© 2011 Trimble and Govindarajan
Presented by: – Chris Trimble – Professor, Tuck School of
Business at Dartmouth
The Other Side Of Innovation
© 2011: Trimble and Govindarajan
© 2011 Trimble and Govindarajan 7
Innovation and ongoing operations are always and
inevitably in conflict.
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What is innovation?
Sustaining Disruptive
Incremental Radical Reverse Strategic
Architectural Modular
Competence Enhancing Competence Destroying
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Definition of Innovation:
Any project that is new to you and has an uncertain outcome.
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Models for Innovation
1. Innovation = Ideas + Motivation
Encourage all employees to pursue innovation on their own initiative.
© 2011 Trimble and Govindarajan
Innovation Spectrum
Model 1
Limitations of Individual Slack Time
Harder Easier
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Models for Innovation
1. Innovation = Ideas + Motivation
2. Innovation = Ideas + Process Treat innovation like any other business process. Script it. Make it efficient. Make it routine.
© 2011 Trimble and Govindarajan
Innovation Spectrum
Model 1
Limitations of Repeatable Innovation
Model 2
Limitations of Individual Slack Time
Harder Easier
We Need a Third Model!
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“That’s the news from Lake Wobegon …
…where all of the women are strong…
…all of the men are good
looking…
… and all of the children are above average.”
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The LAKE WOBEGON effect.
Cognitive psychologists call it “Illusory Superiority.”
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YES!
Ability to learn to juggle.
Ability to learn to ride a unicycle.
Ability to have mind-blowing sex.
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YES!
Ability to learn to juggle.
Ability to learn to ride a unicycle.
Ability to have mind-blowing sex.
Your company’s ability to innovate.
© 2011 Trimble and Govindarajan
Innovation Spectrum
Model 1
Limitations of Repeatable Innovation
Model 2
Limitations of Individual Slack Time
Harder Easier
We Need a Third Model!
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Creativity Execution
Individual Achievement
Organizational Excellence
Towards a Better Innovation Story
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Business Organizations Are Designed to be Performance Engines
Performance Engine
Ongoing Operations
• Today’s Customers • Today’s Competitors • Efficiency • Accountability • On-Spec • On-Budget • On-Time • Profitable
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Fundamental Incompatibilities
Predictability Repeatability Method of the Performance Engine
Uncertain Non-Routine Realities of Innovation
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Does this mean…
“BREAK ALL OF THE RULES!”
Should be the
Innovator’s Mantra?
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“Break all of the rules” does not work
1. Innovators need the Performance Engine.
2. Sounds like “Break the Performance Engine”
3. Sounds like “No Rules”
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Strive for Mutual Respect
Innovation Leaders, Remember: Conflict with the Performance Engine is normal. Performance Engine Leaders, Remember: No Performance Engine lasts forever.
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Fundamental Incompatibilities
Predictability Repeatability Objectives of Ongoing Operations
Uncertain Non-Routine Realities of Innovation
Planning Organizing Can Lead to Challenges in
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Committing to
An Innovative
Idea
Making
Innovation
Happen
Innovation
Innovation: The Missing Link
Organizing
and
Planning
Execution
Strategy
Ongoing Operations
Organizing
and
Planning
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The Third Model
1. Innovation = Ideas + Motivation
2. Innovation = Ideas + Process
3. Innovation = Ideas + Leaders + Team + Plan
© 2011 Trimble and Govindarajan
Models 1 and 2 Put Innovation Inside of the Performance Engine
Performance Engine
(Innovation Inside)
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Management Structure
Partnership Dedicated Team
Shared Staff
Project Leader
Functional Heads
General Manager
Senior Leader
Performance Engine
All Other Performance
Engine Staff
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Newspaper vs. Website
Continuous news Daily news cycle vs.
Free Premium price vs.
Software expertise Journalism expertise vs.
Precise targeting Broad-based brand building
vs.
Multimedia Content Text and Pictures vs.
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Budget increases from $10M to $35M by 1998
Scorecard
Don’t lose too much
Don’t damage brand
Don’t cause trouble
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Additional Changes:
New Compensation Plan New Senior Support Staff
New Titles and Job Descriptions Redesigned Prod. Dev. Process
New Location New Culture
New IT Infrastructure
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Rapid expansion of features. Well beyond “newspaper.com.”
Rapid revenue growth, well
beyond expectations.
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CEO names sr. exec task forces focused on improving relationships
between the two units.
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New York Times Digital’s Evolution
Cautious Growth
Rapid Growth
Profitable Growth
Integrated Organization
Separate Organization
Carefully Managed Partnership
1995 1997 1999 2001 2003
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The Third Model
1. Innovation = Ideas + Motivation
2. Innovation = Ideas + Process
3. Innovation = Ideas + Leaders + Team + Plan
© 2011 Trimble and Govindarajan
Running an experiment is easy.
Running a disciplined experiment is hard.
© 2011 Trimble and Govindarajan
The Payoff:
If you run a disciplined experiment, you learn as
quickly as possible.
© 2011 Trimble and Govindarajan
Learning is a process of making predictions
and then improving them.
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Accura
cy o
f
Pre
dic
tions
Years
Learning
Wild Guesses
Informed Estimates
Reliable Forecasts
Learning is Making Better Predictions
© 2011 Trimble and Govindarajan
Better Predictions
lead to
Better Decisions
which in turn lead to
Better Results
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Disciplined Experimentation
State a Hypothesis and Plan the Experiment
Predict Outcomes; Document Supporting Logic and Assumptions
Execute Experiment, Measure Results,
Document Observations
Compare Predictions and Outcomes; Assess Lessons Learned
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A Special Kind of Plan
1. Each experiment needs a custom plan.
2. Discuss results in a separate forum.
3. Meet frequently.
4. Focus on what you don’t know.
5. Try to spend a little, learn a lot.
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Three Forms of Accountability
1. Results Did you hit your targets?
2. Actions Did you do what we agreed that you would do?
3. Learning Did you run a disciplined experiment?
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