation?” In order to come up with the answer, we presented you with the following figure and asked you how many squares you could find. It turns out, the answer isn’t so simple.

It was clear that this was a fun, engaging exercise, as we had 400 comments in the HBR blog post, an additional 312 comments in Facebook, and about 40 individual email responses. We enjoyed reading the comments and seeing the enthusiasm with which you wrote them. Given the number of good responses, we could not choose the top five; instead, we will be giving a copy of Reverse Innovation to 20 winners.

How you arrive at the answer can make a big difference in what you find. In the first “systematic” analysis, we can find 30 squares.

16 (1×1 squares) + 9 (2×2 squares) + 4 (3×3 squares) + 1 (4×4 square) = 30 squares.

The squares were always there, but you didn’t find them until you look for them. At first glance, you can easily see 16 squares. But the reality as it appears to be is often different from the reality as it is — 30 squares. You need to spend time and dig deeper to understand the reality as it is. Innovative solutions are always there for the problems we face, but you won’t find them unless you look for them.

There is a method to the madness (systematically going through 1×1, 2×2, 3×3, and 4×4 squares in this case). It takes time to find the method, but when you do, it opens up many more solutions and opportunities for any innovation problem. To quote one of the commenters, “We need to look beyond what meets the eye and what we are told, for more innovative perspectives both on the problem as well as the solutions born out of detachment to either.”

But can we do even better than a systematic analysis? On a more creative note, there are 30 squares with black edges and 30 squares with white edges. We’ve now discovered 60 squares. Out-of-the-box thinking can open up even more solutions. The foundation of systematic method, combined with out-of-the-box thinking, can result in order-of-magnitude change in performance. There were several creative replies with many more squares, all the way to infinity. Thank you for stretching our thinking. There are no limits to out-of-the box thinking. Only our own imagination is the limiting factor. To quote on of the commenters, “Don’t think it’s impossible, stretch the limits, bend the rules without breaking them — be curious — seek something new — have fun!”

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To read the complete article, please click here.

Vijay Govindarajan is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth. He is coauthor of Reverse Innovation (HBR Press, 2012). Srikanth Srinivas is a retired management consultant. He is the author of Shocking Velocity.

Blogging on Business Update from Bob Morris (Week of 4/1/13)

 

I hope that at least a few of these recent posts will be of interest to you:

BOOK REVIEWS

The Four Steps to the Epiphany: Successful Strategies for Products that Win
Steven Gary Blank

Your Survival Instinct Is Killing You: Retrain Your Brain to Conquer Fear, Make Better Decisions, and Thrive in the 21st Century
Marc Schoen with Kristin Loberg

Intelligent Leadership: What You Need to Know to Unlock Your Full Potential
John Mattone

INTERVIEWS

Francesca Zambello in “The Corner Office”
Adam Bryant
The New York Times

Lawrence Cunningham
BOB

Gerard J. Tellis
BOB

Emily Bennington
BOB

Vijay Govindarajan
BOB

COMMENTARIES

“Remembering Roger Ebert “
Linda Holmes
NPR

“The Psychology of the Creative Class: Not as Creative as You Think”
Richey Piiparinen

“Five routes to more innovative problem solving”
Olivier Leclerc and Mihnea Moldoveanu
The McKinsey Quarterly

“The Originality Scale”
Marty Neumeier
Liquid Agency

“The Most Popular Articles (First Q 2013)”
The McKinsey Quarterly

“How to Tell Your Company’s Story”
Nadia Goodman
Entrepreneur

“Don’t Sandwich Negative Feedback”
Management Tip of the Day
HBR

“5 Insanely Simple Work-Life Balance Shortcuts From People Who ‘Have it all’”
Cali Williams Yost
Fast Company

“Lessons From Facebook’s Sheryl Sandberg On How To Succeed In Business By Really Trying”
Sharon Poczter
Forbes

“Yes, women make better leaders.”
Margaret Heffernan
CBS MoneyWatch

“How Innovative Is Your Company’s Culture?”
Jay Rao and Joseph Weintraub
MIT Sloan Management Review

“What Losing My Job Taught Me About Leading”
Doug Conant
HBR

“How to Know the Difference Between Your Data and Your Metrics”
Jeff Bladt and Bob Filbin
HBR

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To check out these resources and other content, please click here.

To subscribe via RSS Reader, please click here.

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.

Blogging on Business Update from Bob Morris: Week of 11/12/12

I hope that at least a few of these recent posts will be of interest to you:

BOOK REVIEWS

Leading at the Edge: Leadership Lessons from the Extraordinary Saga of Shackleton’s Antarctic Expedition
Dennis N. T. Perkins with Margaret P. Holtman, Paul R. Kessler, and Catherine McCarthy

The Yale Book of Quotations
Fred R. Shapiro, Editor

The Endurance: Shackleton’s Legendary Antarctic Expedition
Caroline Alexander

The Talent Wave: Why Succession Planning Fails and What to Do About It
David Clutterbuck

Saving Capitalism From Short-Termism: How to Build Long-Term Value and Take Back Our Financial Future
Alfred Rappaport

Brilliance by Design: Creating Learning Experiences That Connect, Inspire, and Engage
Vicki Halsey

How to Close a Deal Like Warren Buffett: Lessons from the World’s Greatest Dealmaker
Tom Searcy and Henry DeVries

INTERVIEWS

Seth Besmertnik (Conductor) in the “Corner Office”
Adam Bryant
The New York Times

James Taylor: An interview by Bob Morris

Nancy Koehn
“Ernest Shackleton’s Lessons for Leaders in Harsh Climates”
IdeaCast produced by HBR Blog Network

John A. Daly: An interview by Bob Morris

COMMENTARIES

“Here’s a Better Way to Brainstorm in Groups”
Management Tip of the Day
HBR

“Waste on the Shop Room Floor”
Josh Linkner

“The best innovators are need seekers”
Gijs van Wulfen
Booz & Company

“The Timeless Strategic Value of Unrealistic Goals”
Vijay Govindarajan
HBR

“How Nate Silver Won the 2012 Presidential Election”
Dorie Clark
HBR

“Disrupt Before You’re Disrupted”
Patrick Houston
InformationWeek

“How ‘social intelligence’ can guide decisions”
Martin Harrysson, Estelle Metayer, and Hugo Sarrazin
The McKinsey Quarterly

“How Do You Survive the Innovation Hamster Wheel?”
Chris Murphy
InformationWeek

“Jack Lowe Jr. of TD Industries: The Leader’s Leader”
Editors of Texas CEO magazine

“How to Promote Potential With Success Mapping”
Mara Swanfor
Talent Management magazine

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To check out these resources and other content, please click here.

To subscribe via RSS Reader, please click here.

Reverse Innovation; Abundance – Our 2 Books for the July 6 First Friday Book Synopsis

We had a wonderful gathering this morning for the June 1 First Friday Book Synopsis.  Karl Krayer presented his synopsis of All In: How the Best Managers Create a Culture of Belief and Drive Big Results by Adrian Gostick and Chester Elton.  I presented the best-selling and much-talked-about The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg.  These are both genuinely useful books.

(Our synopses, with handouts + audio of our live presentations from this morning, will be available soon on our companion web site, 15minutebusinessbooks.com).

On July 6, Karl will present his synopsis Reverse Innovation: Create Far From Home, Win Everywhere by Vijay Govindarajan and Chris Trimble (foreword by Indra K. Nooyi).

I will present my synopsis of Abundance: The Future Is Better Than You Think by Peter H. Diamandis and Steven Kotler.  Peter Diamandis is the founder of the X Prize, and you can watch his TED talk, Abundance is Our Future, here.  So this book will give us a big hefty dose of optimism, which I suspect we could all use right about now.

Click on the flier below to read all the details. We begin at 7:00, and conclude right around 8:05.  And you eat a great buffet with made-to-order omelet bar breakfast, experience great visiting and table conversations, and receive a quick, substantive jolt of content.  Come join us.

Click on image for full view

Reverse Innovation: A book review by Bob Morris

Reverse Innovation: Create Far from Home, Win Everywhere
Vijay Govindarajan and Chris Trimble
Harvard Business School Press (2012)

How and why reverse innovation can help to reverse the negative trends and tendencies that can weaken an organization

Those who have read one or more of Vijay Govindarajan and Chris Trimble’s previously published books (notably Ten Rules for Strategic Innovators and, more recently, The Other Side of Innovation) already know that they share a unique talent for recognizing and then explaining previously unrecognized – or under-appreciated — business trends and their implications. In this instance, the fact that the dynamics of global innovation are not only changing, they are shifting from rich countries with incumbent economies to meeting unmet needs in developing countries.

Leaders in companies that aspire to accommodate those needs must develop a mindset that is radically different, one whose core concept is reverse innovation. That is, “any innovation that is adopted first in the developing world.” To develop that mindset, leaders must understand the significant differences between rich-country and poor-country needs. “Reverse innovation does not begin with inventing, but with forgetting. You must let go of what you’ve learned, what you’ve seen, and what has brought you your greatest successes. You must let go of the dominant logic that has served you well in rich countries. If you want to use today’s science and technology to address unmet needs in the developing world, then you must start with humility and curiosity.”

In short, think “far from home” before attempting to do business there.

Govindarajan and Trimble identify and explore five need gaps that can serve as paths to success with reverse innovation in macro markets of micro consumers. Understanding the nature, extent, and perils as well as opportunities of these need gaps will serve as the foundation of the radically different mindset to which I referred earlier.  With both uncommon rigor and precision, Govindarajan and Chris Trimble explain

o  What the reverse innovation challenge requires
o  How to develop the reverse innovation mindset
o  How to formulate an appropriate strategy based the five paths
o  How to create “clean slate” innovation in emerging markets
o  “The Reverse Innovation Playbook” (Nine rules to guide and inform strategy, global organization, and project organization

In Part 2, Reverse Innovation in Action,” Govindarajan and Trimble shift their attention to mini-case studies of eight major companies (Chapters 5-12, Pages 75-188), citing real-world situations that demonstrate an abundance of do’s and don’ts during initiatives to develop macromarkets with products that appeal to microconsumers. For example, in Chapter Six, Govindarajan and Trimble explain how Procter & Gamble realized that its success in emerging markets required it to innovate the “Un-P&G Way” because unfamiliar customer needs “trump” leading-edge technology. In Chapter Eleven, “PepsiCo’s Brand-New Bag,” this major multi-national company had to learn how to “think globally but snack locally”

Readers will also appreciate the provision of a “Reverse Innovation Toolkit” in Appendix A. Govindarajan and Trimble include several practical diagnostics and templates that will help business leaders expedite their reverse innovation efforts. In fact, they make brilliant use of reader-friendly devices throughout the book, notably “Playbook Lessons” and “Questions for Reflection. Here in a single volume is probably about as much as any business leader needs to help her or his global company to use reverse innovation to avoid or reverse the negative trends and tendencies that can weaken an organization when it attempts to do business in emerging markets.

Harvard Business Review on Inspiring & Executing Innovation: A book review by Bob Morris

Harvard Business Review on Inspiring & Executing Innovation
Various Contributors
Harvard Business Review Press (2011)

How to create and then deliver new or better products and services

This is one of the volumes in a series of anthologies of articles that first appeared in HBR. In this instance, its ten articles focus on one or more components of a process by which to inspire and then execute breakthrough innovation. Having read all of the articles when they were first published individually, I can personally attest to the brilliance of their authors’ (or co-authors’) insights and the eloquence with which they are expressed. Two substantial value-added benefits should also be noted: If all of the articles were purchased separately as reprints, the total cost would be at least $60-75; they are now conveniently bound in a single volume and for a fraction of that cost.

Here in Dallas, there is a Farmers Market near the downtown area at which several merchants offer slices of fresh fruit as samples. I now provide what follows in that spirit.

In “Innovation’s Holy Grail,” C.K. Prahalad and R.A. Mashelkar use the term “Ghandian” innovation because, “at the core of this type of innovation lie two of the Mahatma’s tenets: ‘I would prize every invention of science made for the benefit of all’ and ‘Earth provides enough to satisfy every man’s need, but not every man’s reed’…Ghandian innovators solve problems in two ways: by acquiring or developing technologies and by altering business models or capabilities.”

In “The Customer-Centered Innovation Map,” Lance A. Bettencourt and Anthony W. Ulwick suggest that all jobs have the same eight tasks. To use job mapping, look for opportunities to help customers at every step.” They are:

1. Define: Determine their goals and plan resources
2. Locate: Gather items and information needed for the job
3. Prepare: Set up the environment to do the job
4. Confirm: Verify that they’re ready to perform the job
5. Execute: Carry out the job
6. Monitor: Assess whether the job is being successfully executed
7. Modify: Make alterations to improve execution

“Because problems can occur at many points in the process, nearly all jobs also require a problem resolution step. Some steps are more critical than others, depending on the job, but each is necessary to get the job done. Successfully.”

In “Innovation: The Classic Traps,” Rosabeth Moss Kanter identifies and then rigorously discusses eight (8) common mistakes that must be replaced by the “potent remedies” she recommends. The mistakes are:

• Rejecting opportunities that at first glance appear too small
• Assuming that only new products count – not new services or improved processes
• Launching too many minor product extensions that confuse customers and increase external complexity
•  Strangling innovation with the same tight planning, budgeting, and reviews applied to existing businesses
•  Rewarding managers for doing only what they committed to do – and discouraging them from making changes as circumstances warrant
•  Isolating fledgling and established enterprises in separate silos
•  Creating two classes of corporate citizens – those who have all the fun (innovators) and those who must make the money (mainstream business managers)
•  Allowing innovators to rotate out of teams so quickly that team chemistry can’t gel
•  Assuming that innovation teams should be led by the best technical people

Suggested Readings:

Two by Thomas Kelley with Jonathan Littman:

The Art of Innovation
The Ten Faces of Innovation

and two more recently published books:

The Other Side of Innovation: Solving the Execution Challenge
Vijay-Govindarajan and Chris Trimble

Innovation to the Core: A Blueprint for Transforming the Way Your Company Innovates
Peter Skarzynski and Rowan Gibson

Getting China and India Right: A book review by Bob Morris

Getting China and India Right: Strategies for Leveraging the World’s Fastest Growing Economies for Global Advantage
Anil K. Gupta and Haiyan Wang
Jossey-Bass (2009)

How to leverage the world’s fastest-growing economies for global advantage

In my review of Anil Gupta and Haiyan Wang’s previous book, The Quest for Global Dominance, co-authored with Vijay Govindarajan, I explain that they focus on four tasks essential for any company to emerge and stay as the globally dominant player within its industry:

1. “One, people must ensure that their company leads the industry in identifying new marketing opportunities worldwide and in pursuing these opportunities by establishing the necessary presence in all key markets.”

2. “Two, people must work relentlessly to convert global presence into global competitive advantage.”

3. “Three, people must cultivate a global mindset.”

4. “Four, in developing global strategies, people must take full account of the rapid growth of emerging markets, in particular the rise of China and India.”

In their latest book, Gupta and Wang note that, “Starkly put, China and India are changing the rules of the game” and many of the changes that have occurred in recent years are especially significant. The tasks are still important. However, with reference to the title of this book, Gupta and Wang point out that “being present in China and India [completing various tasks, however worthy they may be] is not the same as getting China and India right.” What to do and how to do it must be determined by different perspectives that are, in fact, the focus of this book.

Hence the importance of fully understanding that only these two countries in the world “simultaneously constitute four stories rolled into one, each of them with the potential to be game changing in its own right.” The authors’ use of the word “game” in Chapter 1 is apt because it denotes players, opponents, and field(s) of competition, rules, officials, and scores. The word also connotes relevant mental and physical skills, practice, preparation, and engagement with opponents. Given these meanings and implications of “game,” now consider the stories “rolled into one,” any one of which could be a game changer, if viewed from these perspectives: “(1) China and India as megamarkets for almost every product and service, (2)…as platforms to dramatic reduce a company’s global cost structure, (3)…as platforms to significantly boost a company’s global technology and innovation base, and (4)…as the springboards for the emergence of a new breed of fearsome global competitors.” Gupta and Haiyan Wang explain why building robust strategies for both countries requires that the company doing so address each of the four “stories” head-on.”

Then in the next four chapters, Gupta and Wang explain the mindset needed to think of both China and India (not of one or the other) as “cousins,” not “twins” (“Chindia”); to think in terms of megamarkets and microcustomers to dominate the competition; to think of leveraging both China and India for global advantage; and think of what competition with “dragons” and “tigers” requires on the global stage. When examining each mindset, the authors cite real-world examples of companies that have developed and then been guided and informed by it. For example, Haier (home appliances), Huawei (telecommunications equipment), and Lenovo (PCs) have a significant presence in India; Bharat Forge (auto components), Suzlon (wind tunnels), and Tata Consulting and Infosys (IT services) have a significant presence in China.

Readers will also appreciate how carefully Gupta and Wang organize and then present their material, especially their core concepts and key insights. In Chapter 4, for example, when explaining how to leverage both China and India for global advantage, they suggest that there are “three primary dimensions along which China and India are becoming central to global competitive advantage for a rapidly growing number of companies across a wide range of industries: cost arbitrage, talent arbitrage, and innovation. Each of the three sources of competitive advantage can be hugely important on its own. [That is also true of China and India.] However, if they can be leveraged in tandem, the impact can be especially powerful.”

They then create a statistical context, a frame-of-reference, for seven specific recommendations for making decisions and taking actions along several fronts (on Pages 107-108) when leveraging China and India as hubs for global advantage. They cite Eli Lilly & Co. and Portal Player as exemplary U.S. companies and explain why. Later in the chapter, they pose a critically important question: What is the optimal mix of global and local for a particular global hub? They then provide a set of five universal guidelines (on Pages 120-121) “that can be used to frame the analysis and discussions that lead to deriving the appropriate answer.”

Reading (and preferably re-reading) this book as well as others and also consulting several sources (such as the China India Institute) will help them to develop a global mindset but only if their cognitive lenses are focused on the future, not on the past. There are also several steps that a company’s decision-makers must take. Anil Gupta and Haiyan Wang suggest four near the conclusion of the final chapter, then share these observations about the successful global corporation of tomorrow: “Organizationally, it will be managed as a globally integrated enterprise rather than as a federation of regional or national fiefdoms. And it will be led by business leaders who have global mindsets and are masters at building bridges rather than moats.”

I highly recommend this book to senior-level executives in companies that are already competing in the global marketplace or are now planning to do so. I also recommend it to senior-level executives in other companies that are within the supply chains of current and imminent global players.

The Quest for Global Dominance:: A book review by Bob Morris

The Quest for Global Dominance: Transforming Global Presence into Global Competitive Advantage, Second Edition
Anil Gupta, Vijay Govindarajan, and Haiyan Wang
Jossey-Bass (2008

How to establish global presence, then achieve and sustain a competitive advantage

As Jeffrey Garten explains in the Foreword, this Second Edition offers “not only updates, not only new examples, and not only a more confident analysis. There are three entirely new chapters.” Given all that has happened since the first edition (2001), these are indeed welcome additions. Anil Gupta, Vijay Govindarajan, and Haiyan Wang focus on four tasks essential for any company to emerge and stay as the globally dominant player within its industry:

1. “One, people must ensure that their company leads the industry in identifying new marketing opportunities worldwide and in pursuing these opportunities by establishing the necessary presence in all key markets.”

2. “Two, people must work relentlessly to convert global presence into global competitive advantage.”

3. “Three, people must cultivate a global mindset.”

4. “Four, in developing global strategies, people must take full account of the rapid growth of emerging markets, in particular the rise of China and India.”

As the co-authors would be the first to acknowledge, it is quite easy to offer prescriptions such as these. Presumably they agree with Thomas Edison: “Vision without execution is hallucination.” After briefly but precisely identifying the “what” of “transforming global presence into global competitive advantage,” the authors devote the bulk of their attention to explaining the “how.” They intended that their book be broad in its coverage of issues relating to the creating and exploiting of global presence, and, that each chapter would focus on a specific action-oriented issue such as building global presence, cultivating a global mindset, or the dynamics of global business teams.

While citing real-world initiatives by several dozen exemplary companies (e.g. Cisco Systems, FedEx, Hewlett-Packard, IBM, Ikea, Marriott, Microsoft, Nucor, Procter & Gamble, and Wal-Mart), the authors address key questions, issues, and challenges such as these:

• Which five imperatives drive the pursuit of global expansion?
• Under which conditions is accelerated global expansion more appropriate?
• When location decisions are made, which criteria should be considered?
• Which four factors drive the speed with which to cultivate a global mindset?
• What are the most common barriers to effective and efficient knowledge transmission?
• What are the primary reasons for the failure of a global business team (GBT)?
• How to overcome communication barriers within a global organization?
• What is a “two-track strategy” and why should it be executed in both China and India?

Gupta, Govindarajan, and Wang are to be commended on the wealth of information they provide and, especially, on the rigor of their analysis of that information. All three are pragmatists. What has worked for other global companies that have transformed their global presence into global competitive advantage? What lessons can be learned from those initiatives? In this context, I am reminded of what Peter Drucker once observed: “We spend a lot of time teaching leaders what to do. We don’t spend enough time teaching leaders what to stop. Half the leaders I have met don’t need to learn what to do. They need to learn what to stop.”

All of the observations and suggestions that Gupta, Govindarajan, and Wang include throughout their narrative share a single purpose: To guide and inform the process by which correct decisions can be made, decisions that will address what not to do as well as what to do. Although their book is a “must read” for C-level executives in companies that seek to transform their global presence into competitive advantage, I think it should also be read by C-level executives in other (non-global) organizations that are within the supply/value chain of those companies.

How to Bring Innovations to Market

Vijay Govindarajan

Here is an excerpt from Theodore Kinni’s interview of Vijay Govindarajan for strategy+business magazine. To read the complete interview, check out other resources, and obtain subscription information, please click here.

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Management professor Vijay Govindarajan explains why companies have trouble implementing new ideas — and what they should do about it.

Innovation processes are almost always heavily front-loaded. They focus the lion’s share of attention on idea generation, but they usually finish with something less than a roar. Ask most executives what you should do after you’ve come up with a market-shaking idea, and they’re likely to say, “Just implement it.”

Vijay Govindarajan, the Earl C. Daum 1924 Professor of International Business and founding director of the Center for Global Leadership at the Tuck School of Business at Dartmouth, knows that implementing innovation is not quite so simple. For the past decade, he and Tuck School colleague Chris Trimble have been studying what happens after companies decide to bring that big idea to market.

They have reported the findings in their new book, The Other Side of Innovation: Solving the Execution Challenge (Harvard Business Press, 2010). In a recent discussion with strategy+business, Govindarajan discussed some of what the duo learned.

Why did you decide to focus your research on the execution side of innovation?

Every time I meet with a group of executives, I take a poll. On a 10-point scale, one being poor, 10 being world-class, I ask them to rate themselves on how good their companies are at idea generation. They consistently rank their companies at five or six on the scale. Then I ask them to rate how good they are at executing ideas. On average, they rank their companies just one on execution. So, although I would not say that companies have mastered idea generation, relatively speaking, there are enough ideas out there. But if companies could just execute better, they could create a lot more growth.

Why do companies find it difficult to execute new ideas?

In a sense, the problem is about people doing the right thing. Every organization has a core business, which we call its performance engine. Its main job is efficiency: By making every task repeatable and predictable, the core business obtains scale and makes a lot of money. Innovation is just the opposite. It is nonroutine and unpredictable. Therefore, there is an inherent and fundamental inconsistency between what companies do to pursue scale and what they need to do to execute on innovation. It is not that people are doing the wrong things and killing innovation. In fact, people are doing exactly what they should be doing to keep the performance engine running — and that is killing innovation.

If the performance engine can’t execute innovation, how then do you go about it?

Well, to start, you can’t just focus on one or the other. You have to be good at innovation and efficiency. There are three basic principles. First, innovation cannot happen inside the performance engine, so it requires a dedicated innovation team. Second, although the innovation team should be separate, it should not be isolated, because it has to leverage some of the assets and capabilities of the performance engine. There has to be a link. Third, because innovation by definition is an experiment with unknown outcomes, you can’t use the same yardstick — short-term financial results — that you use for the performance engine.

You need a dedicated team for every type of innovation?

Absolutely not. There are certain kinds of innovation, such as continuous process improvement and line extensions, that the performance engine can do. The performance engine can also do big innovations as long as they fit within the framework of the existing product portfolio. For example, John Deere can do an improved version of a tractor within its performance engine. But there are limits to what a performance engine can do, because, by and large, it must focus on efficiency.
What dimensions should be considered as executives think about how to approach innovation execution?

Let’s take a concrete example. In 2000, Infosys [Technologies Ltd.], which had been writing software, went into the consulting business. Infosys Consulting could not be launched inside its core business. The performance engine was designed for software development, whereas consulting is about business transformation; programming and consulting require fundamentally different capabilities. And the customer for custom software is the head of IT, whereas the customer for consulting is the CEO. So a dedicated team was created, and the team designed a different culture and compensation package for the new business.

At the same time, the dedicated team drew on certain assets of the performance engine. One very important one was customer relationships, because, after all, the consultants wanted to work with the same Fortune 500 companies as the programmers. A second asset was the existing global delivery model, which enabled Infosys to dramatically lower costs and still offer high-quality service.

How do you ensure the performance engine’s participation in executing the innovation?

You have to recognize that there are fundamental tensions between performance engines and innovation teams, and that any time you force them to work together, conflicts will arise. So you have to make the link, and then expect the conflict and manage it. The Infosys case study revealed three ways to do this.

The first is to have the right leader for the dedicated team. At Infosys, it was an outsider named Steve Pratt. That is important — he wasn’t part of the performance engine. He also happened to be an extremely humble person, who was willing to talk through the potential conflicts with the performance engine and reconcile them ahead of time. And he didn’t overreach. Instead of asking the performance engine to give him a lot of customer contacts, he asked for one customer contact and proved he could sell consulting to that customer without damaging the programming business.

Second, the dedicated team, like the performance engine, should report at a very high level. When Infosys Consulting was started, it was a tiny business. Yet it reported directly to the then CEO, Nandan Nilekani, who played a critical role in anticipating and managing the conflicts between the performance engine and the innovation team. Nilekani also created another board of directors for Infosys Consulting and made sure a few members served on both boards.

Third, it is important to create incentives, because ultimately people respond to rewards. One of the things Infosys did was to double count the revenues from the new consulting business. So if the software business provided a lead that generated sales for Infosys Consulting, it also got credit for the new revenue. This gave the performance engine an incentive to work with the innovation team.

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Theodore Kinni is senior editor for books at strategy+business and the author or co-author of three: No Substitute for Victory, America’s Best: IndustryWeek’s Guide to World-Class Manufacturing Plants, and Future Focus: How 21 Companies are Capturing 21st Century Success.