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Full Description
Profitable innovation doesn't just happen. It must be managed, measured, and properly executed, and few companies know how to accomplish this effectively. Making Innovation Work presents a formal innovation process proven to work at HP, Microsoft and Toyota, to help ordinary managers drive top and bottom line growth from innovation. The authors have drawn on their unsurpassed innovation consulting experience -- as well as the most thorough review of innovation research ever performed. They'll show what works, what doesn't, and how to use management tools to dramatically increase the payoff from innovation investments. Learn how to define the right strategy for effective innovation; how to structure an organization to innovate best; how to implement management systems to assess ongoing innovation; how to incentivize teams to deliver, and much more. This book offers the first authoritative guide to using metrics at every step of the innovation process -- from idea creation and selection through prototyping and commercialization. This updated edition refreshes the examples used throughout the book and features a new introduction that gives currency to the principles covered throughout.
Contents
Introduction to Updated Edition xiiiIntroduction xliiiChapter 1 Driving Success: How You Innovate Determines What You Innovate 1Innovation Is the Power to Redefine the Industry 1The Innovation Imperative: Driving Long-Term Growth in Top and Bottom Lines 5How to Make Innovation Work: How You Innovate Determines What You Innovate 7The Rules of Innovation 91. Exert Strong Leadership on Innovation Direction and Decisions 122. Integrate Innovation into the Business Mentality 153. Match Innovation to Company Strategy 164. Manage the Natural Tension BetweenCreativity and Value Capture 185. Neutralize Organizational Antibodies 236. Cultivate an Innovation Network Beyond the Organization 247. Create the Right Metrics and Rewards for Innovation 25Summary: The Innovation Company 28Chapter 2 Mapping Innovation: What Is Innovation andHow Do You Leverage It? 29A New Model of Strategic Innovation 29Business Model Change 31Value Proposition 32Supply Chain 33Target Customer 34Technology Change 35Product and Service Offerings 35Process Technologies 36Enabling Technologies 37Three Types of Innovation 39Incremental Innovation 42Semiradical Innovation 47Radical Innovation 51Ersatz Radical Innovation 55Disruptive Technologies 57Innovation Model and the Innovation Rules 58Chapter 3 Choosing Your Destiny: How to Design a Winning Innovation Strategy 59Choosing the Right Strategy 59Play to Win and Play Not to Lose Strategies 60Play to Win Strategy 60Play Not to Lose Strategy 63Too Much of a Good Thing 71Clearly Defined Innovation Strategy Drives Change 72Do You Select an Innovation Strategy? 75Internal Factors 76External Factors 77Risk Management and Innovation Strategy 78Innovation Strategy: The Case of the PharmaceuticalIndustry 79Attempts to Solve the Innovation Problem 81Changing the Innovation Approach 82Strategy and the Innovation Rules 85Chapter 4 Organizing for Innovation: How to Structure a Company for Innovation 87Organizing for Innovation 87Developing an Internal Marketplace for Innovation 88Balancing Creativity and Value Creation 89The Balance Changes as the Organization Matures 91Five Steps to Balancing Creative and Commercial Markets 98Outsourcing Innovation 100Making Good Use of Your Partners 103Integrating Innovation within the Organization 105The Value of Networks and Innovation Platforms 106The Corporate Venture Capital Model 110The Ambidextrous Organization 112The Leadership Role 115Organization and the Innovation Rules 116Chapter 5 Management Systems: Designing the Process of Innovation 119Systems and Processes Make Things Happen 119The Objectives of Well-Designed Innovation Systems 120Choosing and Designing Innovation Systems 124Systems for Ideation: Seeing the Gaps 127Structured Idea Management 128Experimentation 130Prototyping 131Making Deals 133Innovation That Fits 134Management Systems Comparison 137Electronic Collaboration 139Management Systems and the Innovation Rules 142Chapter 6 Illuminating the Pathway: How to Measure Innovation 145To Measure or Not to Measure? 145What Gets Measured Gets Done 146The Three Roles of a Measurement System 148A Balanced Scorecard for Measuring Innovation 150The Business Model for Innovation 150Inputs, Processes, Outputs, and Outcomes 151From the Business Model to the Measurement System 155Designing and Implementing Innovation Measurement Systems 159Measures for Ideation 160Measuring Your Innovation Portfolio 163Measuring Execution and Outcomes of Innovation 168Measuring Sustainable Value Creation 170The Barriers to Effective Performance Measurement. 176Measurement and the Innovation Rules 178Chapter 7 Rewarding Innovation: How to Design Incentives to Support Innovation 181The Importance of Incentives and Rewards 181Motivation 182Different Strokes for Different Folks 183A Framework for Incentive Systems' Design 185Setting Goals for Measuring Performance 188Specific vs. Broad Goals 188Quantitative vs. Qualitative Goals 190Stretch vs. Expected Goals 190Success-Driven vs. Loss-Avoidance Goals 191Performance Evaluation and Incentive Contracts 193Team vs. Individual Rewards 193Subjective vs. Objective Evaluation 196Relative Performance vs. Absolute Performance Evaluation 198Incentive Contracts 199Expected Level of Pay 200The Shape of the Pay-Performance Relationship 200Timing Incentives 202Delivery of Compensation 203Key Considerations in Designing Incentives Systems for Innovation 204The Danger of Overuse 205The Negative Effect on Intrinsic Motivation 206Fear, Failure, and Fairness 207Incentives and Rewards, and the Innovation Rules 208Chapter 8 Learning Innovation: How Do Organizations Become Better at Innovating? 211The Importance of Learning 211A Model of Learning 214Learning to Act 215Learning to Learn 216Learning Systems for Innovation 217Systems for Delivering Value 218Systems for Refining the Current Model 220Systems for Building Competencies 221Systems for Crafting Strategy 223How to Make Learning Work in Your Organization 224Knowledge and Ignorance Management 224The Project Roadmap 226Failures As Part of the Process 228Learning Histories 228The Dynamic Nature of Innovation Strategy 229The Technology Stage 230The Performance Stage 232The Market Segmentation Stage 233The Efficiency Stage 234The Complementarities Stage 234Learning and the Innovation Rules 235Chapter 9 Cultivating Innovation: How to Design a Winning Culture 237How Culture Affects Innovation 237Is Innovation the New Religion? 238The Danger of Success 240Organizational Levers of an Innovative Culture 244The Levers of an Innovative Culture 244Legends and Heroes 251The Physical Environment 252Different Country Cultures Breed Different Innovation Cultures 252People and Innovation 254Recruiting to Build an Innovative Organization. 255Turn Your Recruitment Strategy Upside-Down! 256The Role of Senior Management 258Leading Innovation 258The Role of the CEO 260Culture and the Innovation Rules 261Chapter 10 Conclusion: Applying the Innovation Rules to Your Organization 263Combining Creativity with Commercial Savvy 263Smart Execution 264The Role of Leadership 266Leadership Must Define the Innovation Strategy and Link It to the Business Strategy 266Innovation Must Be Aligned with the Company Business Strategy, Including Selection of the Innovation Strategy 267Leadership Must Define Who Will Benefit from Improved Innovations 268Diagnostics and Action 269Stage Gate Systems 278The Venture Capital Model 280The Technology Innovation Model 281Time-Driven Systems 282Organizing Initiatives 285Fine Tuning 285Redirection/Revitalization 285Generating Innovation Value 286Endnotes 289Bibliography 307Additions to Bibliography for Updated Edition 329Index 333
