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Making Innovation Work : How to Manage It, Measure It, and Profit from It- Wharton School Publishing |
Seven Innovative Rules of Good Innovative Management
2005-10-30
"This book challenges the prevalent misconceptions about innovation, and lays out the tools and processes necessary for an organization to harness and execute innovation (from the Introduction)."
Tony Davila, Marc J. Epstein, and Robert Shelton say, related chapters of book show that, contrary to popular belief: * Innovation does not require a revolution inside companies. * Innovation is not alchemy, with mystifying transformations. * Innovation is not primarily about creativity and having a "creative culture." * Nor is it solely about processes and stage-gate tools. * Innovation does not focus exclusively on cool new technology. * Innovation is not something that every company needs in large quantities. They argue that Making Innovation Work provides three new, important perspectives for senior managers: 1. Innovation, like many business functions, is a management process that requires specific tools, rules and discipline-it is not mysterious. 2. Innovation requires measurement and incentives to deliver sustained, high yields. 3. Companies can use innovation to redefine an industry by employing combinations of business model innovation and technology innovation. In this context, they say that innovation is not about secret formulas; it is about good management, and thus, they identify the seven Innovative Rules of good innovative management: 1. Strong leadership that defines the innovation strategy designs, innovation portfolios, and encourages truly significant value creation. 2. Innovation is an integral part of the company's business mentality. 3. Innovation is matched to the company business strategy including selection of the innovation strategy (Play-to-Win or Play-Not-to-Lose). 4. Balance creativity and value capture so that the company generates successful new ideas and gets the maximum return on its investment. 5. Neutralize organizational antibodies that kill off good ideas because they are different from the norm. 6. Innovation networks inside and outside the organization because networks, not individuals, are the basic building blocks of innovation. 7. Correct metrics and rewards to make innovation manageable and to produce the right behavior. Finally, they say that "the seven Innovative Rules are guiding principles for executing innovation in any company, business unit, non-profit organizations, or government entity. You can attain the goals embodied in the Innovation Rules by using the standard management tools - strategy, structure, leadership, management systems, and people. Because organizations are complex, no single tool is sufficient to reach any one of the goals." Every one of the Innovation Rules requires several tools as discussed in the book. Strongly recommended.
Book report by HBS Working Knowledge
2005-10-22
This book opens with some cheery news: "Much that is held as common wisdom regarding how successful innovation is managed is wrong." According to the authors, innovation does not require a company-wide revolution or mystifying transformations, nor a focus on technology or a devotion to building a "creative culture." In fact, not every company really needs a large quantity of innovation. Instead, there are a few requirements to implement a successful innovation program: specific tools, rules, and discipline; the right measurements and incentives; and the ability to integrate both business model innovation and technology innovation.
Using real-world examples from such innovative organizations as Apple, Coca-Cola, and Vodafone, this book identifies seven rules of innovation: exert strong leadership on the innovation strategy and portfolio decisions; integrate innovation into the company's basic business mentality; align the amount and type of innovation to the company's business; manage the natural tension between creativity and value capture; neutralize organizational "antibodies"; recognize that the basic unit of innovation is a network that includes people and knowledge both inside and outside the organization; and create the right metrics and rewards for innovation. Innovation comes in many flavors. For example, Apple is praised for its chancy decisions to invest in the iPod and iTunes, two "semi-radical" innovations that fundamentally changed the industry. Years earlier, rival Dell also broke with the traditional PC business by honing a direct sales strategy, but Dell's change led it to focus even more on PCs, not less. This book largely escapes a problem with many books on innovation: their relentless reuse of case studies of companies that were once rich in innovation but lost their way, apparently with little notice from the authors. So it's refreshing to note that Making Innovation Work takes a shot at Hewlett-Packard-an innovation golden boy in dozens of titles despite years of declining performance-by opining that former CEO Carly Fiorina sowed the seeds of its downward turn by changing the company's culture away from the "HP Way." We like the authoritative tone of this work, born perhaps from the experience of its trio of authors. Davila is a professor at Stanford's Graduate School of Business. Epstein was a visiting scholar at Harvard Business School and is a distinguished research professor at Rice University's Jones Graduate School of Management. Shelton is managing director of Navigant Consulting's innovation practice. Of the many recent books on innovation, this goes near the top of the list. - Sean Silverthorne 
Incrementalism leads to a long and painful death!
2005-09-30
Sticking to incrementalism will lead to a long and painful death for businesses. The only hope is innovation, especially in an age where you are not only competing with local players, but are engaged in open competition from those all around the world - some of which inherently possess lower cost structures. Innovation is the next frontier. Through innovation you'll be able to set your sights higher and create surprising experiences for your customers.
Making Innovation Work is a great book on applying structure to the innovation process. While pure innovation cannot always be systematized, applied structure is necessary to move ideas from the wonderful world of thought to the real world of application. In essence it's all about applied innovation. The authors explain seven innovation rules which talk about innovations power to redefine industry. The rules explain the need for strong leadership, reasons for weaving innovation into corporate thought, managing creativity, as well as creating the right metrics and rewards to spur innovation. All in all, Making Innovation Work is an excellent book which will show you how to stimulate and most importantly, apply innovation to create real world, bottom-line results. Entrepreneurs and managers alike need to understand that innovation is not about repackaging the old, it's about creating the new. My personal recommendation is to read Making Innovation Work as well as Clayton Christensen's Innovator's Dilemma. Go ahead - shoot for the moon! ------------------ Michael Davis Founder -- Epoch Strategic Ventures (Innovation Network) Editor, Byvation (Newsletter)
Seven innovation rules for a more structured approach to innovation
2005-09-22
Tony Davila is a Faculty Member of Stanford's Graduate School of Business. Marc J. Epstein has been a visiting professor and visiting scholar at Harvard Business School, a distinguished research professor at Rice University's Jones Graduate School of Management, and has also served at a professor at Stanford Business School and INSEAD. Robert Shelton is Managing Director of Navigant Consulting's Innovation practice, and has served as VP and Managing Director with Arthur D. Little and as Managing Director of the Technology Management practice at Stanford Research Institute. One word of warning: This review is slightly longer than I wish.
The authors use 10 chapters in this book to explain that innovation is about good innovation management. "This book challenges the prevalent misconceptions about innovation, and lays out the tools and processes necessary for an organization to harness and executive innovation." Chapter 1 - Driving Success discusses the fact that superior innovation can provide companies the opportunities to grow faster, better, and smarter than their competitors or even influence the direction of an entire industry. It is important from the outset to keep in mind the fundamental tenet of innovation "How you innovate determines what you innovate." The authors introduce the "Seven Innovation Rules", which are each discussed in detail: 1. Exert strong leadership on the innovation strategy and portfolio decisions. 2. Integrate innovation into the company's basic business mentality. 3. Align the amount and type of innovation to the company's business. 4. Manage the natural tension between creativity and value capture. 5. Neutralize organizational antibodies. 6. Recognize that the basic unit (or fundamental building block) of innovation is a network that includes people and knowledge both inside and outside the organization. 7. Create the right metrics and rewards for innovation. Obviously none of these rules are new, but the authors argue that they are interdependent and that mastering just one or two will not take an organization far enough. The second chapter discusses that fact that high-performing companies innovate by leveraging both new business models and improved technologies, whereby six levers of innovation are identified. Not all innovations are created equally and the generic types of innovation include incremental, semi-radical, and radical. Each of these levers and generic types of innovation are discussed in detail. The third chapter builds on the conclusion of the second chapter and explains that the innovation strategy must support the overall business strategy. "Without a clear game plan, and without alignment of the key players in the organization, you cannot be very successful at innovation." The authors make a distinction between play-to-win and play-not-to-lose strategies, which depends on the center of gravity and diversity of the investment within the innovation matrix. They further discuss the internal and external factors to consider in choosing an innovation strategy and risk management with relation to innovation strategy. The fourth chapter discusses the fact it is not enough to choose a strategy, but that it has to be build and embedded into the overall organization. Within this chapter there are discussions on the development of an internal marketplace for innovation, the outsourcing of innovation, the integration of innovation within the organization, and the leadership role. There is a very useful action plan for the CEO (this surely means senior management?) in order to improve the innovation organization. In the fifth chapter the authors focus on the mechanisms by which innovation (and the other tasks of organizations) gets done. "Innovation systems are established policies, procedures, and information mechanisms that facilitate the innovation process within and across organizations." These innovation systems fulfil five important roles: increase the efficiency, appropriate lines of communication, coordination between projects and team, learning, and alignment of the objectives of the various constituencies. They continue to discuss the choice and design of innovation systems, compare management systems, and electronic collaboration. The sixth chapter has a strange title - Illuminating the Pathway. It refers to measuring innovation, which is both fundamental and critical to innovation success. Although the authors recognize the strength of the old saying "What gets measured gets done", they also recognize its weakness in that many companies measure far too much. They discuss the three roles of measurements systems (plan, monitor, and learn), a balanced scorecard for measuring innovation, the design and implementation of innovation measurement systems. In addition, they also discuss the barriers to effective performance measurements. "Measurement is one of the most significant factors in successful innovation. Ironically, in many organizations, it is one of the least attended to." "Incentives and rewards are some of the most powerful management tools available." This is the subject of Chapter 7, which is probably also one of the most controversial issues going around today. Following a short discussion on motivation the authors turn towards incentive systems' design, which should reinforce a company's innovation strategy. They also discuss goals setting, performance evaluation and incentive contracts, and the key considerations with respect to designing incentives systems. Chapter 8 focuses on learning innovation, since the ability to learn faster, better, and more cheaply can mean the difference between market leadership and barely surviving. Learning in an innovative organization has these characteristics: Specific processes for learning and change link to strategy; a systems approach; shared vision; flexibility and agility; anticipation of challenges and threats; and collaborative but challenging environment. The authors then continue with a discussion on the two major types of learning (`learning to act' and `learning to learn') and the interaction between systems and the learning process. The penultimate chapter discuss how culture affects innovation, whereby it is important to note that culture is not static and continually evolves just like innovations and markets. "[Innovation] can be a vital source of competitive energy as well as an energizing force for the people in the company." However, according to the authors, the biggest threat to innovation is success which can result in complacency and dogma. They continue with a discussion on the organizational levers of an innovative culture, differences in country cultures which breed innovation cultures, and the very important role of senior management on innovation (with special responsibilities for the CEO!). The final chapter serves as a conclusion and discusses how you can apply the innovation rules to your organization. Although some people might disagree, the authors believe that "successfully executing improvements to innovation is relatively straightforward", with the 7 innovation rules provide the basis for effective execution. The authors make conclusive remarks about the role of leadership ("... the crucial difference in creating and sustaining successful innovation"), the available diagnostics and action, and the organization of initiatives. One important thing to keep in mind is that "no formula or structure for innovation that will work for every organization." Yes, I do like this book. It provides a more structured approach to the somewhat `mythical' field of innovation. I believe that the strength of the book is that the 7 innovation rules can provide a checklist/basis for the innovation approach, whereby the various chapters give background information and guidance on the individual rules. There are lots of useful figures, diagrams and tables with each chapter. I highly recommended this book to people who want to revitalize their organizations (and also want some control of this effort).
Outstanding read and great insight!
2005-09-18
I found this book to be loaded with insight and practical beyond my expectations. I highly recommend it. It is written in a very intelligent and easily understandable fashion. It also takes a different look at innovation, and very convincingly out-thinks the other books on this topic. Bravo, for the authors who take the typical innovation authors to task on this topic.
Excellent Book!  Read for more: http://www.amazon.com/gp/redirect.html%3FASIN=0...
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