Tuesday, April 17, 2012

Innovation Engine--Belated Post From ILTA 2011

I was looking back at ILTA Conference 2011 and at Mary Abraham's good post on Chris Trimble's August 22 keynote, and I realized it didn't lay out quite as clearly as my notes the central "performance engine" vs. "innovation engine" dilemma.  So, this extremely belated post to correct the issue covers that keynote (and also provides an opportunity to note that Mr. Trimble just published "Reverse Innovation:  Create Far From Home, Win Anywhere" with Vijay Govindarajan, also of the Tuck School of Business at Dartmouth, on April 10 2012.)

The keynote was on the subject “What are the best practices for executing an innovation strategy?” While Mr. Trimble had a great topic, he did not entirely succeed in engaging his audience. He had a very important main topic, however, that ongoing operations and serious innovation inevitably conflict within organizations; the corollary is that you won’t get major change without changing the organizational model.

Through innovation we improve the economy and lives. Information technology has been the most innovative sector over the last 20 years.

He knows how much of our time is spent dealing with everyday battles, “keeping the trains running on time.”

There is a “Mt. Ranier-like” story in every innovation journey. When you finally get the big idea, it can feel like a victory. The breakthrough from big idea to innovative product can be very challenging.

Trimble’s First Law of Innovation: Innovation and ongoing operations are always and inevitably in conflict.

Finding a way to navigate through those conflicts is an art.

He defines innovation as any project that is new to you and has an uncertain outcome. How do we execute high-degree-of-difficulty projects?

Only three models of innovation work. Model 1 addresses easiest innovations; Model 2 slightly more challenging; and Model 3 for hard innovations.

In Model 1 (Innovation=Ideas + Motivation) , every employee can be innovative, and just needs some encouragement to pursue innovation on their own initiative. It is limited by individual slack time.

In Model 2, (Innovation = Ideas + Process), innovation is treated like any other business process. It gets scripted, made efficient and routine. An example is the auto industry. It is limited to situations where every innovation is similar to innovations that have gone before.

In Model 3, innovation breaks or changes ordinary business processes.

Companies struggle with an innovation myth. “Innovation Man” struggles against the bureaucratic octopus, “one person fighting the system.” He is brilliant and clever and determined to get things done. Improve innovation by defeating this myth.

We have to put less emphasis on creativity, more emphasis execution of ideas. We need less on individual achievement and more on organizational excellence.

Organizations were designed to be “performance engines” not on innovation.

Performance Engines focus on: 
  • Today’s customers & competitors
  • Efficiency
  • Accountability
  • Getting things done on spec, on-budget, and on time
  • Profitability

 There is great power in repeatability and predictabilities. Innovation is fundamentally incompatible with that. Breaking the rules doesn’t work, because innovators need the “performance engine”; it sounds too much like “no rules.”  Strive for mutual respect between performance engine leaders and innovation leaders.
Innovation leaders have to remember that conflict with the performance engine is normal.

Performance engine leaders should remember that no performance engine lasts forever (e.g., Blockbuster).

Too often innovators and companies skip the planning and strategy requirements for execution.

In Model 3, you need a special type of team and a special kind of plan. Model 3 always needs a dedicated team. There needs to be a partnership between shared staff and the dedicated team.

Special Team

Anything more than adding more people will disrupt shared staff’s responsibility for the performance engines.

Managing the partnership is quite challenging. The project leader of the dedicated innovation team will be in conflict with the general manager. The general manager will win every time. The senior leader needs to intervene and adjudicate those conflicts.

He turns this approach to legal issues.

Under the Law2020 Innovation Challenge, clients want more help with IT. They want efficient legal processes, and they want full and easy access to all of their legal information.

You won’t get major change without changing the organizational model.

The most experienced lawyers typically manage the business, have the most authority, and manage relationships, because that works (in his terms, makes the performance engine run).

With innovation, you need to run experiments while doing no harm.

Are there some clients or projects where the normal organizational approach does not work? Do we need informational professionals comfortable partnering with clients? Do we need to consider client IT when building our own systems?

Trimble sets up the Grey Lady’s attempt to go on-line in the late 90s as a very challenging innovation problem.

The New York Times had smart people with lots of money and plenty of time. They had set up a “little performance engine”, a mirror copy of what they had been doing. They brought in an executive from outside, but early on, everyone who reported to him was an insider.

NYT spun off the web site. Martin Niemeyer (?) set up a new compensation plan, new job descriptions, changed product development process, moved to a new location, and built a new IT infrastructure. They treated it as building a new company from scratch. It was working really well, except for the relationship with the newspaper. There came to be conflicts about client relationships, branding, and use of news. That had to be resolved by a senior executive task force.

There were three phases in the relationship; cautious growth as an integrated organization, rapid growth as a separate organization, and finally profitable growth as a carefully managed partnership.

Every innovation initiative is an experiment. If you run a disciplined experiment, you learn fast. Learning is about turning guesses into estimates into forecasts. This is the learning curve you need to focus on. Better predictions lead to better decisions (which lead to better results).

A quick and inexpensive failure can be a learning experience.

For a special plan, recognize that every experiment deserves a custom plan, don’t use standard templates. A separate forum should discuss innovations and meet frequently. Review plan. Focus on what you don’t know and your assumptions. Spend a little to learn a lot.

Performance evaluations for innovation leaders are challenging.