It is a well known fact now: Smaller, more nimble companies are changing the face of Innovation and giving larger incumbent companies' nightmares. These small maverick companies' are always out to produce that industry changing product or service that would make larger companies' obsolete. There are three strategies that smaller midsize companies' use, from which larger companies' can learn:
1) The practice of constant experimentation is as fundamental to research as it is to innovation. When a company is small, it benefits from a quick cycle of experimentation and learning. For big companies', the budgets, culture, and shareholders all stand in the way of following this pattern. Small and smart companies understand the value of trial and error. Large companies fear failure and panic if they don't see results at the end of an experiment. Large companies' must demand small, controlled launches that allow your teams to learn, build courage, and taste success.
2) Mature industries are characterized by inertia, habit, tradition, complacency, and "expertise," people who know the best way something should be done (i.e. it's the way they have always done it.) This produces amazing opportunities for upstart companies to beat established companies with their innovation. The solution is to slash bureaucracy, fire the people who are hindering progress, and beef up innovation efforts. The less obvious solution would be to create a new company, thinking like an entrepreneur.
3) C level support is extremely vital for innovation activities. Unlike giant companies, midsize and small companies benefit from the involvement of the CEO. When the CEO sponsors an idea, one can bet it is approved in record time.Most large company CEOs talk about innovation but are not really involved in day to day activities. However, the CEO has to be involved. Without this support, the odds of nothing happening increase dramatically.
Thursday, September 25, 2008
Wednesday, September 10, 2008
Pushing the pedal on Innovation
In today's competitive environment it becomes increasingly important to accelerate innovation, more specifically accelerating the time between origination and full realization of an idea. No matter the competitive dynamic, it is almost always helpful to get new products or services into market settings as quickly as possible, in order to enable rapid in-market learning and business model development. In their new book, From Strategy to Execution: Turning Accelerated Global Change into Opportunity, Mark Johnson and Josh Suskewicz review new ways to accelerate innovation as well as institutionalize the processes and tools that make rapid and consistent new product development an engrained capability. Here, I summarize one type of acceleration - speeding up the launch time for products in disruptive market situations.
1) Team set-up: Putting together a heavyweight team is one of the most important aspects of developing a disruptive product or service offering. The team should have decision-making power, and should break down and reconstruct processes so that they match the project's needs. The team should be led by an authorized project champion with enough power within the company to get things done. Team members should be together to avoid communications complexities and should be freed from other responsibilities so they can focus on one project at a time. Successful companies are set up to perform in a certain way: To execute their business model. To that end they are methodical and incredibly skilled; our research has made it clear that incumbents will almost always win battles of sustaining innovation. In order to avoid this dilemma, teams focused on new disruptive development should be kept at arm's length from the standard processes that drive the core business. This requires a senior-management mandate, corporate autonomy and customized processes and allocations.
Also, teams must be staffed with people who have the right set of skills to thrive in such an environment. The most effective employees in any given situation are most likely to be the ones who have wrestled with and learned from and succeeded in similar situations in the past.
2) Funding: The project would need to be funded with just enough resources - enough to be able to make progress and test key assumptions, and only enough so teams are under pressure to develop a viable business model quickly. When doling out money in a stage wise process, companies must make sure to use the appropriate benchmarks to review progress. The product development funnel that works for a core business may well suffocate ideas that fall beyond the incumbent business model. Core valuation tools such as "net present value" and "return on investment" work very well when evaluating existing markets and knowable, highly sustaining development efforts. However, markets that don't exist can't be measured. Instead, companies should focus on progress-tracking metrics such as knowledge-to-assumption ratios, which are reflective of the development of the business idea, as well as both directional and actionable.
A summary of some of the most crucial aspects of a successful disruptive product launch would include:
1) Senior management commitment.
2) Strict deadlines that would galvanize the team and pave the way for rapid action.
3) Team autonomy where the team is completely distinct from the core company.
4) Innovative team culture
5) Selective team talent
1) Team set-up: Putting together a heavyweight team is one of the most important aspects of developing a disruptive product or service offering. The team should have decision-making power, and should break down and reconstruct processes so that they match the project's needs. The team should be led by an authorized project champion with enough power within the company to get things done. Team members should be together to avoid communications complexities and should be freed from other responsibilities so they can focus on one project at a time. Successful companies are set up to perform in a certain way: To execute their business model. To that end they are methodical and incredibly skilled; our research has made it clear that incumbents will almost always win battles of sustaining innovation. In order to avoid this dilemma, teams focused on new disruptive development should be kept at arm's length from the standard processes that drive the core business. This requires a senior-management mandate, corporate autonomy and customized processes and allocations.
Also, teams must be staffed with people who have the right set of skills to thrive in such an environment. The most effective employees in any given situation are most likely to be the ones who have wrestled with and learned from and succeeded in similar situations in the past.
2) Funding: The project would need to be funded with just enough resources - enough to be able to make progress and test key assumptions, and only enough so teams are under pressure to develop a viable business model quickly. When doling out money in a stage wise process, companies must make sure to use the appropriate benchmarks to review progress. The product development funnel that works for a core business may well suffocate ideas that fall beyond the incumbent business model. Core valuation tools such as "net present value" and "return on investment" work very well when evaluating existing markets and knowable, highly sustaining development efforts. However, markets that don't exist can't be measured. Instead, companies should focus on progress-tracking metrics such as knowledge-to-assumption ratios, which are reflective of the development of the business idea, as well as both directional and actionable.
A summary of some of the most crucial aspects of a successful disruptive product launch would include:
1) Senior management commitment.
2) Strict deadlines that would galvanize the team and pave the way for rapid action.
3) Team autonomy where the team is completely distinct from the core company.
4) Innovative team culture
5) Selective team talent
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