Breakthrough innovation - one step at a time
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Posts from — December 2007

Posts by Gina

by gina

December 31, 2007   No Comments

Posts by Lois

by lois

December 31, 2007   1 Comment

Acceleration and building the business

by gina

The third competency needed to have a full up breakthrough innovation capability is acceleration. Acceleration activities ramp up the fledgling business to a point where it can stand on its own relative to other business platforms in the division that’s eventually going to house the new business.. Whereas incubation reduces market and technical uncertainty through experimentation and learning, acceleration focuses on building a business to a level of some predictability in terms of sales and operations. As one Innovation Director told us:

“I need a landing zone for projects that the business unit does not feel comfortable with. If I transfer these projects too early, the business unit leadership lets them die. I need a place to grow them until they can compete with ongoing businesses in the current operating units for resources and attention.”

The skills needed are those required for managing high growth businesses. Acceleration involves exploitation rather than either exploration (which Discovery requires) or experimentation (which Incubation requires). The activities of acceleration include investing to build the business and its necessary infrastructure, focusing and responding to market leads and opportunities, and beginning to institute repeatable processes for typical business processes such as manufacturing and order delivery, customer contact and support. Acceleration involves turning early customer leads into a set of qualified customers and predictable sales forecasts. Similar to an independent start up firm in first stage growth, acceleration pursues top line revenue rather than bottom line profitability.

December 29, 2007   No Comments

Incubation for generating business proposals

by gina

Whereas discovery competencies generate or recognize RI opportunities, the incubation competency involves activity that matures radical opportunities into business proposals. A business proposal is a working hypothesis about what the technology or business platform could enable in the market, what the market space will ultimately look like, and what the business model will be. Incubation is not complete until that proposal (or, more likely, a number of proposals, based on the initial discovery) has been tested in the market, with a working prototype, and first revenues are flowing in.

We’ve observed that the skills needed for incubation are experimentation skills. Experiments are conducted not only on the technical front, but, also for market learning, market creation and to test the business proposal’s match with the company’s strategic intent.

In most of the companies we studied, most projects entering into the incubation phase were filtered out when the experiments failed for one reason or another, due to the high uncertainty associated with what initially appeared to be a promising opportunity. One BI portfolio manager described his frustration at the ‘churn’ rate in the portfolio at the early phases of the projects, when they were moving from the idea phase to early technical and market experimentation. Still, he admitted how that was to be expected given the high level of innovativeness, and therefore risk, of the ideas.

It turns out the incubation is the hardest competency to develop and maintain in companies. It takes too long. We don’t train business students how to do it. Certainly not how to evaluate it. We call incubation “The Long and Winding Road.”

December 27, 2007   No Comments

Recognizing the capability for Breakthrough Innovation

by gina

When we started studying the companies who have a declared strategic intent to build a breakthrough innovation capability, we saw companies who wanted BI but didn’t have enough good ideas. We saw companies with lots of great ideas that couldn’t get them built into businesses. They’d send them over to the business unit once the technology or concept was developed ‘enough,’ and then nothing happened. They just stalled.

We were asking ourselves, “What is a capability for breakthrough innovation, anyway?”As it turns out, there are three separate and distinct capabilities. How do we know? Because some companies had some, and some companies had others, but only 1 had all three of them. AND even that one didn’t have them tied together very well. We saw projects slip off the radar screen.

We believe that breakthrough innovation is about the three following capabilities: Discovery, Incubation and Acceleration.

The discovery capability involves activities that create, recognize, elaborate, and articulate opportunities for radical innovation. The skills needed are exploratory, conceptualization skills, both in terms of technical, scientific discovery and external hunting for opportunities. Discovery activities can include invention, but needn’t always.

While the vast majority of companies in our study invested in internally focused laboratory research , most also hunted inside and outside the company for ideas and opportunities, and licensed technologies or placed equity investments in small firms that hold promise.

We saw ‘alpha teams’ of idea generators…really creative, smart types who just pumped out idea after idea because they understood the wealth of scientific expertise resident in their company. We saw idea hunters who went out into business units and help workshops and idea jams. We saw “exploratory marketing’ teams within R&D groups. These were pairs (a technical person and a business person) who hunted outside the company,…indeed, across the globe, for opportunities.

One of our companies relied upon an informal network of external contractors to generate and develop wild ideas and inventions. This network was maintained and funded by a senior executive who elected not to bring them within the company for fear that their creativity would be stifled.

Discovery if about idea generation, opportunity recognition and opportunity elaboration. All of it. It’s definitely about R&D, but there’s more to it than that.

We’ll share our thoughts on the capabilities of Incubation and Acceleration in future posts.

December 22, 2007   No Comments

Identifying Career Paths for Innovators

by gina

Yesterday my colleague Andrew and I (he’s a Strategy Professor, also involved in our research program), spoke with the person in Organizational Development at the company I told you about a few days ago, who’s working to develop career paths for innovators. Turns out he’s taking a different approach now. Says that all rising leaders in the organization should do a development rotation through the innovation group. Then, they should go back to the business units and be promoted up through the traditional ranks.

Interesting, we said (though we did not really find it interesting at all…. more like discouraging). Why not stick with the plan to promote people up through an innovation function? He agrees that innovation is becoming a function, but also noted that the whole company has to understand innovation, so it’s important to have every general manager do a rotation through that group. Then, when they’re vice presidents of Business units, they’ll be better ‘receivers,’ of breakthroughs, even though those opportunities may not ‘fit’ their business units very well.

He’s absolutely right, of course. We all believe the innovation…. breakthrough innovation… is much more likely to succeed in companies whose senior leaders understand it and, indeed, have experienced it.

But he’s also wrong, we believe. How can innovation become a function if there’s no one in that group on a consistent basis? If there’s no recognition of success via promotion? Does that mean we do not believe there’s a set of skills, responsibilities, and activities that are unique to innovation? Specifically, unique to New business Creation…the part that’s beyond what the technical team does? When we posed that question to him, he paused. Well….. yes.

He agreed to speak with us again in six weeks or so,..the time it’s going to take him to get buy in from the senior Vice President of Innovation in that company on his plan for promotion that does not involve promotion through the ranks of innovation.

We’ll see what happens. I’m placing my bets that the plan will be substantially modified. At least I hope so.

December 20, 2007   No Comments

Career Paths for Innovators

by gina

Yesterday I got a note out of the blue from a friend at Intel. An innovator…a serial innovator. Ph.d in electrical engineering, MBA sort of guy. Really smart, and guess what? Sort of outspoken. First he was at Kodak, then moved to Intel, and has been involved in multiple projects, but is nearly always frustrated. Here’s what he said:

The project is going well. We have 8 companies on board now, I hired a good team to run it, and a good Board of Directors. We are going live on the 17th of this month. I feel that the innovation part of the work is done, so my work is done. I am looking to depart in second quarter of next year.

Question: Why can’t he be happy where he is? Why does he feel the need to find something new? What is the company missing here?

No career paths for innovators. One project, then another…and that’s fine. But who’s developing him? Coaching him? Asking him how he prefers to be rewarded? Will he ever reach VP level? Director level? Not a chance. Has he built new business platforms for the companies he’s worked for? Absolutely.

Companies say they want these people, but don’t have a clue how to promote them. In fact, high powered innovative people are usually considered pains in the…….

Most of the companies we’ve studied are worried about this problem. One person from a major firm told us “If I want to get promoted to VP, I’m going to have to transfer out of this (New Business Creation) group and into a division. The only way you get promoted here is by overseeing more people and a bigger budget.”

Sadly…that’s just not how breakthrough innovation works. You don’t always need more people and a bigger budget.

Another company we are very familiar with is beginning to get how big a problem this is. They’ve devoted a person in their Organizational Development/HR group to develop career paths for innovation people. Their tossing ideas around about the best way to do this. But they’re working at it.

To me, this is one of the biggest signs that innovation is taking root as a real business function. It’s not going to go away. People like my friend at Intel may finally have a host of opportunities for professional progress.

December 12, 2007   No Comments

Breakthrough Innovation in big companies

by gina

I apparently startled my daughter when she spotted me online on Skype.

Christine

I figured she didn’t know what hit her when I told her I was working on my blog. This is quite a breakthrough for me. The team who’s supporting me on this convinced me that blogging is as easy as email.

I guess that’s what innovation is all about - making changes that improve the quality of life. But this blog isn’t just about innovation. It’s about our group’s research on how big, established, bureaucratic companies are struggling to develop real major, breakthrough, pathbreaking, gamechanging, radical innovation. Big innovation. Not the small stuff. Something beyond the next flavor, the next model, the next incremental change in a product. Whole new business opportunities based on technological leaps, combinations of technologies that have never been combinable before, or cool insights into new business models. Here’s to pathbreaking, trend-disruptive, radical innovation.

So why start this blog? Because of the 12 years of research we’ve been doing on the topic. Analyzing how established companies innovate, and what gets in the way. Also because it’s clear that innovation is becoming the newest business function in companies, much like marketing, quality, and finance have become functions in organizations over the past forty to fifty years. Companies are recognizing the need to develop an innovation capability that is sustained over time rather than a program du jour. They are struggling with how to do this because they don’t know how. Nevertheless, they’re focusing on the experiment and are investing heavily.

Our research program began in 1995 with a generous grant from the Sloan Foundation and the sponsorship of the Industrial Research Institute, a professional organization of R&D Managers, Directors and Chief Technology Officers of Fortune 1000 companies. The objective of phase I (which ran from 1995-2000) was to learn how breakthrough innovation (which we’ll refer to as BI) projects were managed in large, established companies. We believed that management processes that worked well for incremental innovation would kill off breakthroughs before they got out of the starting gate. We studied twelve projects in these ten companies over the course of five years:

These were projects that senior leadership in the companies identified as potential breakthroughs. Over the five years that we tracked them, some were killed off, as expected, and others met with varying degrees of success. Several changed the game in their industries.

The vast majority of projects we studied originated and progressed solely because of the strong will and persistence of a talented champion with ties to and protection from a senior management sponsor. Project teams and their leaders spent more time fighting against the norms of their companies, whose management systems, processes, and metrics were dedicated to efficiency, responding to market needs, and operational excellence. These were not the norms and infrastructure needed for the high-uncertainty environment of BI.

Companies can do a much better job of developing management systems and infrastructures that support, rather than antagonize, innovation champions and their teams. In 2000, they hadn’t figured out how. So we wrote a book about it: Radical Innovation: How Mature Firms Outsmart Upstarts. Companies should develop a supportive infrastructure for innovation, the book says. It’s called a breakthrough innovation hub. People who know how to coach innovation teams, people who go out and find great ideas, create partnerships, protect and guide innovation teams, interact with the mainstream organization regularly…that’s what a hub could do.

We saw the beginnings of an innovation hub in two of the companies we studied, but that was all. And both of those were snuffed out by the end of study period. Interesting, and discouraging.

So we kept studying. How do companies that want a sustained BI capability execute it? Is an innovation hub the right approach? What alternatives were being tried? Well, that study’s just been completed, and what we’ve learned form the basis for this blog. This blog is about building an innovation capability that will last. It’s about developing an innovation function. Companies are doing it. They’re getting there. It’s early yet, but it is happening.

Here are the companies we’ve been studying since about 2001: All of them had a declared strategic intent to develop or evolve a sustainable BI capability:

It’s amazing how much attention is being devoted to developing not just one random breakthrough, but an entire innovation capability…especially since the late 1990s.

We visited each company. Asked about all aspects of the management system for innovation. Met with the individual or board responsible for the BI capability development (we’ll call this person or team the hub leadership). Met with the individual or team to whom the hub leader reported. Met with the hub leader’s staff and, in some cases, team leaders of projects that were part of the breakthrough project portfolio.

Every six months for the next three years we checked in to see what was up. How were things going? What changes had they made? Why???? In all cases except one, we spoke with the company president or a senior vice president or a chief technology or chief strategy officer of the company.

Other companies started to contact us…they wanted to participate in our study. Intel called!!! So, we formed a second group comprising these firms that met at Rensselaer Polytechnic Institute’s Lally School of Management & Technology every six months for the duration of the study, and they debated a bunch of issues while we got to watch and learn. This group included

They are a wonderful set of participants, they’re all interested in furthering their own learning and that of the collective and larger innovation community, and we are honored to have had the opportunity to work with them.

So, welcome to our blog! We look forward to telling you what we’re seeing in the world of breakthrough innovation in established companies, and to hearing your experiences as well.

December 11, 2007   No Comments