Innovation of Management/ Management of Innovation?

Dr. Rajib Roy

Do We Love It or Hate It?
 The Flow of Innovation

Operation
al System

Adaptive
Adaptive Space
Space
Innovation

Entrepreneuri
Level of

al System

Operation
al System

Adaptive
Space

Entrepreneuri
al System

Time
The Flow of Innovation
The Brick Wall
Networks/Information Flows
Orchestrating for Better Flow
Orchestrating for More Better Flow
Orchestrating for Complete Flow
The New Order: Adaptability
We Need To Enable The Adaptive Process
Common Strategies to Grow

 Move upmarket to serve higher end, higher margin clients with greater product
demands.

 Move down-market to serve less complex, lower margin clients with fewer
product demands.

 Expand into new markets:

 Internationally
 New industries
Transforming Innovation into Strategy
The Innovation Matrix

Source: Nagji and Tuff (2012)

Matching Strategy to the Innovation Ecosystem

Source: Adner (2006)

Innovation Models

Source: Anthony et al
(2006)
Screening for Success

Source: Day (2007)

Conceptualizing Risk in Innovation Strategy

Source: Day (2007)

Profiting from Innovation

“If an innovating firm does not

target its R&D resources
towards new products and
processes which it can
commercialize advantageously
relative to potential imitators
and/ or followers, then it is
unlikely to profit from its
investment in R&D.”
David J. Teece
Source: Teece (1986)
The Other Side of Innovation

 Innovation within the ongoing operations of a mature organization is difficult due

to fundamental incompatibilities:
 Ongoing operations engage in repeatable and predictable activities.
 Innovation requires non-routine activities in the face of great uncertainty.
 Thus, companies often set up entirely separate efforts to carry out innovation.
 However, complete isolation is also flawed because the organization fails to leverage
its existing skills, asset base and the opportunity to access resources a start-up would
not have.
 Govindarajan and Trimble argue that innovation should thus be executed via a
partnership between:
 A newly formed Dedicated Team whose sole focus is innovation and
 The Performance Engine (the unit responsible for ongoing operations).
The Other Side of Innovation

 Three basic steps to making the partnership work:

 Intelligently allocate tasks to the Performance Engine and the Dedicated Team.

 Assemble the right Dedicated Team.

 Anticipate and manage inevitable conflicts in the partnership.

The Other Side of Innovation

 Three Divide labour within the partnership:

 The Performance Engine (PE) should only be allocated tasks that

 Fall within the capabilities of members of the PE team and Dedicated Team

 Flow along the same path as ongoing operations, from person to person, at the same pace
and with the same people in charge. Otherwise, these tasks will disrupt the PE and/or
generate conflict between the innovation and ongoing operations.

 All other tasks should be assigned to the Dedicated Team.

The Other Side of Innovation

 Manage conflicts in the partnership

 Constantly reinforce a relationship of mutual respect
 Profits from the Performance Engine are needed to fund the innovation effort, which will
sustain profits in the future.

 The innovation leader must be both collaborative and positive – and must have
high level support with the parent organization.

 The company must set up organizational structures to manage demands for

resources (such as capital or Shared Services team) by each of the organizations, in
all instances fairly balancing the needs of both the Performance Engine and the
Dedicated Team.
Building the NextGen Organization and Team
Building the NextGen Organization and Team

 Assemble the right Dedicated Team

 Approach this process as if you were starting a new company from scratch.
 Hire the best people possible, from whatever source.
 Create a new culture, with new work relationships and processes, making
sure to avoid the seven traps:
 Same People
 Same Titles and Job Definitions
 Same Power Centre
 Same Metrics
 Same Culture
 Same Processes
 Same Policies
Building the NextGen Organization and Team

 NextGen management needs to develop an entrepreneurial culture by

 Recruiting top talent whatever the cost and from whatever the source.
 Seeking out individuals who are innovative, technically skilled, risk-taking.

 Leverage existing expertise:

 Including both new hires and existing employees.

 Prevent replication of Stowe culture:

 Intentionally create new organizational structure (roles, titles, reporting relationships).
 Fewer rules, less bureaucracy.