The Dynamics of Break through Innovation- An analysis of HBR June 2011 Part II

by Prtk Nayak on Thursday 7 February 2013, 5:00 PM | Category: Economy | View: 867 views


a)      These management jobs are very tough and getting tougher, given our rapidly changing, fiercely competitive, global business environment. Being a good manager takes very hard work, attention to detail, and organizational discipline. But as executives rise up in the organization, other skills become increasingly important. They need to transition from being a manager to being a leader. Management is about business results and processes. Leadership is about people. The key quality you need in good leadership is passion—the urgency to attack and solve the complex problems that all organizations face. To do so, you need to be surrounded by highly talented people, and you need to find a way to transmit your passion to them, so they will buy into your vision of the future, perform at the highest possible levels, and come up with innovative solutions to the challenges of achieving the vision.

When skies are blue, a company might be able to cruise along with top managers who are indifferent leaders. Such managers are typically executing tactical, incremental strategies where the critical ingredients are good, disciplined management as well as operational excellence. But once the skies begin to darken, as they inevitably do, such managers will get into deep trouble, and often end up taking a business down with them. Their most talented innovators and strategists, those whose skills are now badly needed to help set the business on the proper course, have either long departed or become so disenchanted that they have nothing left to give.

b)      Hostility - In general, managers who do not actively encourage new ideas and innovations in their organizations do so because of indifference. They will typically listen politely to your new idea, provide some encouragement, and offer good advice. If they are being honest, they will tell you they barely have the time, energy, and budget to help much beyond a pat on the back now and then. But some managers go beyond indifference. Their initial reaction to any new idea is negative, if not downright hostile. This is particularly true if the idea comes from someone outside their own organization. Some of them also exhibit characteristics that many of us would associate with being a bully. Typically, the corporate bullies I have met have achieved their high management positions because, despite their poor interpersonal skills, they are very good at other parts of the job. Sometimes, they are excellent innovators themselves, but given their autocratic tendencies, innovation for them is a one-man or one-woman show. They tend to be poor team players: Collaborative innovation is not for them.

Such hostile behaviour is hugely detrimental to a healthy innovation environment. People championing new ideas, especially if they are potentially disruptive new ideas, are going against the grain of what the business is currently doing. Rejection is painful, especially coming from people in positions of authority. Senior managers can nurture those new ideas through positive words and actions, or they can stop them on their tracks by being overly negative and combative.

c)      Isolation - Innovation is a team sport. It is also observed that innovation "is multidisciplinary and technologically complex. It arises from the intersections of different fields or spheres of activity." That is why it often takes a group of people who are not only highly talented but who bring together diverse skills and points of view in order to successfully tackle the kinds of complex problems we face in the 21st century. But perhaps even more important, a collaborative approach to innovation helps provide the energy and emotional support that new ideas need in their very early stages. New ideas are almost always rough and ill-formed at first. In my experience, nothing works better than bouncing ideas off other, supportive people. This back-and-forth dialog is crucial in helping to shape the idea into something more concrete, understandable, and actionable. Then it is more ready to face the tougher challenges and criticisms from line management and others in the organization. That is why isolating people in organizational silos are one of the biggest obstacles to innovation. Companies that are serious about innovation do everything possible to break down silos and encourage communication and collaboration across the organization and beyond.

Fostering innovation is very hard, especially if the innovation is disruptive in nature. A spirit of innovation and collaboration does not come naturally to an organization. For such a spirit to take hold, it must become an integral part of the company's culture. None of this is easy, but it is what a company must do if it truly wants to create a healthy environment in which innovation can flourish.


Case-Study P&G

The basic idea behind discussing P&G's marketing strategy of tide is to highlight the fact that how strategic innovation can help in a substantial way to achieve the desired results and drive growth powered by competency.

The growth prospects for P&G's tide seemed feeble back in 2000 but a decade later tide became a leading name in the detergent industry which is not accidental  but a result of innovative strategies formulated and incorporated by P&G.

As the chairman of P&G puts it in the right phrase “we know from our history that promotions may win quarters but innovation wins decades”. It's significant to note here that innovation starts from people's life and their ability to think. Innovating for financial gains or for competitive advantage can be self-limiting. As a matter of fact in 2000 only 15% of innovations at P&G were meeting their revenues & profit targets, to address this company set about building organizational structure to systemize innovation. P&G now focussed more on break through innovation as in case of Henry ford's model wherein he slashed the time required to build a car from more than 12 hours to just 93 minutes by shifting the production of its famous model-T from the piquet avenue plant to its new Highland Park complex.

Thus P&G derived six lessons for leaders looking to build new growth factories

·         Co-ordinate the factory with company's core business.

·         Be a vigilant portfolio manager.

·         Start small and grow carefully.

·         Create tools for gauging new business.

·         Make sure the right people are doing the right work.

·         Nurture cross-pollination


Discussing Innovation Strategy:-

P&G focussed on four types of innovation:-

·         Sustaining innovations- it  brings improvements to existing products, which are very important to sustain share among current customers and getting new ones

·         Commercial innovations – It use creative marketing, packaging and promotional approaches to grow existing offerings

·         Transformational sustaining -  It typically bring order of magnitude improvements and fundamental changes to a business and often leads to breakthrough's in market share.

·         Disruptive innovations- It represent new to the world business opportunities. A company enters new business with entirely new offerings.


Discussing Tide (converting a product into a brand)

P&G's approach towards this particular product created a niche market segment and revolutionized the complete product segment instead of restricting Tide detergent in ordinary boxes and bottles P&G launched a series of products with Tide name all with different scents and capabilities .Within a year building on 26 patents moreover it even figured out the needs of different markets and focussed on need based innovations. For example, in India a majority of the population wash their clothes with hands thus P&G launched its product named Tide naturals which is gentle on hands and made tide available 30% below the regular price thus made the tide brand accessible to 70% of Indian customers.

P&G also began selling exclusively through Amazon and other channels some of its products such as swash which was a product which took an unconventional path to commercialization, similarly Tide dry cleaners represents an entirely new business model which were a series of innovative cleaning establishments and stores which have driven through windows, better cleanliness standards and 24-hour storage lockers.

P&G's efforts proved that it's not foolish for large companies to attempt to create innovative growth businesses just from a mere 15% figure the company pulled upto 50% .projections further  suggests that the typical initiatives in 2014 and 2015 will have nearly twice the revenue of today's initiatives . That's a six-fold increase in output without any significant increase in input.

Ambidextrous CEO

“Change is the only constant” a very popular but clichéd adage. But this very ‘change' seems to have huge implications especially when it comes to doing Business and being successful at it. All Success stories in business share one major climax-dealing with ‘change'. In the global business scenario staying one step ahead of your competitors dictates the difference between success and extinction and staying ahead does not only mean beating your rivals in a core business domain but also being able to nurture a clear vision of the future of that business domain as well.

If history is to be believed then it seems that Innovation has in most cases proven to be the best insulation against change. Innovation not only prepares a business for the future abrupt changes in the market demand but also helps in leveraging those changes to eliminate competition and making profits also. But nurturing a vision of innovation is easier said than done. Innovation can be a very demanding wife at times. Encouraging innovation in a business is a very uphill task especially when you are already using all resources in competing in your core domain. Diverting some of these resources to sustain innovation is a very tricky task which involves a carefully considered trade-off between the competing demands of the core business and the new units driving innovation.

Lack of innovation can sometimes be suicidal if the company fails to cope with abrupt change in the market demands. Sometimes established businesses have to get through a lot of mess to stay alive in the market. This thing was clear when HP, the largest maker decided to acquire Autonomy corporation, a software service firm. Given the premise that HP's stocks were not performing very well and the pc making business had become a business with very less profit margin the decision to buy Autonomy corp. was an outcome of the mounting pressure on HP from its investors. With little or no innovation to handle abrupt changes in the business, this time the shift in consumer demands towards more software oriented services, HP's decision can be perceived as a quick fix to keep up with this change.

In the fall of 2008, Mike Lawrie, the CEO of London based software firm Misys, asked his senior executives to prepare a plan for weathering the global economic crisis. When they reported back, cutting investments on Misys's open source solutions topped their list. Considering the fact that the company was having a tough time in coping with the difficult economic scenario, the Open source solutions unit was perceived as a threat to the firm's core identity and values. Often in this kind of tight situation the CEO is the only friend of innovation who ends up trying to persuade the heads of the core businesses to support and fund the innovations. In other words he pushes the key decisions in this regard into these units, ceding much of his or her own power and creating a collection of feudal baronies- a perfect recipe for failure. To avoid this kind of trap which seems to be the easiest way out, research suggests three basic leadership principles to be followed:

(1) Engage the senior team in a forward looking strategic aspiration.

(2) Explicitly hold the tension between the demands of the innovation unit and the core business at the top of the organization

(3)Embrace inconsistency by maintaining multiple and often conflicting strategic agendas.


When Misys acquired Allscripts, a major proprietary electronic health records(EHR)  provider, the tensions reflecting the power struggle between the company's identity and future became even more intense. Open source started roping in all the contracts and beating Allscripts fair and square. But Lawrie held this tension in the senior team, constantly devising and tweaking strategies to achieve a balance between the Allscripts and the open source solutions unit. Lawrie's efforts soon yielded results when Allscript's revenues grew by 30%, even as Misys's open source won important contracts. Lawrie was successful in creating a complementary business model which encompassed both the company's identity and future. He did this by increasing the customer base and acquiring software assets and used the open source solutions unit to solve his customer's mission critical problems.

In a nutshell, Lawrie did not let his company's identity limit him to customer groups or solutions that may be disrupted in the future.

For Third part of this article please



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