Innovation Master Plan

Is there any doubt in your mind about the importance of innovation?

Do you recognize that innovation is vital to the future of your company? And perhaps to your own future as a business leader?

Since you're reading this book, it's reasonable to assume that you do.

And of course I agree with you.

As you've been thinking about innovation it's likely that you've already discovered that the process of innovation is difficult to manage. It's risky, expensive, and unpredictable.

This explains why Einstein supposedly said, "It's called 'research' because we don't know what we're doing." If we did know what we were doing we'd call it something else, like "engineering," or "product design," or "marketing."

And even when we think we do know what we're doing, the results from the innovation process frequently fail to live up to our expectations.

Further, our innovation efforts must improve not only to our products and services, but also the very processes we use to run the business. Louis Gerstner puts it this way: "In almost every industry, globalization is leading to overcapacity, which is leading to commoditization and/or price deflation. Success, therefore, will go to the fittest - not necessarily to the biggest. Innovation in process - how things get done in an enterprise - will be as

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important as innovation in the products a company sells."

1

Yes, innovation is important, necessary, and difficult; this much is obvious.

magic or methodology?

Yet some executives look at the innovations that come from companies like Apple or P&G, and they think to themselves, "Well, we don't have people or the resources like theirs. We can't do that kind of magic."

But the truth is that Apple's success, or P&G's, or Toyota's, or the innovation successes of any company that you admire, isn't due to their proficiency with magic; it's because they follow a disciplined innovation process.

So if you want to compete with companies like that, and you want to be admired as their peer, then the best way to get better at innovation is by developing and applying methods that will improve the results by improving the process: adopt a systematic approach that makes use of the best tools, and also goes beyond tools to address the bigger patterns and issues to help you manage the large scale risks and opportunities that your organization faces. This system elevates innovation to what it really should be, a strategic asset to your organization.

Defining that system is the intent behind The Innovation Master Plan.

When you have a good plan and you implement it well, the results will be evident and powerful: dramatic improvement to your innovation practice, all the way from the strategic perspective at the beginning, to the heart of the innovation process in the creative endeavor, and then to the marketing and sales processes at the end when you reap the rewards for your efforts in the form of

1 Louis V. Gerstner. Who Says Elephants Can't Dance. HarperBusiness, 2002. P. 270.

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competitive advantage, brand enhancement, revenue, and profits.

Results will also show up as a culture of innovative thinking and innovative results that pervade your entire organization, leading to a virtuous cycle in which you get better at innovation, and your results in the market improve, which then gives you more resources to get better still.

Figure 1

Innovation's Virtuous Cycle

This is what a well crafted and well executed master plan ought to do. So let's get started.

mindset the hidden problem of innovation

A plan, even a master plan, will only be as good as your ability to execute it, and your ability to execute depends to a great extent on your mindset.

Most executives, however, lack both experience with innovation and they also lack the innovation mindset, so it's no surprise that their companies aren't very good at producing innovations. This partly explains why the ones that are good stand out so prominently. For every Google, Starbucks, or Nike there are 1,000 or 10,000 companies that innovate poorly, or not at all.

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This raises 2 questions that are very much worth examining:

Why are the good ones so good, and what do they do that the others don't do?

That's the main subject of this book.

Why are the others not so good?

This is the topic we'll explore in this section.

In our experience, there are two enormous problems that hinder the companies that lag at innovation. The first is the nature of today's change, the brutal pace that has put so many organizations on the defensive as they struggle to adapt to everything that's coming at them.

And the second is the mindset that their top managers bring to the problems of innovation.

Let me explain.

The first issue, about change, is that it's occurring differently today than in the past. Twenty or thirty years ago most large companies were buffered from outside impacts by their size, and they could withstand many strategic challenges just by using their sheer bulk to block new entrants from accessing the market. They outspent newcomers on marketing, followed their competitors' successful innovations with their own copies, tied up distributors with exclusivity agreements, slashed prices below cost, and used economies of scale to out-muscle their competitors.

But many of these tactics don't work as well as they used to, and consequently the strategic vulnerabilities of all firms, large and small, is increasing.

Why don't they work? Because the nature of marketplace competition is different today than it was in the past. An example, and one of the big lessons from the meltdown of the financial sector in the fall of 2008, was the fact that the