1. 1 Innovation Management

2. 2 Make sure you’ve fixed (or are at least aware of) the strategic problem

3. 3 What can be done? Lead: Lead: – Build the “ambidextrous” senior team: communicate the strategy, allocate resources Structure: Structure: –Explore transitional and intermediate forms Incent: Incent: – Explain “just what’s in this for me?” Build: Build: –Lay the foundations for a new culture, new expectations

4. 4 What can be done? Lead: Lead: –Develop a clear strategy –Generate energy –Build an “ambidextrous” senior team –Make decisions

5. 5 Develop a clear strategy How will we Create value? How will we Capture value? How will we Deliver value?

6. 6 And allocate resources to it! How will we Create value? How will we Deliver value? How will we Capture value? 100% 80% 60% 40% 0% 20% 654312

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8. 8 Generate Energy Position the discontinuity as an urgent threat: Position the discontinuity as an urgent threat: –Flirt with bankruptcy –Make vivid the idea that the firm might flirt with bankruptcy Position the discontinuity as an opportunity Position the discontinuity as an opportunity –Generate some small successes: build enthusiasm and “infect” the organization –Leap boldly into the future

9. 9 An established company which, in an age demanding innovation, is not able to innovate, is doomed to decline and extinction. -- Peter Drucker

10. 10 Build ambidextrous organizations: Differentiation vs. integration General Manager Existing businessEmerging business MfgSalesR&DMfgSalesR&D

11. 11 The scope of the ambidextrous organization Alignment of: Exploitative Business Exploratory Business Strategic intent Critical tasks Competencies Structure Controls, rewards Culture Leadership role Ambidextrous Leadership

12. 12 Build an Ambidextrous Senior Team Ambidextrous senior teams must manage Ambidextrous senior teams must manage –both more mature, operationally focused businesses –and higher growth, emerging businesses High performing senior teams show: High performing senior teams show: –High conflict, high respect decision making capabilities –High levels of trust and truth telling –The ability to manage divergent incentive systems and career paths Coupled with processes that support the divergent management of quite different business units Coupled with processes that support the divergent management of quite different business units –E.g. Resource allocation processes that allow for different time horizons, milestones, rates of return

13. 13 When you innovate, you've got to be prepared for everyone telling you you're nuts. --Larry Ellison

14. 14 If at first the idea is not absurd, then there is no hope for it. --Albert Einstein

15. 15 What can be done? Lead: Lead: Structure: Structure: –Implement appropriately –Choose the right people –Manage linkages

16. 16 Control & Coordination Balance entrepreneurial energy and coordination Entrepreneurial Energy Successful disruptive innovation unites entrepreneurial insight with effective coordination Startups B as U

17. 17 Control & Coordination Choose a structure that fits the firm’s strategic positioning and skills Joint venture/ alliance Entrepreneurial Energy Internal venture Build inside existing unit Acquire

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19. 19 What can be done? Lead Lead Structure: Structure: Incent Incent –Explain “just what’s in this for me?” –Manage the balance between: Individual outcomes and team/firm outcomesIndividual outcomes and team/firm outcomes “Objective” and “subjective” measures“Objective” and “subjective” measures

20. 20 Control & Coordination The incentive problem is an inherently difficult one… Entrepreneurial Drive, Freedom from the “old ways” Startups B as U

21. 21 Control & Coordination Using “high powered” incentives may reduce coordination Acquire Build inside existing units Joint venture/ alliance Entrepreneurial Drive, Freedom from the “old ways” Internal venture Build inside existing unit ?

22. 22 Large corporations welcome innovation and individualism in the same way the dinosaurs welcomed large meteors. --Dilbert

23. 23 What can be done? Lead Lead Structure Structure Incent Incent Transform the culture: Transform the culture: –Build on core values –Practice thinking in new ways –Manage from the heart

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25. 25 Case Discussion: IBM What was the situation facing Lou Gerstner as he came in as IBM’s new CEO? What was the situation facing Lou Gerstner as he came in as IBM’s new CEO? What did Gerstner do to deal with IBM’s problems? Do you think Gerstner has really turned around IBM? What did Gerstner do to deal with IBM’s problems? Do you think Gerstner has really turned around IBM?