10 Rules for Strategic Innovators

Books Worth Reading

August / September 2007 Volume 5 Number 4

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Read any good books lately? Rolf Dobelli has, and with the introduction of this new feature, he shares his findings with Innovation readers. Dobelli is chairman of getAbstract, the world's largest provider of business book summaries.

10 Rules for Strategic Innovators

Change dominates business today. Companies face great pressure to give birth to major innovations, but they often settle for merely tweaking their processes or services. Tackle the innovation issue head-on with a "strategic experiment," say the authors of 10 Rules for Strategic Innovators, Vijay Govindarajan and Chris Trimble. This involves having your main business create an autonomous offshoot, whose main function is to explore new processes, ideas and products. The authors maintain that an experiment of this kind offers vast growth possibilities, since it can alter how you define business and success (rather than just making you better at what you currently know and do). Strategic innovation also offers greater potential for "nonlinear growth," which transforms an industry, and may just transform your bottom line, too. However, two minor obstacles stand in the way of taking this innovative initiative: you won't know how to evaluate the experiment and it'll most likely lose money at the start.

Fear not. The authors have accumulated business acumen to steer your division to success. Their tips include: maintain momentum once a good idea appears. Create a separate identity for the "experimental" business. Give it all it needs from the parent company, but make sure the offshoot has brand new systems, and an independent culture and approach. Don't allow tensions to develop between the two entities. Track your predictions and the corresponding results. Learn through trial and error.

As opposed to offering a simple guide to innovation, Govindarajan and Trimble do something less common, and they do it well: they analyze the institutional structures which allow, nurture and support innovation. They explain how to open new innovation-focused divisions in your organization, how to think about learning and how to evaluate such new projects (and, perhaps more importantly, how not to evaluate them). They share case studies of established companies' successful and failed attempts to sprout innovative offshoots. The results are very level-headed. The authors clearly plot the difficulties of institutional innovation, including planning and learning in uncharted waters. We expect that this book could help you sail through.

Vijay Govindarajan and Chris Trimble. 10 Rules for Strategic Innovators: From Idea to Execution. Harvard Business School Press, 2005. List Price: $32.00. ISBN-13: 978-1591397588.

The Innovation Killer

What if the problem with innovation isn't what you don't know, but rather what you do know? To generate new ideas you need expertise in a specific area, yet that very expertise may smother the ideas you're working to generate. Cynthia Barton Rabe discusses this paradox in her new book, The Innovation Killer. She believes that "GroupThink" and "ExpertThink" are innovation's two greatest enemies. "GroupThink" occurs when members of a group conform to collective norms and suppress their differing concerns. This is done to promote the group's actions as moral, its members as united and its position as invulnerable.
"ExpertThink" also stifles new concepts, because experts automatically do things they know will work. They apply their "skill, training and knowledge," and let "best-known methods" (or rather, already-known methods) shape what they think. That may be why the best innovators often lack extensive formal training.
To escape from this, look for "Zero-Gravity Thinkers"—€”people who are detached from your situation, are free thinkers or have related expertise. To create an engine for more innovative solutions, add these open thinkers to already strong teams. Try borrowing thinkers from other departments, or even swapping them with another organization.

This lively manual moves lightly and defines innovation simply. While Barton Rabe does not provide specific guidance about what processes to use, she offers an immediately applicable, solid introduction that you can use to promote innovation. Her creative successes (which include being on the team that introduced the Energizer Bunny ad concept) illustrate her points well. We recommend this book to all those who are eager to innovate and shake up their organizational attitudes and structures.

Cynthia Barton Rabe. The Innovation Killer: How What We Know Limits What We Can Imagine —€“ and What Smart Companies Are Doing About It. Amacom, 2006. List Price: $26.00. ISBN-13: 9780814408834

Green to Gold

Sesame Street's Kermit the Frog famously observed, "It's not easy being green." Whether easy or not, environmental and social pressures are pushing more and more companies to ride the "green wave" to ecological sustainability. Daniel C. Esty and Andrew S. Winston, authors of Green to Gold, succinctly make the business case for sustainability, and then provide a manual of green strategies and tactics.

Nature is an asset and makes economic life possible. Almost all businesses will feel the effects of ten major environmental problems in the short or medium term, including climate change, waste management and changing energy sources. Even if you don't believe the scientific data supporting these theories, remember that many influential people do. Make sure you know how these issues will affect your organization.

Smart management of environmental issues is about more than hedging against downside risk. In fact, behaving responsibly can be a comparative advantage. Esty and Winston suggest the following green "plays" that have been working well for best-in-class companies like Toyota and Wal-Mart: improve your use of resources. Cut your environmental costs. Prevent an environmental problem before it can occur. Stay ahead of regulations and laws. Aim for next-generation, environment-friendly products—€”even if they don't fit your existing product categories. Display "eco-labels" on your products. Put a "green halo" over your company by running green initiatives. However, be sure that if you walk the walk, you talk the talk.

The authors' presentation avoids being too abstract, too detailed or too one-sided: in fact, it's just right. The two Yale professors deserve praise for collecting so many excellent tips and tricks, and for describing them in memorable (mostly) jargon-free prose. Although some of its suggestions may seem obvious, this beautifully organized, crisply written book is perfect for any business leader who wants to move beyond rhetoric to action. And while Kermit's wisdom is doubtless correct, this handbook makes being green much easier.

Daniel C. Esty and Andrew S. Winston. Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage. Yale University Press, 2006. List Price: $25.00. ISBN-13: 978-0300119978.