Leadership: The Philosopher’s Stone of Innovation…? (Part 2)
Posted on February 26, 2008
Filed Under Gregg Gallagher, Innovation, Leadership, Management, Strategy, Strategy Execution | Leave a Comment
The other end of the spectrum re strategic decision-making is where it is totally driven by the leadership of the company. This is very often the case with start-up, early-stage and founder-run, privately held firms. The potential advantages are somewhat obvious: strategy is driven by a focused vision, factors which may not be effectively quantifiable can be considered in the decision, and the encumbrances and delays of “process” can be bypassed.
Of course, the potential downsides of a purely personal leadership-driven approach are also obvious: Key success factors may not be sufficiently considered or outright ignored, an imprudent balance of risk might result within the portfolio of opportunities (both too much or too little), and the development of a cadre of leaders within the firm that can create and manage innovation may be stinted (i.e., everyone waits for the guy/gal at the top to make these hard decisions.)
The answer is that it’s not an either/or trade-off - it’s all about the AND! Strategy and decision-making in the context of innovation should both be both process and metric driven, as well as allow for the spark of creativity, insight and intuition that only personal leadership can provide. The key challenge for leadership is to know when and where the balance between the two must be adapted to the circumstances. Sometimes you let your management team work all the issues through the process…at other times you have to step in - whether it be to breakthrough an impasse, or to course correct when you “just know” that path they have chosen is not the right one for your company.
While he is not widely recognized to be an expert in innovation project management, the observation of Kenny Rogers still applies: “You got to know when to hold em, know when to fold em, know when to walk away and know when to run.”
Leadership: The Philosopher’s Stone of Innovation…? (Part 1)
Posted on February 22, 2008
Filed Under Gregg Gallagher, Innovation, Leadership, Strategy, Strategy Execution | 1 Comment
I had the opportunity to speak before the Association for Strategic Planning this week on the topic of Innovation - an inherently rather broad and deep subject, so my approach was one of surveying the various paradigms of innovation (creativity/ideation, invention, implementation, value-creation, etc.), and that all of these conceptual frameworks for understanding innovation are valid and need to be considered in the context of business innovation, which should have customer value creation as it’s central focus.
Following the talk, Stan Marcus of Capital Business Credit engaged me in a discussion surrounding the key role of strategy in the identification and creation of customer value. He identified one of the key challenges facing executive leadership regarding innovation strategy is that of choice - the identification of the one or few key products, opportunities or other initiatives that the organization should focus on executing, selected from what is most often a seeming abundance of riches - i.e., a large number of identified options, all with uncertain, indeterminate paybacks.
So how is the choice made? Some authors urge metric-driven, opportunity portfolio management processes which apply rather rigid, theoretically “objective” evaluative criteria across a number of dimensions (strategic fit, ROI, level of risk, etc.). The process becomes a rather deterministic black box in which you feed the data in on the left, and the prioritization decisions re product/service innovation are spewed out on the right.
Such approaches are intellectually attractive from the standpoint that the organization can apply agreed-upon metrics and processes to generate decisions that would otherwise be driven by subjective and sometimes highly idiosyncratic sources.
Others would argue that very often the assumptions upon which such metric-based approaches are based are themselves highly subjective, albeit cloaked in a veneer of legitimacy provided by their Excel-based delivery.
To quote Bill O’reilly: “What say you?”
The evolution of the organizations – Part 2
Posted on February 15, 2008
Filed Under Leadership, Management, Norman Wolfe, Organization & Culture | Leave a Comment
The second major stage of organization model started to emerge around the middle of the 20th century. It was heralded by the work of the humanist psychologist like Carl Rogers, Abraham Maslow and applied to organization life by people like McGregor and Herzberg.
This movement, if one wants to call it that, added another component to how we viewed and led organizations. If you recall the first stage was to view the organization as a machine and to improve its performance we had to fine tune the way the machine operated. Most of the focus was on the structure and flow of work through the system. In this worldview the people were recognized as providing the energy that made the machine work, but they were viewed as just another part of the machine. Each individual carried the same amount of energy and hence one person was just as good as another.
The second stage, what I call the Humanist or Organic stage began to recognize that each person did not provide the same quanta of energy and that there were ways to increase the energy component of the “fuel”. And so a whole industry grew up around helping organizations and the leaders that ran them improve the energy output of the people (often referred to as increasing motivation and engagement). And the Organization Development consultants became very popular.
What is interesting about this stage is that rather than seeing the two frameworks, and their contribution to improve performance, as complimentary they were viewed as competing approaches. There were those who argued that at the end of the day it is all about the bottom-line, that the people side is just about making people feel good. For them the real power for improving performance is to improve the system and the rest will take care of itself. Even Deming, the great leader of the quality movement once said that organization improvement is 85% system and 15% people.
Of course the OD side would argue that the real power in improving performance comes from the people, that a highly motivated workforce will outperform the best organized system. And that an investment in improving the environment, the leadership, the culture is what is really needed.
Even today this battle wages on between the two paradigms, which is really a sad situation. If you step back and think about it the argument would be like arguing that the engine, transmission and drive shaft are more important than the fuel, or that the fuel is more important than the car mechanics.
In reality you need to understand the contribution of both and know which attributes to apply in which situation.
This is part of what is opening the door to the next stage in how we view organization what I call the Integrative or Spiritual phase. But more on this in my next post.
Norman Wolfe
Innovation Risk Management & Product Success Rates
Posted on February 13, 2008
Filed Under Gregg Gallagher, Innovation | Leave a Comment
In my earlier post on the potential traps of metrics-based innovation management, I noted that while a significant amount of innovation appears to be driven out of smaller firms, there is an underlying, Darwinian dynamic by which we only see the relatively small percentage of successful outcomes, as compared to the very large numbers of failures in the form of companies which fail before ever bringing products to market, products which fail after being introduced, etc.. Research by the PDMA and other entities indicates that new product success rate appears to be higher in larger companies than in smaller firms.
I do not dispute these numbers, but do believe that there may be an underlying dynamic these numbers don’t fully consider as to the nature of the innovations being measured. For discussions sake, let’s simplify and categorize new products as falling within two broad categories: Sustaining Innovations which are incremental improvements upon an existing product, technology or service. A new version of the Apple iPod with more memory and a color LCD screen would be an example of incremental innovation. The other end of the scale are Transformative Innovations which (per Carlson & Wilmot) are “major new market opportunities that come through breakthrough technologies and business models.”
My intuition tells me that the higher new product success rate of larger firms derives from their greater emphasis on pursuing lower-risk, incremental product development as compared to higher-risk, potentially transformative approaches. Smaller firms tend to be more receptive to risk, and the very raison d’etre of most start-up companies is bring such transformative innovations to market.
I’ll discuss how larger firms can more effectively manage higher levels of risk in their innovation processes in future posts.
I would like to hear from this blog’s readership their perspectives on my assumptions outlined above.
Gregg Gallagher
Director, Marketing & Innovation Practice
Quantum Leaders, Inc
The evolution of organizations – Part 1
Posted on February 12, 2008
Filed Under Leadership, Management, Norman Wolfe, Organization & Culture | Leave a Comment
Organizations have gone through two major evolutionary transitions over the last 100 years. The first was the foundation of the modern organization around the turn of the 20th century.
This was the time of Henry Ford and the mass production. It saw the emergence of Frederick Taylor and the scientific method of management. It viewed the organization much as Newtonian physics viewed the world at large, as a huge clock, a machine that can be analyzed, reduced to a simple set of interconnected formulas. The cornerstone of this worldview is that an organization is a simple, perhaps complex, linear system that can be structured, and controlled to produce a predictable result.
The foundation of management theory was epitomized by the standard Plan, Organize, Lead and Control. We strived to make the organization as efficient as possible through the careful analysis of process and workflow, streamlining, and optimizing wherever possible. We found new uses of tools to help improve and speed up the flow of work through the system and used metrics to tell us if we are efforts were improving the processes.
If we compared it to building a high performance race car, this would be analogous to the careful design of the engine to create maximum output, tuning the transmission to the particular engine to ensure the smoothest transitions and the driveshaft to maximize the transfer of energy to the wheels.
Norman Wolfe
Forthcoming Talk @ ASP Orange County on Innovation
Posted on February 12, 2008
Filed Under Gregg Gallagher, Innovation | Leave a Comment
Just a heads up that I’ll be speaking before the Orange County Chapter of the Association for Strategic Planning this coming Tuesday (Feb 19th) at the Doubletreee Club Hotel in Santa Ana. Details and registration info are available here.
Here’s the promotional blurb on the event….
Most companies are aware of the need for innovation, and some actually have processes in place to achieve it. Few, however, actually succeed at consistently increasing customer value.
Gregg Gallagher, Director Strategic Marketing and Innovation Practice for Quantum Leaders will present ideas about innovation and invention (and how they differ), and tools to improve your understanding of innovation and how to successfully capture, implement and communicate the innovations that can strategically differentiate your firm. Following the speaker, facilitated roundtable case study discussions will give participants an opportunity to use the presented tools.
Participants will learn about and practice with a tool used in assessing innovation, learn the myths of innovation and the importance of different types of innovation.
Gregg Gallagher
Director, Marketing & Innovation Practice
Quantum Leaders, Inc
The Potential Trap of Innovation Metrics
Posted on February 11, 2008
Filed Under Gregg Gallagher, Innovation, Strategy Execution | 2 Comments
“Be careful what you wish for measure … you just may get it.”
As my library of books on Innovation grows, I am seeing two somewhat conflicting themes emerging in regards to the role of metrics in Innovation. One sees up-front metrics as a key determinant of establishing efficient distribution of a firm’s resources across all identified opportunities, enabling a process by which those opportunities not projected to meet or exceed the established metric thresholds are filtered out of the product development funnel. On the other hand, there is also a growing awareness that too strong a focus on metrics and process can inhibit innovation:
“The complete dominance of process excellence as a strategic focus over the last 10 years has stripped many firms of their ability to take risks, look beyond a quarter or two, or even consider creating new ideas.” - Jeffrey Phillips
Very few breakthrough technologies, products, services or business models have been - or can be - accurately measured in advance. (I’m reminded of a cartoon from the New Yorker 15 years ago in which an executive laments “What we need is a totally revolutionary and breakthrough product that has been thoroughly market-tested!”)
Underscoring this is the fact that most innovation appears to be being driven out of smaller companies - very often startups - that have little to none of the formal innovation processes and metrics that larger firms have adopted. On the other hand, the average lifespan of such businesses is frighteningly short. Larger, publicly-held firms simply can’t take the risks that a smaller entrepreneurially-driven one can.
So what’s a “mother of invention” to do?… I’ll discuss in my next posting…..
Gregg Gallagher
Director, Marketing & Innovation Practice
Quantum Leaders, Inc
The challenge of new business paradigms
Posted on February 10, 2008
Filed Under Leadership, Norman Wolfe, Organization & Culture | Leave a Comment
I recently gave a presentation on the third evolution of business, what I call the Spiritual Phase of organizations. (For more on this look for a future article to be published on our website.)
While many in the audience clearly understood how organizations have evolved from the Machine Phase to the Humanist Phase and we are at the early emergence of the next phase the Spiritual Phase, there were those who saw this as a rather egalitarian, socialistic, feel good state that has little to do with business. Business after all is about making money, making a profitable return for shareholders.
Well there are two comments I wish to make to this. First business is not about making money; business is about providing a good or service to a marketplace. To say business is about making money is like saying football is about getting touchdowns. No football is about moving the ball across the field against those who wish to defend against that movement. Touchdowns are merely the way we keep track of how well we did. Football is played on the field not on the scoreboard. Business is played in the marketplace, not on the income statement.
Having said that, I do believe that metrics is a critical part of business. And the two best metrics I have found for any organization is productivity and velocity. Productivity is a simple measure of capacity, how much goods and services I can provide the marketplace with the given set of resources I have. Velocity is the speed in which I can execute the plays required to bring the goods and services to the marketplace. Improving either of these metrics will give me a competitive advantage. Improving both of them will make me a winner every time.
It is actually my desire to find ways to improve these two parameters that has led me during my 40 years of leading and working with organizations, to the very understanding that the next wave in organizations will be the Spiritual Phase, the phase where ones actions have meaning and purpose and serve something more than the individual, the department, or even the company. And it is because of the capitalist desire for profits that this phase is emerging.
Norman Wolfe
Improving Your Company’s Velocity - Practice, Practice, Practice
Posted on February 7, 2008
Filed Under Gregg Gallagher, Leadership, Management, Organization & Culture, Strategy Execution, Uncategorized | 2 Comments
Not only is it a way to get to Carnegie Hall, but focused, repeated practice of your firm’s best business processes is one of the ways to improve your overall velocity. In sports, it’s called establishing “muscle memory” by the repeated execution of a golf or tennis swing (for example), first working on the proper mechanics via slow, fluidic repititions, gradually increasing speed as the body learns how it all comes together.
So too can organizations learn to improve it’s overall velocity while still flawlessly executing on it’s processes. I witnessed this first hand when I implemented a stage-gate product development process at Fujitsu Business Communications Systems close to a decade ago. Overall time-to-market across the various product lines were abysmal. Even worse, product releases were being done in a haphazard, inconsistent manner (based on the idiosyncrasies of each product manager), resulting in poor product performance in terms of time-to-volume.
Initial resistance to a disciplined product lifecycle management process was strong from all quarters - especially from the product managers who railed against process as an inhibitor to velocity - and who were also somewhat daunted by the responsibility of leading and driving their teams through the behavioral changes the process implied.
The first few times the product teams went through the process were fraught with the frictions, false starts, and other inefficiencies that are part of the learning process. However, as the product managers and product team members grew to better understand not only the specific deliverables, but more importantly the behaviors expected of them as team participants, the timeframes contracted quickly, resulting not only in higher overall velocity (time to market), but the level of support for products at introduction improved remarkably such that time to volumes also substantially improved.
Gregg Gallagher
Director, Marketing & Innovation Practice
Quantum Leaders, Inc
Speed - Life In The Business Fast Lane
Posted on February 6, 2008
Filed Under Gregg Gallagher, Innovation, Uncategorized | 2 Comments
At this week’s staff meeting, we discussed an emergent theme from our conversations with clients and other constituencies - that of improving the velocity of organizations in executing across a number of dimensions.
In the area of new product development, the ability of a firm to accelerate new product introduction ahead of competition and within window of opportunity is central to success.
The payoffs:
- Speed yields competitive advantage - via the ability to respond to customers’ needs faster than competition.
- Speed yields higher profitability - by realizing revenues from sales earlier & longer in product life cycle
- Speed means fewer surprises - by reducing likelihood that market conditions will dramatically change during development
However, speed must not be achieved at the expense of managing the project properly, so there is always a dynamic tension between rushing a product into market too soon (e.g. without the requisite critical success factors being adequately addressed such as staff training, marketing programs, etc.).
How is your firm currently working towards improving it’s product velocity?
Gregg Gallagher
Director, Marketing & Innovation Practice
Quantum Leaders, Inc