Making Innovation Work: How to Manage It, Measure It, and Profit from It, Updated Edition [NOOK Book]


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, ...

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Making Innovation Work: How to Manage It, Measure It, and Profit from It, Updated Edition

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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.


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Product Details

  • ISBN-13: 9780133093353
  • Publisher: Pearson Education
  • Publication date: 11/23/2012
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 400
  • Sales rank: 375,990
  • File size: 7 MB

Meet the Author

TONY DAVILA leads the Entrepreneurship Department and Entrepreneurship and Innovation Center at IESE Business School, and is one of the world’s leading scholars, speakers, and advisers on entrepreneurship and innovation. Building on his doctoral work at the Harvard Business School, he works with both large industrial companies and Silicon Valley startups to design management control and performance measurement systems that drive innovation.


MARC J. EPSTEIN is Distinguished Research Professor of Management at Jones Graduate School of Business at Rice University. Previously Visiting Professor at Harvard, he has been a senior consultant to leading corporations and governments for more than thirty years, specializing in strategy implementation, innovation, governance, accountability, and performance metrics. He has also served as professor at Stanford Business School and INSEAD.


ROBERT D. SHELTON is the Leader of the Innovation Practice at a major global consulting firm. Through many years as an innovation consultant, his client list is a “who’s who” of innovative companies including leaders in high tech, consumer goods and services, software, financial services, cleantech, aerospace, and healthcare industries. He was Vice President and Managing Director with Arthur D. Little, and Managing Director of the SRI Worldwide Technology Management practice.

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Table of Contents

Introduction to Updated Edition    xiii

Introduction    xliii

Chapter 1   Driving Success: How You Innovate Determines What You Innovate    1

Innovation Is the Power to Redefine the Industry    1

The Innovation Imperative: Driving Long-Term Growth in Top and Bottom Lines    5

How to Make Innovation Work: How You Innovate Determines What You Innovate    7

The Rules of Innovation    9

1. Exert Strong Leadership on Innovation Direction and Decisions    12

2. Integrate Innovation into the Business Mentality    15

3. Match Innovation to Company Strategy    16

4. Manage the Natural Tension Between

Creativity and Value Capture    18

5. Neutralize Organizational Antibodies    23

6. Cultivate an Innovation Network Beyond the Organization    24

7. Create the Right Metrics and Rewards for Innovation    25

Summary: The Innovation Company    28

Chapter 2   Mapping Innovation: What Is Innovation and

How Do You Leverage It?    29

A New Model of Strategic Innovation    29

Business Model Change    31

Value Proposition    32

Supply Chain    33

Target Customer    34

Technology Change    35

Product and Service Offerings    35

Process Technologies    36

Enabling Technologies    37

Three Types of Innovation    39

Incremental Innovation    42

Semiradical Innovation    47

Radical Innovation    51

Ersatz Radical Innovation    55

Disruptive Technologies    57

Innovation Model and the Innovation Rules    58

Chapter 3   Choosing Your Destiny: How to Design a Winning Innovation Strategy    59

Choosing the Right Strategy    59

Play to Win and Play Not to Lose Strategies    60

Play to Win Strategy    60

Play Not to Lose Strategy    63

Too Much of a Good Thing    71

Clearly Defined Innovation Strategy Drives Change    72

Do You Select an Innovation Strategy?    75

Internal Factors    76

External Factors    77

Risk Management and Innovation Strategy    78

Innovation Strategy: The Case of the Pharmaceutical

Industry    79

Attempts to Solve the Innovation Problem    81

Changing the Innovation Approach    82

Strategy and the Innovation Rules    85

Chapter 4   Organizing for Innovation: How to Structure a Company for Innovation    87

Organizing for Innovation    87

Developing an Internal Marketplace for Innovation    88

Balancing Creativity and Value Creation    89

The Balance Changes as the Organization Matures    91

Five Steps to Balancing Creative and Commercial Markets    98

Outsourcing Innovation    100

Making Good Use of Your Partners    103

Integrating Innovation within the Organization    105

The Value of Networks and Innovation Platforms    106

The Corporate Venture Capital Model    110

The Ambidextrous Organization    112

The Leadership Role    115

Organization and the Innovation Rules    116

Chapter 5   Management Systems: Designing the Process of Innovation    119

Systems and Processes Make Things Happen    119

The Objectives of Well-Designed Innovation Systems    120

Choosing and Designing Innovation Systems    124

Systems for Ideation: Seeing the Gaps    127

Structured Idea Management    128

Experimentation    130

Prototyping    131

Making Deals    133

Innovation That Fits    134

Management Systems Comparison    137

Electronic Collaboration    139

Management Systems and the Innovation Rules    142

Chapter 6   Illuminating the Pathway: How to Measure Innovation    145

To Measure or Not to Measure?    145

What Gets Measured Gets Done    146

The Three Roles of a Measurement System    148

A Balanced Scorecard for Measuring Innovation    150

The Business Model for Innovation    150

Inputs, Processes, Outputs, and Outcomes    151

From the Business Model to the Measurement System    155

Designing and Implementing Innovation Measurement Systems    159

Measures for Ideation    160

Measuring Your Innovation Portfolio    163

Measuring Execution and Outcomes of Innovation    168

Measuring Sustainable Value Creation    170

The Barriers to Effective Performance Measurement.    176

Measurement and the Innovation Rules    178

Chapter 7   Rewarding Innovation: How to Design Incentives to Support Innovation    181

The Importance of Incentives and Rewards    181

Motivation    182

Different Strokes for Different Folks    183

A Framework for Incentive Systems’ Design    185

Setting Goals for Measuring Performance    188

Specific vs. Broad Goals    188

Quantitative vs. Qualitative Goals    190

Stretch vs. Expected Goals    190

Success-Driven vs. Loss-Avoidance Goals    191

Performance Evaluation and Incentive Contracts    193

Team vs. Individual Rewards    193

Subjective vs. Objective Evaluation    196

Relative Performance vs. Absolute Performance Evaluation    198

Incentive Contracts    199

Expected Level of Pay    200

The Shape of the Pay–Performance Relationship    200

Timing Incentives    202

Delivery of Compensation    203

Key Considerations in Designing Incentives Systems for Innovation    204

The Danger of Overuse    205

The Negative Effect on Intrinsic Motivation    206

Fear, Failure, and Fairness    207

Incentives and Rewards, and the Innovation Rules    208

Chapter 8   Learning Innovation: How Do Organizations Become Better at Innovating?    211

The Importance of Learning    211

A Model of Learning    214

Learning to Act    215

Learning to Learn    216

Learning Systems for Innovation    217

Systems for Delivering Value    218

Systems for Refining the Current Model    220

Systems for Building Competencies    221

Systems for Crafting Strategy    223

How to Make Learning Work in Your Organization    224

Knowledge and Ignorance Management    224

The Project Roadmap    226

Failures As Part of the Process    228

Learning Histories    228

The Dynamic Nature of Innovation Strategy    229

The Technology Stage    230

The Performance Stage    232

The Market Segmentation Stage    233

The Efficiency Stage    234

The Complementarities Stage    234

Learning and the Innovation Rules    235

Chapter 9   Cultivating Innovation: How to Design a Winning Culture    237

How Culture Affects Innovation    237

Is Innovation the New Religion?    238

The Danger of Success    240

Organizational Levers of an Innovative Culture    244

The Levers of an Innovative Culture    244

Legends and Heroes    251

The Physical Environment    252

Different Country Cultures Breed Different Innovation Cultures    252

People and Innovation    254

Recruiting to Build an Innovative Organization.    255

Turn Your Recruitment Strategy Upside-Down!    256

The Role of Senior Management    258

Leading Innovation    258

The Role of the CEO    260

Culture and the Innovation Rules    261

Chapter 10  Conclusion: Applying the Innovation Rules to Your Organization    263

Combining Creativity with Commercial Savvy    263

Smart Execution    264

The Role of Leadership    266

Leadership Must Define the Innovation Strategy and Link It to the Business Strategy    266

Innovation Must Be Aligned with the Company Business Strategy, Including Selection of the Innovation Strategy    267

Leadership Must Define Who Will Benefit from Improved Innovations    268

Diagnostics and Action    269

Stage Gate Systems    278

The Venture Capital Model    280

The Technology Innovation Model    281

Time-Driven Systems    282

Organizing Initiatives    285

Fine Tuning    285

Redirection/Revitalization    285

Generating Innovation Value    286

Endnotes    289

Bibliography    307

Additions to Bibliography for Updated Edition    329

Index    333

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