copyright iimg@2005 1 managing innovation by dr madhav mehra president world council for corporate...
TRANSCRIPT
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MANAGING INNOVATION
BY
DR MADHAV MEHRAPRESIDENT
WORLD COUNCIL FOR CORPORATE GOVERNANCE
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Abilityto
RespondInnovativelyto Change
The Greatest Secret of Business Success
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What is Innovation
Application of knowledge to find new and radical
ways to solve a problem and/or add value
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“Wealth in the new regime flows
directly from innovation, not
optimization; that is, wealth is not
gained by perfecting the known, but by
imperfectly seizing the unknown.”
- Kevin Kelly"New Rules for the New Economy," Wired
Art of imperfection
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Innovation Lethargy
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Diffusion of Innovation
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Diffusion of
Innovation
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Diffusion of Innovation
Fuel Cell
Jet Engine
Video Recorder
Computer Chip
1920 1930 1940 1950 1960 1970 1980 1990 2000
46
30
70
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Lethargy in Incandescent Lamp
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Dynamic Innovation
in Computer
Chip
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Success Breeds Atrophy
• Fast growth creates new paradigm • Concentration into a few companies. • Even higher demand results in incremental
improvements • Maturity brings complacency • Industry “Statesmen” • Focus on Asset Productivity • Technical Blindness & Obsolescence
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Why Innovation
Does not Happen
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Obstacles to Innovation…1
• Direction and Alignment
• A Framework for Innovation
• A Safe Environment
• Resources and Equipment
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Obstacles to Innovation…2
• Irrelevant Innovations
• A Compensation System
• Fighting Over Recognition
• Industrial Voodoo
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Incrementalism Innovation’s Worst Enemy
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“The greatest difficulty in
the world is not for people to
accept new ideas, but to
make them forget about old
ideas.”
--- John Maynard Keynes Economist
EMPTY THE CUP
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DO IT RIGHT FIRST TIME“Do it right first time”, says Tom Peters, “is insane advice”. “Nobody does
anything... INTERESTING.. right the first.. . or the twenty-first... or the forty-first... time.” Excessive emphasis on do it right first time has atrophied our imagination and dried up our creativity. Thomas Edison had to blow up thousands of bulbs before he could make one light up. Could we have had an incandescent lamp, if Thomas Edison was told, “do it right first time”?
Take Silicon Valley, arguably the most fertile economy in history, the mecca
of awesome success which gave the likes of Bill Gates riches more than most of the living monarchs. What’s the region’s secret? Dick Cavanaugh and Don Clifford, formerly at McKinsey & Company, became the gurus of mid-sized growth companies in the early 1980s. Mid-sized growth companies, they reported, work like hell to negate the other guy’ painstaking, decades-long pursuit of efficiency— by creating an innovation that is in order of magnitude beyond where that other guy has got. The objective, in effect: Put him out of business. Waste his factory. Similarly in Silicon Valley a new product comes along, leapfrogs what’s already there, and puts a dozen companies and thousands of people out of business. One of AT&T’s biggest problems is that it’s stuck with billions of dollars worth of copper wire, buried in the ground...in the age of fibre optics and wireless.
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DO IT RIGHT FIRST TIME
Nobody does anything right the first time
Atrophies imagination and dries up creativity
Thomas Edison
Silicon Valley
Reward good tries
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STIFLING INNOVATION
Regard ideas with suspicion
Go through several levels for approval
Critiscize for the sake of criticism
Problems identification as synonymous with failure
Nobody admits there is a problem
Rigid control
Count everything that can be counted
Decision enveloped in secrecy and confidentiality
Justify need to know
Management knows everything
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PARADIGM TRAPS
“Everything that can be invented has been invented.”
“Heavier than air flying machines are impossible.
“There is no likelihood that man can ever tap the power of the atom.”
Robert Millikan, Nobel Prize Winner Physics, 1923
Charles Duzaell, Director U.S. Patent Office, 1899
Lord Kelvin, 1895
Contd..
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“There is to be a world market for just 5 computers.”
“There is no reason for individuals to have a computer in their homes."
"Digital television defies the law of physics."
PARADIGM TRAPS Contd...
Thomas J. Watson
Ken Olsen of PEC, 1997
US Congressional committee
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“The Americans have need of the telephone — but we do not. We have plenty of office boys.”
"To affirm that the aeroplane is going to revolutionise naval warfare of the future is going to be guilty of the wildest exaggeration."
"A severe depression like that of 1920s is outside the range of possibility."
- Sir William Preece, Chief Engineer British Post Office, 1876
Nov. 16 1929, Harvard Economic Society
PARADIGM TRAPS Contd...
Scientific American,1910
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POWER OF PARADIGM
• You can live by the rules and die by the rules
• A paradigm is any set of rules that defines boundaries within which to operate
• “That is impossible”- is a statement not about truth but about paradigms
• Organisations are forest of paradigms
• By asking what is impossible you can find your future
• Once you give yourself permission to think about the things that are obviously impossible, you are on your way to shaping your future
• Neglect the future and no one will thank you for taking care of the present
• Leadership is not about titles. Its about purpose.
• You manage within paradigms but lead between paradigms
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What is it, you think is
Impossible
to doif you could do it
will fundamentally t r a n s f o r m
your business ?
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HOLY TRINITYBRAHMA, VISHNU, SHIVA
REMEMBER SHIVA
ORGANISED STRATEGIC FORGETFULNESS
PLANNED DESTRUCTION
CANNIBALISATION
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RESISTORS
Low management expectations
Ineffective coaching
Poor team leadership
Unsupportive or inconsistent culture
Undefined vision or values
Poor communication skills
Removing Restraints to Motivation
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The Tao of Team Leadership
A good group is better than a spectacular group. When leaders become supertars, the teacher outshines the teaching.
The leader who tries to control the group through force does not understand group process. Force will cost you the support of the group .... Every law creates an outlaw.
The wise leader settles for good work and then lets others have the floor. The leader does not take all the credit for what happens and has no need for fame.
Learn to lead in a nourishing manner.
Learn to lead without being possessive.
Learn to be helpful without taking the credit.
Learn to lead without coercion.
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Ready Fire! Aim Fast Prototyping
It’s one thing to say “run like mad and then change direction.” Or urge: “Ready. Fire! Aim,” Or: Just Do It. But how do you do it? One technique stands head and shoulders above the pack: fast prototyping.
Michael Schrage, grand doyen in innovation, isn’t given to overstatement, and yet he urges that a culture of rapid prototyping is the core competence among innovation’s winners.
Schrage points to rapid-prototyping champs such as Hewlett-Packard, 3M, Microsoft, and Sony to make his point. At the latter, the mean time to prototype is an astonishing five days. Competitors take several months, at best, to do the same.
Schrage says specification-driven companies require that every “i” be dotted and “t” be crossed before anything can be shown to the next level of management. Prototype-driven companies, by contrast, love to . . . PLAY. They are open to new ideas. They cherish quick-and-dirty tests and experiments. Free-flowing exchange around rough models is the norm. It’s not that sloppy work is encouraged or tolerated; it’s just that hasty experiments to gather some real data are “the way we do business around here.”
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The Accelerating Pace of InnovationClearly, in a world where everyone is trying to innovate, the speed at which innovation takes
place becomes critical.. The Japanese invasion of the small-car market in the US is an example that amply illustrates the point. Constantly increase your rate of innovation — or else!
Here are some recent examples on the accelerating pace of innovation:
•When John Scully became chairman of Apple in 1984, he set a goal to reduce their product-development time to one year from three and a half.
•To counter a threat from Yamaha in the Japanese motorcycle market. Honda introduced thirty new models within a six-month period.
•With Internet making waves in 1995 and Netscape emerging as a market leader Microsoft with its undisputed dominance in the personal computer software market found itself on to the wrong foot. Bill Gates did not wait long to re-evaluate their strategy and swing the rudder of Microsoft's Super Tanker full 180 degree. Facing the dawning realisation of a huge shift in its market, Bill Gates committed a full quarter of his net wealth — estimated $4 billion at that time, in the quest to be a major player on the internet scene. The result was that within 3 years his net wealth increased by over 12 times.
•Compaq Computer came out of nowhere to challenge IBM in certain segments of the microcomputer market. Compaq claims its product-development time of nine months gave it an edge over IBM’s.
•More dramatic is the lesson learned by the Phillips company in the home video field. Their 2000 videodisc player was technically excellent but came in only one model and was late getting to market. Licking its wounds, Phillips carefully prepared itself for the CD-player craze by putting an entire series of flexibly designed units on the market.
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Challenge
Freedom
Idea management
Trust/openness
Dynamism
Risk taking
Six steps for creating & sustaining innovation
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SILICON VALLEY’S SUCCESS SECRETS
Tolerance of Failure (It’s a badge of honour.)
Tolerance of Treachery (No such thing as loyalty.)
Pursuit of Risk (of 20 V.C.-funded start-up, four go bankrupt, six lose money,Six do okay, three do well, one hits the jackpot.)
Willingness to Reinvest (Cash flows into The Valley . . . and stays there.)
Enthusiasm for Change (“Obsolete ourselves or the competition will.”)
Promotion on Merit (Politics counts for little. Performance counts for all.)
Obsession with Product (Find the “cool idea.”)
Openness to Collaboration (generations last months . . . borrow and get going.)
Variety, Variety, Variety (Mix fleeting with permanent Anybody Can Plan (“I can be rich.”)
John Mockelthwaite, management editor for The Economist.
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Managing Innovation
• It is all in the vision• Vision of new markets and new
customers• Creating, communicating and living a
vision• Innovation is about execution
Contd….
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Managing Innovation
• Managing culture is most crucial
• Skilled management of organisational politics
• Technology cycles drive innovation streams
• Ambidextrous organisations help compete for today and tomorrow
Contd….
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Managing Innovation
• Managing innovation streams means managing discontinuities
• Innovation is a team sport• Recognizing people and building a
team• Instilling Pride• You will be fired for not making a
mistake• Embracing contradictions
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Sustaining Innovation
“A sustaining innovation targets demanding, high-end customers with better performance than what was previously available.
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Disruptive Innovations• Disruptive innovations, in contrast, don’t
attempt to bring better products to established customers in existing markets. Rather, they disrupt and redefine that trajectory by introducing products and services that are not as good as currently available products. But disruptive technologies offer other benefits––typically, they are simpler, more convenient, and less expensive products that appeal to new or less-demanding customer.”
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Disruptive Companies
• Amazon.com,
• Charles Schwab
• Dell Computer
• eBay
• Linux
• McDonalds
• Blackberry
• Apples iPod
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Poor are the Greatest Source
of Innovation
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In today’s warpspeed Economy you either
INNOVATE or
Get Eliminated
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PROACTIVATE
P Pricing Natural Capital R Radically increasing Energy Efficiency O Opting for Minimalist Design A Adopting Zero Waste System C Capturing, Sequestering and storing CO2 T Turning to Renewables I Investing in Green Issues & Green Technology V Vigorously Pursuing Market Mechanisims A Activating Women and Children to Drive Change T Training Staff, Community to Execute the change E Experiential Living
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The End