Innovation
Management
1
Make sure you’ve fixed
(or are at least aware of)
the strategic problem
2
What can be done?

Lead:
– Build the “ambidextrous” senior team:
communicate the strategy, allocate resources

Structure:
– Explore transitional and intermediate forms

Incent:
– Explain “just what’s in this for me?”

Build:
– Lay the foundations for a new culture, new
expectations
3
What can be done?

Lead:
–
–
–
–
Develop a clear strategy
Generate energy
Build an “ambidextrous” senior team
Make decisions
4
Develop a clear strategy
How will we
Create value?
How will we
How will we
Deliver value? Capture value?
5
And allocate resources to it!
100%
How will we
Create value?
80%
60%
40%
20%
How will we
Capture value?
How will we
Deliver value?
0%
1
2
3
4
5
6
6
7
Generate Energy

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
– Generate some small successes: build enthusiasm and
“infect” the organization
– Leap boldly into the future
8
An established company which,
in an age demanding innovation,
is not able to innovate, is doomed
to decline and extinction.
-- Peter Drucker
9
Build ambidextrous organizations:
Differentiation vs. integration
General Manager
Existing business
Mfg
Sales
R&D
Emerging business
Mfg
Sales
R&D
10
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
11
Build an Ambidextrous Senior Team

Ambidextrous senior teams must manage
– both more mature, operationally focused businesses
– and higher growth, emerging businesses

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
– E.g. Resource allocation processes that allow for
different time horizons, milestones, rates of return
12
When you innovate, you've got to
be prepared for everyone telling
you you're nuts.
--Larry Ellison
13
If at first the idea is not absurd,
then there is no hope for it.
--Albert Einstein
14
What can be done?


Lead:
Structure:
– Implement appropriately
– Choose the right people
– Manage linkages
15
Balance entrepreneurial energy and
coordination
Entrepreneurial
Energy
Startups
Successful disruptive
innovation unites
entrepreneurial insight with
effective coordination
B as U
Control & Coordination
16
Choose a structure that fits the firm’s
strategic positioning and skills
Entrepreneurial
Energy
Acquire
Joint
venture/
alliance
Internal
venture
Build inside
existing unit
Control & Coordination
17
18
What can be done?



Lead
Structure:
Incent
– Explain “just what’s in this for me?”
– Manage the balance between:
• Individual outcomes and team/firm outcomes
• “Objective” and “subjective” measures
19
The incentive problem is an inherently
difficult one…
Entrepreneurial
Drive,
Freedom from
the “old ways”
Startups
B as U
Control & Coordination
20
Using “high powered” incentives may
reduce coordination
Entrepreneurial
Drive,
Freedom from
the “old ways”
?
Acquire
Joint
venture/
alliance
Internal
venture
Build inside
existing
existing units
unit
Control & Coordination
21
Large corporations welcome
innovation and individualism
in the same way the dinosaurs
welcomed large meteors.
--Dilbert
22
What can be done?




Lead
Structure
Incent
Transform the culture:
– Build on core values
– Practice thinking in new ways
– Manage from the heart
23
24
Case Discussion: IBM

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?
25