Book Summary - Other Side of Innovation 1

About the authors

Vijay Govindarajan
• Professor of International Business at the Tuck
School of Business.
• Co-director for Global Leadership 2020.
• He is a popular keynote speaker.
• Aluminai of IIM – Ahmedabad.
• He qualified as a Chartered Accountant in India.
He was awarded the President's Gold Medal for his
outstanding performance in obtaining the first rank

Chris Trimble
• An expert on making innovation happen in large
organizations.
• Faculty at the Tuck School of Business at Dartmouth and
is a senior advisor at Booz & Company.
• Famous for : “Ten Rules for Strategic Innovators – from
Idea to Execution” of the Freakonomics, The Tipping Point,
and Blink fame

Book Summary - Other Side of Innovation 2

 INTRODUCTION:
CONCEPTS & FUNDAMENTALS
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IDEAS ARE ONLY BEGINNINGS

INNOVATION = IDEAS

INNOVATION = IDEAS + EXECUTION

http://www.youtube.com/watch?v=MudaxA80eI4
(Click to see video)

Getting a group of businesspeople engaged in a Big Idea Hunt is usually easy.

Brainstorming sessions are fun! Out-of-the-box thinking is energizing! Ideation is cool!

Not only that, generating a breakthrough idea is glamorous. It wins great status. If you
come up with the brilliant idea, then you will always be associated with it.

The challenges beyond the other side is Execution. This other side is usually an
afterthought. It is humdrum. It is behind-the-scenes. It is dirty work.

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 What are general models of Innovation
MODEL 1
INNOVATION = IDEAs + MOTIVATION
• Strategy : Operate efficiently and compete
on cost.
• To motivate employees, Org A cross
trained its employees and rotated them
among the plants.
• Bonus = 80% to 150% based on the output
of the product.
• Limited to ‘Continuous process
Improvement’.
• Not possible to produce larger
innovations.
Book Summary - Other Side of Innovation
MODEL 2
INNOVATION = IDEAs + PROCESS
• Strategy : Robust, Step by Step process to
launch an new product / process into the
market much ahead of competition.
• Only capable of producing repeated /
improvised innovations.
MODEL 3:
INNOVATION = IDEAs + LEADERs
• Common model. After finding THE great
idea, a great Leader is found to execute
assuming that the talented and
empowered leader would cross all
barriers.
5
 HOW DO ORGANISATIONS WORK ?
The engine strives to make every
ORGANISATION PERFORMANCE ENGINE
task, every process and every
activity as repeatable and
predictable as possible.

By definition – Innovation is
PROFIT
neither repeatable nor
predictable. It is exactly the
Efficiency opposite – non routine and
Productivity uncertain.

INNOVATION ONGOING OPERATIONS

Innovation & Ongoing Operations are always at conflict.

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 ORGANISATION DISECTED
INNOVATION

=
MISSION, GOALS & IDEA
STRATEGY
+ Over
emphasized
ORGANISATIONAL LEADER
DESIGN
+
POLICIES &
TEAM
PROCESS, ACTIVITIES
ORGANISATION
+ Neglected

PLAN

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 INNOVATION

IDEA TEAM

+ + +

LEADER PLAN

The fundamental prescription given in this

book is that innovation initiative needs a
“separate kind of a team”
&
special kind of a plan.
Part I : Team, Part II : Plan

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 Part I

Build the Team

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Project Team = Dedicated Team + Shared Staff

Organization
Performance Engine (PE)

DEDICATED
SHARED STAFF PARTNERSHIP
TEAM

MODEL FOR ORGANISING AN INNOVATION INITIATIVE

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Steps for building the project team
• Divide the labor : Decide how responsibilities for
executing the initiative will be split between the
dedicated team & the shared staff.
• Assemble the dedicated team : Determine who will
serve on the dedicated team and how to define their
roles and responsibilities.
• Manage the partnership : Establish clear
expectations for each partner & mediate the
inevitable conflicts that will arise between the two.

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Step 1

Limitations of ‘PE’ to execute an innovation by itself

A B A B

Cp (A) Cp(B) Performance Engine

Cp (PE) = Cp (A) + Cp(B)
+/- Cp (Work Rel between A&B)

Changing the Work Relationships is impossible. The same have evolved over a period
of time & because of the constant demand of the ongoing operations .

Thus if the work relationship inside the PE are inconsistent with what is needed for a
certain portion of the innovation initiative, then that portion must be assigned to the
dedicated team.

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 Step 2
Assemble the dedicated team
Organizational Memory :
The concept tells that a dedicated team may start behaving like the PE since the individuals that
make up the dedicated team have memory. Organizations have a tendency to create sub groups
that mimic what already exists, even when the conscious intent is otherwise.

Basic Principles to be kept in mind while forming the dedicated team :

Identify the skills that you need : Consider both specific skills and special skills that your dedicated
team will need. Special skills may be individual know how, capabilities and experiences that are specific
to the organization. General skills are like – creativeness, out of the box thinking, questioning
personalities. Other skills essentially that are required : 1) experience in setting up a new unit 2) the
dedicated team’s senior leader should be politically savvy and skilled at building partnership.

Hire the best people

Match the organizational model to the dedicated teams job : Reporting structure, decision rights,
titles, JDs, Work processes, performance measures, compensation plans and culture. Customised to
the type of innovation initiative.

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Step 2

Traps in building the dedicated team :

• Having a bias for insiders.
– Familiarity.
– Comfort of working with them.
– Expedience (Internal reorganizing is easier)
– Compensation Norms
– A desire to give attractive opportunities to your own employees.
• Adopting existing formal definitions of Roles and Responsibilities.
• Reinforcing the dominance of Performance engine power centers.
• Assessing performance based on established metrics.
• Failing to create a distinct culture.
• Using existing processes.
• Succumbing to the tyranny of Conformance.
Building a dedicated team SHOULD be uncomfortable.
Book Summary - Other Side of Innovation 14
Step 3

Manage the partnership

Challenge 1
Competition with the PE
leaders for scarce resources

DEDICATED
SHARED STAFF PARTNERSHIP
TEAM

Challenge 3
Disharmony in the
Challenge 2 partnership.
The divided attentions of
the Shared Staff

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Challenge 1 : Competition with the PE leaders for scarce resources

• Make all formal resource allocations to an innovation initiative

through one plan and one process.
• The innovation initiative should pay fully for what the shared
staff provides.
• The innovation initiative should pay for resources committed,
not resources actually used.
• Performance score cards in the PE should, to the extent
possible, be isolated from the uncertainty of the innovation
initiative.
• Discuss the contingency plans in advance.

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 Challenge 2: The divided attentions of the Shared Staff

• Winning formal resources is not enough, winning hearts

and minds of the shared staff is what is required. For the
dedicated staff, innovation initiative is everything, for the
shared staff it is one thing.
• Resistance from PE is expected since it imagines that
working on the innovation initiative will :
– Weaken the existing brand, relationships with customers.
– Replace the existing process, products. The incentive
compensation is at risk, or may loose their jobs.
• Designing added bonuses linked to the success of the
innovation initiative would be helpful.
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 Challenge 3 : Disharmony in the partnership.

‘Us’ versus ‘them’

• Anticipate the specific resentments that are likely to arise, to
be alert to their presence, and go out of your way to defuse
them in advance.
• Practice below principles:
– Make the division of responsibilities as clear as possible.
– Go out of the way to reinforce the common values that the
performance engine and dedicated team share.
– Select insiders for the dedicated team roles that demand heavy
collaboration with shared staff.
– Locate the dedicated team near the critical members if the shared
staff.
– Reinforce the importance of being able to collaborate across the
boundaries.

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 Part II : PLAN
Initial plans for “IIs” are typically riddled with
guesswork. As a result, the competitor that
wins is rarely the one with best initial plan ; it
is the one that learns the fastest.

Sorry that the project failed, boss, but, let me tell you, we learned a lot.

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 Formalizing the experiment

Plan the experiment

Compare predictions Predict the outcomes,

and outcomes, assess document supporting
lessons learned logics and assumptions.

Execute experiment,
record measurements,
document observations

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 Principles of planning an ‘II’ :
1. Invest heavily in planning.
2. Create the plan and scorecard from scratch.
3. Discuss data and assumptions.
4. Document a clear hypothesis of record.
5. Find ways to spend a little, learn a lot.
6. Create a separate forum for discussing the results.
7. Frequently reassess the plan.
8. Analyze trends.
9. Allow formal revisions to the predictions.
10. Evaluate Innovation leaders subjectively.

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 Seeking the truth : Be aware to the Biases
• Overconfidence in predictions : When the results are lower than the
expectations, there can be two reasons :
– Poor assumptions
– Poor execution (generally neglected)
• The ego bias.
– Successful experiments : due to actions planned and executed.
– Un-Successful experiments : due to external influences (badlucks)
• The recency bias : making accountable recent actions.
• The familiarity bias
• The Size bias : belief that big outcomes are result of big actions.
• The simplicity bias : fast answers to explain.
• The political bias.
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 10 myths about Innovation
i. Innovation is all about ideas.
ii. The great leader never fails.
iii. Effective Innovation leaders are subversives fighting the system.
iv. Everyone cannot be an Innovator.
v. Innovation happens Organically.
vi. Innovation can be embedded inside an established organization.
vii. Catalyzing Innovation requires wholesale organizational change.
viii. Innovation can happen only in skunk works.
ix. Innovation is unmanageable chaos.
x. Only start ups can innovate.

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Book Summary - Other Side of Innovation 24
 Thank you.

The book is a practical guide to managing big innovation initiative. The book
details many examples which although are not included in this summary.

The book understands innovation as breakthrough in nature and describes an

effective strategy to manage the same. Incremental innovations are much easier
and manageable by the organizations and thus might not be dealt by the authors
in details. All types of innovation are although necessary, organizations mainly
are found grappling at executing a breakthrough challenge.

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