Managing innovation

Source: THE OTHER SIDE OF INNOVATION,

SOLVING THE EXECUTION CHALLENGE

Harvard Business Review Press, Copyright, 2010 Govindarajan and Trimble

Managing

Execution

and getting

new decisions done

Innovation

isputting ideas into action.

1Ron McFarland, Ota-ku, Tokyo, Japan

Innovation – It is getting things done

after a decision has been made.

Innovation = ideas + execution

Innovation is not just ideas. It

is ideas that are acted on, and

the result is

something achieved.


Innovation & motivating people

Innovation = ideas + motivation

In some companies and for

some decisions to innovate

and achieve something, all

that is needed is to motivate

people on the front line to

come up with ideas and

personally act on them.


Innovation & processes/procedures

Innovation = ideas

+ process/procedures

For some decisions to

innovate, it is best to come

up with ideas and achieve it

through detailed company

procedures and processes.


Innovation & leader support

Innovation = ideas + leaders

In still other companies,

decisions to innovate

successfully is coming up with

ideas and having strong

leaders to make them reality.


Organizational and scheduling requirements

Innovation = ideas + leaders

+ team (organization) + plan (schedule)

In some companies and for

major decisions to innovate

successfully, it must come

up with ideas, assign a

major leader, develop a

dedicated team and

establish an action plan.


Innovation – The need for organization & planning

The need to reassess organizational structure and project planning

is often overlooked. For major projects that greatly differ from the

ongoing operation, this is a major error and the chance of failure

increases greatly.

Put

innovation

into action

Strategy

Organization

& PlanExecutionStrategy

Organization

& Plan

Newly decided project

Ongoing operation (core business)


Innovation – It is getting things done after a

decision has been made.

1. New organization chart

2. New business cards

3. Detailed job descriptions

4. Physically separated location away from ongoing operation

5. Make a Gantt chart of activities, assignments and schedule

Organization

& Plan

Newly decided project

Strategy

Put

innovation

into action

Buildproject team like a start-

up company


Ongoing operations and executing changes

Operations

&

processing

(Processing)

Operations

&

processing

Outbound

items &

services

Marketing

&

sales

After

sales

support

Inbound

items &

services

(Processing) (Shipping) (Service)(Receiving) (Marketing)


Project members

Operations & processing

shared staffDedicated team

Operations

&

processing

Outbound

items &

services

Marketing

&

sales

After

sales

support

Inbound

items &

services

New Project

Team

The dedicated team could be from internal employee transfers or hired from

the outside. This is dependent on the skills, desires and talent required. It also

depends on who is available in the company. Usually, the project members

should be represented by both. All should want change and improvement.

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Ron McFarland, Ota-ku, Tokyo, Japan

Challenges of partnership

Shared staff Dedicated teamProject Team

Ongoing

business

leader

New

project

leader

Challenge #1Competition with ongoing business for

scarce resources

Challenge #2Divided time, energy and attention of shared staff

Challenge #3Disharmony in

partnership

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#1 challenge, scarce resources

Ongoing

business

leader

New

project

leader

Challenge #1Competition with

ongoing business for scarce resources

Conflict resolution1. Make a formal, documented allocation of funds for the project.

2. Make a formal, documented allocation of shared personnel’s time.

3. Confirm a balance between short-term (mostly ongoing related) and long-

term (mostly new project) gains.

4. If the use of resources for a new project impacts in any way on ongoing

business, the new project budget should cover the losses.

5. Leaders should discuss all contingency plans in advance of concern.

The conflict1. If the needs of the new project grows, the project leader might have to

promote the priority of the project.

2. He might have to request a higher budget.

3. On the other hand, the ongoing business leader might promote his own

ongoing, core business to increase direct profits.

¥

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#2 challenges, dividing shared staff’s attention

Shared staffChallenge #2

Divided time, energy and attention of shared staff

The resolution1. The value of the new project must be understood and believed in by members in the ongoing

business operation. This concept should be repeatedly promoted at the top level, mid-

management level and operational level.

2. All senior executives should be new project advocate when there is stress in time, energy and

attention.

3. Furthermore, the new project leader must be flexible when the ongoing business becomes

overloaded, as they are the profit-center of the organization that funds all projects.

4. At the departmental level, the ongoing operation could charge the new project for excess work

provided.

5. A special bonus could be given to shared staff that work over a certain amount.

The concern1. The shared staff may consider the new project a distraction to his work.

2. The shared staff might be under short-term time pressure.

3. The shared staff might not consider the new project important.

4. The shared staff might have stronger loyalties and formal ties to the ongoing business operation.

5. The shared staff might feel the new project will damage the ongoing business operation (weaken

brand, customer/supplier loyalties – cannibalize current business).

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#3 challenges, partnership relationships

Shared staff Dedicated teamProject Team

Challenge #3Disharmony in

partnership

The resolution1. Make the division of responsibility as clear as possible.

2. Reinforce common values for both groups.

3. Add more internal staff (less outside hires) on the project team to support cooperation,

as they have established relationships.

4. Locate key staff near the dedicated team for face-to-face interaction.

The concern1. The differences are important to gain value, but it could cause rivalry.

2. Common conflict can involve perceived skill level of individuals.

3. Conflict could result if management gives too much praise to one side (either ongoing

business or new project).

4. Conflict could results from differing opinions on performance assessments.

5. Conflict on compensation could occur.

6. Conflict on decision authority could occur.

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Getting results through experiments

PlanWhat do you want to

learn or confirm? What

opportunity signals

should be amplified?

Predict

OutcomesWhat do you think

the outcome will be?

Execute

experimentConduct the most

accurate experiment

you can.

CompareCompare the experiment

results with plan. Discuss

and plan next action.

Learning

through

experiments

Don’t guess

without reliable

data!

I experiment as

much as possible

and as fast as

possible.

Fail-Forward-Fast – When you do evaluations often, you will feel

the direction the project is going, forward or backward.

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Prediction differences - ongoing operation vs. new project

Time

Pre

dic

tio

n

- Under estimate

+ over estimate

Informed estimates

Pilot experiment

Wild guesses

Never tried

Reliable forecasts

Repeated experience

Ongoing operations have quite reliable forecasts with their work history.

New projects do not. This must be planned for.

Exact outcome

Learning by experience and experiments

UnknownFuture

16


Identifying the critical unknowns

A company must have open internal and external discussions

on critical unknown factors. Then, cause-and-effect simulations

should be recorded.

Co

nse

qu

en

ces

if w

ron

g?M

ino

r

Mo

der

ate

S

ever

e

Certainty of predictionCertain Educated guess Wild guess

Least critical unknowns

Most critical unknowns

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Planning differences - ongoing operation vs. new project

Evaluating new projects Evaluating for ongoing operations1. Invest heavily in planning Invest based on budget2. Create plan and milestones Modify plan quarterly/yearly3. Discuss data and assumptions Focus on data/results4. Document and record assumptions Document clear expectations5. Try spending little but learn a lot Be on budget, time, specifications6. Results based on learning Results based on output7. Frequently reassess plan Deliver results on plan8. Evaluate positive/negative trend Evaluate positive/negative results9. Anticipate prediction revisions Avoid revisions10. Evaluate leaders on learning Evaluate based on performance

Evaluate new projects

differently. Notice the

differences below.

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Clarifying new project assumptions-1

One way to clarify new project assumptions is producing and distributing a

Gantt chart for all to see.

Milestone check point.

Project activities and responsibility can be assigned. Timing can only be estimated.

Therefore, estimated start-finish targets should be set and understood by all.

Also, there should be regular milestone reviews to make sure the project in on target.

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Clarifying new project assumptions-2

Following a flow chart like this on decision making for a new project can

greatly clarify assumptions. Also, when projects are off target, quick

counter measures can be put into action (Fail-Forward-Fast).

Technical

Financial

Make

adjustments

quickly.

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The feedback problem during a project

ColdHot

Projects are the same. Regular and often progress and cause-and-

effect reports make project adjustments easier. This greatly speeds

up project execution.

Waiting too long for

the temperature to

adjust makes it

difficult to find the

correct warmth.

Slow temperature adjustment

Spend a little, learn a lot: Time is money, and the best way to save time

and learn a lot, is by getting fast, often feedback.

Water temperature adjustment

21


Project results – If failure, find out why

There is a strong belief that most failures are due to execution only rather than

predictions. This is not true. Both share in the reason and must be studied as

to how much each. The goal is losing as little as possible and

gaining/learning as much as possible.

Study all assumptions

made and all activities

performed.

Broadly, if a project fails, there are only two reasons. The outcome is poor,

or initial prediction is wrong.

Why did we

fall short?

Poor assumptionsPoor execution

Prediction too highOutcome too low

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Project results & evaluation – Accountability

Failure comes in many forms. Nothing was achieved. No action was

taken to achieve the project. Nothing was learned.

What was learned could be

far more valuable than the

loss taken on a pilot project.

Different than ongoing operations, for new projects, goals like sales, or

profit may not be the main objective. There are three things that a new

project development team should be evaluated on.

Type of

Accountability

Results

(success of project)

Learning (expertise

and knowledge gained)

Execution (action

taken and effort made)

Did the project deliver

the predicted outcome?

Was the project executed

well and as planned?

Was there a detailed

learning process and

was expertise gained?

Focus of Evaluation

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Source: THE OTHER SIDE OF INNOVATION,

SOLVING THE EXECUTION CHALLENGE

Harvard Business Review Press, Copyright, 2010 Govindarajan and Trimble

Managing

Execution

and getting new decisions done

I hope the ideas in this

presentation will help

you get major projects

done on time and with

little expense.

Thank you

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