Innovation To The Core by Skarzynski & Gibson

Notes adapted from Innovation To The Core, second half, from page 85.

5 Design Rules for Enlarging the Enhancing the Innovation Pipeline:

1. Involve many minds
2. Sow enough seeds
3. Widen the front end
4. Increase the combinations
5. Ideate around specific themes

Industrial revolution companies believed that the way to drive up productivity and efficiency was to steadily reduce the discreationary decision-making power of first-line employees.

In a radical departure from that paradigm, E Edwards Deming and others said that managemd should teach first-level employees about statistical process control – that they should unleash people's discretionary decision-making power. – Thus the quality movement.

A social architecture is required.

Show your employees you expect them to generate new ideas – that innovation is atleast part of their job, if not their whole job.

Cornerstone for making innovation happen is a deep companywide understanding that 'innovation starts with me'.

Appraoch based on three factors:

1. Your objectives: Are you looking for raw ideas? Market-ready ideas? Market-ready products?
2. Your industry'es comptietive dynamics: What is the pace of technology and market-change?
3. Your company's strengths and scale: What is the extend of your global reach? How high is your brand awareness around the world?

It takes a thousand ideas to find a hundred with enough comercial promise to merit a small-scale experiemnt. Only ten projects will be jduged worthy of pursuing seriously wiht a substantial financial commitment, and only one or two will turn out to be unqualified successes.

Simply no way around it – chance of finding the next big opporutnity is a function of how many seeds you sow and how many new things you try.

Many innovation categories such as:

Technology, product, service, operational, cost, experience, management, business model, industry.

Radical business innovation are almost alwayas the product of 'creative collision' between insights from the four categories of unexamined dogma, unexplited trends, underutilized competencies or strategic assets, and unvoiced cusotmer needs.

Set out to identify deep discountinuities. Take a comprehensive look at competences and assets, searching for ways to leverage them into new growth opportunities.

If you have done disciplined disvoery work, your ideation efforts will be reasonably grounded. Ideas will be connected to the real world, not just some crazy, unbounded creative space. Generate ideas based on discovery insights rather han unstructured brainstorming.

Narrow the scoe by focusing your ideation on very specific corporate challenges.

Seek ideas at the intersection.

Business model – a conceptual framework for identifying how a compay creates, delivers, and extracts value.

Unpacking the business model:

• Who do we serve?
• What do we provide?
• How do we provide it?
• How do we make money?
• How do we differentiate and sustain an advantage?

Evaluating Ideas

Assessing the upside – how radical is it, how much impact could this have?

Feasibility – how feasible is this?

Revenue possibility? costs, returns, margins.

Venture capitalists ask these questions in this order. Many companies ask them in reverse order and squash ideas before they have blossommed.

"It's almost like looking at a human baby when it is only a couple of months old and saying 'well, it cant talk, cant' walk. What kind of value is there in this?"

Companies often think less radical is less risky. But radical and risky are completely different notions.

Constructing an Innovation Architecture

Strategic innovation reuires a high degree of focus.

Diversity and Coherence in harmony.

Vectors of innovation pg 143

Innovation architecture themes. e.g. harmonize technology, seamless solutions, and virtual presence.

Generate a big portfolio of ideas, then grouping them into domains.

What are the three to four ways in which you are gong to reinvent your company and your industry over the next few years?

"We are going to go from being this kind of company to that kind of company"

Did we find a consensus? Would these answers suprise competiors? Are thse answers relfectd in the short-term riority of the company?

In the emergent button-up approach to strategy making, top management is less tha author of strategy and more the editor of strategy.

Not generating the company's new thining but connecting the dots.

Questions for evaluation pg 155.

Avoding risk

Risk is determined by four factors:

1. Size of the irreversible and nonrecoverable financial commitment
2. Degree to which the new opporutnity departs from the compays existing base
3. Amount of irreducible uncertainty surrounding critical project assumptions
4. Time frame required for ramp-up

Perceived risk is a function of ignorance. What is the ignorance gap? Assumptions about:

• Who the customers are
• What benefit the new product / service will offer
• Whether customers would actually want or value it
• How much they would be wiling to pay for it
• What prodct or servie configuration would work best
• How much it is going to cost to produce
• What kind of technocal cmpetencies willb erequred
• Which distribution channels would be most effective

In the early stages of any new business concept experiment, the emphasis should be on learning rather than earning. Learning over investment.

Management bandwidth.

Supply and Demand of Innovation

Supply side of innovation – the sheer flow and quality of ideas

Demand side – the natural, reflexive pull for those ideas within the business structure. Are executives held personally responsible for innovation pipeline

Enablers for building a high performance supply side to the corporate innovation system:

1. Broad-based training
2. Technology infrastructure
3. Coaching and mentoring
4. Rwards and recognition

Productivity can be improved in two ways:

1. cutting resources and costs whilst the top line remains flat
2. keeping resources and costs on a flat line and growing the revneues

Headquarters Innovation War Room:

Separate sheets of paper, colour-coded by division, arranged on the wall by level of progress:

risk profile, schedule time, people involved, resources.

Challenge for large organizations is to create a whole set of things on the demand side that will make leaders as sensitive and responsive to the need to innovate as they are to the need to make the quarterly numbers. 3 tools:

• Budgeting process
• Management compensation
• Bold growth targets

Dual focus of short-term performance and long-term growth – an incrasingly important attribute for senior executives.

Audit measures pg 214.

In Organizing Genius, Warren Bennis concluded that teams that really reached epiphanies truly 'believed that they would make a dent in the universe'.

An insanely significant vision.

As predictable as a rainbow and manageable as a butterfly"

The unholy trinity of conventional management: meet the deadline, make the budget, and dont screw up.

Developing the right set of metrics is a prerequisite for driving the right set of behaviours, as well as for tracking the companys proress on innovation embedment.

Originally posted 2009-03-29 13:03:14.

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