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Harvard Business Review published our article on Stealth Innovation, detailing how to make innovation happen under the radar inside a company.
The article is adapted from our book Innovation as Usual. Excerpt of the article below:
The Case For Stealth Innovation
by Paddy Miller and Thomas Wedell-Wedellsborg
You have an idea for a daring, innovative project that could have a significant impact on your business. However, you suspect that your idea will meet with internal resistance: The innovation would upend the status quo, and chances are good that other parts of the organization will try to stop it. What’s your next step?
The conventional answer is simple: Get a mandate from the top. As many innovation experts rightly point out, only the most incremental ideas pass through the corporate-approvals gantlet unscathed. The more unusual your idea, the larger the risk that it will fall victim to turf wars, myopic incentive systems, or simple resistance to change. For this reason, innovators are often counseled to go straight to the top, secure backing at the highest possible level, and build a corporate sense of urgency around their ideas.
The “top first” strategy, however, carries its own risks. CEOs of large organizations are constantly barraged with proposals for new, untested projects, and typically, the ideas get a five-minute perusal followed by a “no.” And even if your idea does win support from the C-suite, early exposure is a double-edged sword: It buys you legitimacy and resources, but it also thrusts you squarely into the corporate spotlight—and that can be a dangerous place for young, unproven ideas. Our experience working with innovative managers has revealed an alternative approach: innovating under the radar. […]
We recently conducted a joint survey with Capgemini Consulting that targeted managers and leaders of innovation. The survey looked into formal and informal mechanisms for managing innovation. The final report will be out in early 2012. Here we share a couple of results from the section on innovation culture, concerning how widespread the mandate for creating a culture of innovation is becoming and the perceived source of an innovation culture.
The World Innovation Forum took place in New York last week. Paddy Miller was a speaker, and his presentation will be outlined in a separate post. Here we summarize the thinking presented at the Forum this year, which touched on design, disruption, ecosystems, customization, culture, leadership, and conventional management getting in the way of innovation.
Clayton Christensen opened the forum with a talk on disruptive innovation. He suggested that a reason previously unassailable companies fail is that they follow principles of good management and seek profit in higher-end markets. It is in the area of lesser performance, however, that there is opportunity for disruptive innovation, for simple products for those who couldn’t afford them before, he said. He cited the idea that Japan is lost because it is focusing on the high-end only and has lost ground to other Asian countries. Japan doesn’t have the labor market mobility and venture capital structure that exist in the U.S., Christensen said, and the U.S. should continue stoking its microeconomic engines for macro stability, lest it end up like Japan. Christensen also criticized the exhortation by business schools to focus on core competence and outsource the rest, because it looks at the past rather than at what is needed to be good at tomorrow. The second part of his talk focused on healthcare, where he advocates moving away from an over-expensive reliance on experts to decentralizing, commoditizing and personalizing healthcare.
Larry Huston, who headed Procter & Gamble’s Connect+Develop open innovation initiative, said he wanted to talk about how to make money with open innovation. He gave examples of companies that had opened up, such as a mining company that put details of its land online and requested analyses for where to drill; Pringles chips searching outside for a method to print ink onto chips; and a medical center in China opening up to bring in intellectual development.
The vertical model is gone, Huston said, and the new economic model is partnering. The return on investment with connected innovation is twice what you would get developing it yourself. Read the rest of this entry »
Our working paper on building a “creative culture” to drive sustainable innovation in an organization is available here. Observing that there is a lack of a clear model for an innovation culture in the literature at the same time that companies are increasingly facing the need to build a widespread “culture of innovation,” we offer a conceptual and practical model of an innovation culture, focusing on individual values and meaning-making and the practices of creativity and improvisation.
Booz & Company’s Global Innovation 1000 highlights certain anomalies, not least all the contrast between those companies that actually make the list of heavy R&D spenders and those that are perceived to be leading innovation companies. Of this latter group you have to pass through Apple, Google, 3M and GE before arriving at the fifth company, Toyota, that is identified as a top R&D investor. Is it that perceived innovators have a better batting average? This is not borne by the report itself. Maybe they manage their “Innovation Image” better? More than a third of the big spenders are healthcare companies and what is clear is that few people understand what’s happening in the sector – not a single company featured in the perceived list. Would someone like to put up the argument that the iPod was a more important innovation than the cardiac stent?
Defining innovation strategies in terms of need seekers, market readers and technology drivers and then a list of unrelated competencies doesn’t help. For example, anyone who has read Ken Auletta’s “Googled” would come to the conclusion that Google is a great search company but has struggled in finding a focus outside of that space.
A breakthrough in the service industry was the development of the concept of the service-profit chain by Earl Sasser at Harvard. Implicitly the whole concept was about improving service levels through raised interconnectivity and personalisation for clients. If we examine a whole host of innovations in recent times, whether it’s checking in for your next Southwest Airlines flight or accessing your bank account, from Facebook to crowdsourcing, the unstated objective is that increased connectivity is good for transparency of markets, providing better service to clients and eventually increasing profitability.
Nothing could be further from the truth if you look carefully at the service strategies of many very profitable companies. Should we say successful, because they would be proud of the record when presenting to shareholders – but facing their customers they often use the sharpest of practices to avoid customer contact as well as avoiding fulfilling their contractual commitments. Read the rest of this entry »
Critical Eye published our article on six popular mistakes leaders commit when trying to make innovation happen:
1. Not knowing where you want to go
2. Thinking communication is enough
3. Chasing free lunches only
4. Jumping into action
5. Thinking ‘fear of change’ is the problem
6. Treating innovation as a one-man, one-idea show
By Azra Brankovic, IESE Research Associate
Two years ago we wrote here about business school offerings on innovation, and we returned to have a look at what’s new in 2010-2011. Once more we looked at MBA and executive education courses and faculty research at top schools in the U.S. and Europe.
The past two years saw a global recession and a slow recovery. We were curious to see how this might have affected offerings. Allowing for changes from year to year that are due to sabbaticals and the like, we found that the courses offered on innovation are largely the same, with some tweaks. Read the rest of this entry »
Our pfizerWorks case study with Jordan Cohen is featured on Gary Hamel’s new website for management innovators – an interesting initiative called MIX which seeks to create a community around the issues of Management Innovation. Recently launched, still in alpha version but looks promising.
Here is the link to the pfizerWorks feature on MIX.