The Other Side Of Innovation

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1 The Other Side Of Innovation Presented by: Chris Trimble Professor, Tuck School of Business at Dartmouth 2011: Trimble and and Govindarajan

2 2011 Trimble and Govindarajan

3 2011 Trimble and Govindarajan 3

4 2011 Trimble and Govindarajan 4

5 2011 Trimble and Govindarajan 5

6 2011 Trimble and Govindarajan 6

7 Innovation and ongoing operations are always and inevitably in conflict Trimble and Govindarajan 7

8 2011 Trimble and Govindarajan

9 What is innovation? Sustaining Disruptive Incremental Radical Reverse Strategic Architectural Modular Competence Enhancing Competence Destroying 2011 Trimble and Govindarajan 9

10 Definition of Innovation: Any project that is new to you and has an uncertain outcome Trimble and Govindarajan 10

11 Innovation Spectrum Easier Harder Model 1 Model 2 Model Trimble and Govindarajan

12 Models for Innovation 1. Innovation = Ideas + Motivation Encourage all employees to pursue innovation on their own initiative Trimble and Govindarajan 12

13 Innovation Spectrum Limitations of Individual Slack Time Easier Harder Model Trimble and Govindarajan

14 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 Trimble and Govindarajan 14

15 Innovation Spectrum Limitations of Individual Slack Time Limitations of Repeatable Innovation Easier Harder Model 1 We Need a Third Model! Model Trimble and Govindarajan

16 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 Trimble and Govindarajan 16

17 The LAKE WOBEGON effect. Cognitive psychologists call it Illusory Superiority Trimble and Govindarajan 17

18 Is there an ANTI LAKE WOBEGON effect? 2011 Trimble and Govindarajan 18

19 YES! Ability to learn to juggle. Ability to learn to ride a unicycle. Ability to have mind-blowing sex Trimble and Govindarajan 19

20 2011 Trimble and Govindarajan 20

21 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 Trimble and Govindarajan 21

22 2011 Trimble and Govindarajan 22

23 Innovation Spectrum Limitations of Individual Slack Time Limitations of Repeatable Innovation Easier Harder Model 1 We Need a Third Model! Model Trimble and Govindarajan

24 2011 Trimble and Govindarajan 24

25 Towards a Better Innovation Story Creativity Execution Individual Achievement Organizational Excellence 2011 Trimble and Govindarajan 25

26 Business Organizations Are Designed to be Performance Engines Ongoing Operations Performance Engine Today s Customers Today s Competitors Efficiency Accountability On-Spec On-Budget On-Time Profitable 2011 Trimble and Govindarajan 26

27 Fundamental Incompatibilities Method of the Performance Engine Repeatability Predictability Realities of Innovation Non-Routine Uncertain 2011 Trimble and Govindarajan 27

28 Does this mean BREAK ALL OF THE RULES! Should be the Innovator s Mantra? 2011 Trimble and Govindarajan 28

29 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 2011 Trimble and Govindarajan 29

30 Strive for Mutual Respect Innovation Leaders, Remember: Conflict with the Performance Engine is normal. Performance Engine Leaders, Remember: No Performance Engine lasts forever Trimble and Govindarajan 30

31 Fundamental Incompatibilities Objectives of Ongoing Operations Repeatability Predictability Realities of Innovation Non-Routine Uncertain Can Lead to Challenges in Organizing Planning 2011 Trimble and Govindarajan 31

32 Innovation: The Missing Link Ongoing Operations Strategy Organizing and Planning Execution Innovation Committing to An Innovative Idea Organizing and Planning Making Innovation Happen 2011 Trimble and Govindarajan 32

33 The Third Model 1. Innovation = Ideas + Motivation 2. Innovation = Ideas + Process 3. Innovation = Ideas + Leaders + Team + Plan 2011 Trimble and Govindarajan 33

34 Models 1 and 2 Put Innovation Inside of the Performance Engine Performance Engine (Innovation Inside) 2011 Trimble and Govindarajan

35 Model 3 is Different. It always involves creating a Dedicated Team Trimble and Govindarajan

36 Build the Team Shared Staff PARTNER- SHIP Dedicated Team 2011 Trimble and Govindarajan 36

37 Management Structure Senior Leader Performance Engine General Manager Project Leader Functional Heads All Other Performance Engine Staff Shared Staff Partnership Dedicated Team 2011 Trimble and Govindarajan 37

38 2011 Trimble and Govindarajan

39 2011 Trimble and Govindarajan

40 Newspaper vs. Website Daily news cycle vs. Continuous news Premium price vs. Free Journalism expertise vs. Software expertise Broad-based brand building vs. Precise targeting Text and Pictures vs. Multimedia Content 2011 Trimble and Govindarajan 40

41 CEO looks to outside search firm to fill a very senior position 2011 Trimble and Govindarajan 41

42 Early NYTD Structure 2011 Trimble and Govindarajan 42

43 Budget increases from $10M to $35M by 1998 Scorecard Don t lose too much Don t damage brand Don t cause trouble 2011 Trimble and Govindarajan 43

44 2011 Trimble and Govindarajan

45 Build the Team Shared Staff PARTNER- SHIP Dedicated Team 2011 Trimble and Govindarajan 45

46 A Common Error Shared Staff PARTNER- SHIP LPE 2011 Trimble and Govindarajan 46

47 CEO chooses to reconstitute NYTD as a separate business unit 2011 Trimble and Govindarajan 47

48 Restructured NYTD 2011 Trimble and Govindarajan 48

49 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 2011 Trimble and Govindarajan 49

50 Rapid expansion of features. Well beyond newspaper.com. Rapid revenue growth, well beyond expectations Trimble and Govindarajan 50

51 Restructured NYTD 2011 Trimble and Govindarajan 51

52 Despite beyond-expectations topline growth, lost $60M in Trimble and Govindarajan 52

53 Company considers reintegration of NYTD 2011 Trimble and Govindarajan 53

54 CEO names sr. exec task forces focused on improving relationships between the two units Trimble and Govindarajan 54

55 New York Times Digital s Evolution Cautious Growth Rapid Growth Profitable Growth Integrated Organization Separate Organization Carefully Managed Partnership Trimble and Govindarajan 55

56 2011 Trimble and Govindarajan

57 The Third Model 1. Innovation = Ideas + Motivation 2. Innovation = Ideas + Process 3. Innovation = Ideas + Leaders + Team + Plan 2011 Trimble and Govindarajan 57

58 2011 Trimble and Govindarajan Innovation is experimentation

59 Running an experiment is easy. Running a disciplined experiment is hard Trimble and Govindarajan

60 The Payoff: If you run a disciplined experiment, you learn as quickly as possible Trimble and Govindarajan

61 2011 Trimble and Govindarajan Learning is a process of making predictions and then improving them.

62 Accuracy of Predictions Learning is Making Better Predictions Wild Guesses Informed Estimates Reliable Forecasts Learning Years 2011 Trimble and Govindarajan 62

63 Better Predictions lead to Better Decisions which in turn lead to Better Results 2011 Trimble and Govindarajan

64 Disciplined Experimentation State a Hypothesis and Plan the Experiment Compare Predictions and Outcomes; Assess Lessons Learned Predict Outcomes; Document Supporting Logic and Assumptions Execute Experiment, Measure Results, Document Observations 2011 Trimble and Govindarajan 64

65 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 Trimble and Govindarajan 65

66 The Biggest Challenge: How do you evaluate an innovation leader? 2011 Trimble and Govindarajan

67 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? 2011 Trimble and Govindarajan 67

68 2011 Trimble and Govindarajan

69 The Other Side Of Innovation Presented by: Chris Trimble Professor, Tuck School of Business at Dartmouth 2011: Trimble and and Govindarajan

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