When a company can get its best ideas to market faster, its leaders can be confident that their most important strategic decisions will be executed faithfully, and their visions for the company’s future will be realized. They are also able to be agile in response to market changes, pursue new opportunities, and achieve ambitious plans for growth.
High Velocity Innovation will show how companies accelerate growth with:
- The strategic elements that pull innovation from their best people
- A framework for driving innovation that overcomes roadblocks, cultural barriers, and the pressure to sustain the current business
- Leadership models and metrics for building high accountability and responsiveness into innovation systems
- A roadmap for accelerating innovation across your business, no matter where you are now
Businesses like yours can establish strategies, systems, processes, and tools that build innovation velocity by addressing the root causes that lead to innovation disappointments. To succeed, your best ideas need solid execution without launch delays, budget overruns, or poor product/market fit.
Not every idea will succeed—and not every idea should succeed. But a company’s best ideas can be identified and accelerated with High Velocity Innovation.
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About the Author
Read an Excerpt
Why Innovation Programs Take Too Long
On September 2, 2015, Elon Musk announced on Twitter that Tesla was moving out of the margins and into the mainstream of the car industry. The Tesla 3 would be the company's first car for the masses, with a price comparable to a low-end luxury car. It would incorporate all the innovation that Tesla was known for and it was expected to revolutionize the car industry.
When the first one rolled off the line in July of 2017, Tesla had a backlog of 455,000 orders to fulfill. However, the company missed its first production target. And then missed the second. As months passed, one problem after another plagued production.
Savvy consumers know that production problems at launch often mean quality problems later. In March of 2018, Tesla recalled half the cars it produced for a steering wheel repair. The backlog of Tesla 3 orders gave Tesla some buffer to address the problems, but the markets were not so forgiving. Tesla's stock dropped from a peak of $383 per share in June of 2017 to a low of $252 in April of 2018.
The company's iconic reputation for innovation and Elon Musk's credibility as one of the most innovative persons in the world came under serious threat. No one doubted that the Tesla 3 was innovative, but now the execution failures would blunt the impact this innovation would have on the car industry.
How did this happen to one of the most innovative companies in the world? As Elon Musk said in an interview for Bloomberg News in July of 2018, "We were huge idiots and didn't know what we were doing."
Innovation Management Is Counterintuitive
Effective innovation development is the ability to drive an innovation to completion, whether it's a new product, process, or business model. Yet innovation management is counterintuitive because common assumptions about management tend to break down in environments of high uncertainty. This means the things that teams do to speed up innovation often slow it down.
At Tesla, Musk had designed the Tesla 3 and its production process on the assumption that the factory would be as fully automated as possible, and then jumped with both feet into building a fully automated factory. Yet that meant incorporating a lot of unproven ideas about how to automate manufacturing all at once before the product had been stabilized and proven.
Tesla invested hundreds of millions of dollars in robots that sat idle after it became clear that people could do the same thing with less cost, time, and quality problems. They made a lot of costly decisions without the knowledge to make those decisions, and paid dearly for it in reputation, market capitalization, and consumer confidence. Although Tesla's struggles were the ones that made the newspapers, many Innovation Program Leaders deal with these same issues behind the scenes while trying to do their best to go as fast as they can.
Innovation Program Leaders Try to Do the Right Thing
It seems like the best thing to do with a new business idea is to run it by some customers to get reactions and then make decisions based on their feedback. But customers are notoriously bad at providing accurate feedback on something that's in the conceptual stage. Most customers can't give good information about a new idea until it is made more concrete with a representative sample of the final product. And in some industries, like food and beverage or medical devices, it may not be possible to give customers representative samples for something that has never been done before, for safety reasons.
In product development, it seems right to define all the requirements up front and then drive them into execution with a streamlined development process. However, that assumes teams have good information, and that's not possible to get so early in the program. If the execution team assumes that requirements are frozen and acts accordingly, then changes to requirements become expensive rework loops. For innovation programs, the requirements change often as new information comes in.
Innovators deal with a lot of uncertainty, and it seems like making bold decisions early is one way to reduce the amount of turbulence. But those bold decisions are the ones that lead to major failures like the production process for the Tesla 3, that trigger massive delays and cost overruns, if the product survives at all. Instead of accelerating innovation, they slow it down.
The Things People Do to Speed Up Innovation Slow It Down
Over and over again, I see the things company leaders do to accelerate innovation often slow it down instead. They encourage teams to be decisive, only to find that many of those decisions have to be revisited later, when it's expensive to change the decisions. They accelerate the Investigation Phases of innovation to meet an aggressive time line, and then find that the Execution Phases get bogged down. They staff an innovation team with outsiders for fresh thinking and then wonder why these teams' products cost too much or fail to resonate with consumers. Figure 1.1 shows the problems that people experience over and over when they try to push innovation.
Three practices in particular receive a lot of praise in innovation management literature. They have been around long enough that if they had a lot of success, they'd be much more common with many innovations in the market that would demonstrate their value. Although a lot of theory has been written about them as compelling hypotheses, they don't have much evidence to prove them.
Conventional wisdom says that if a company's people are not innovative and the processes and metrics conspire to kill innovation, the best thing to do is to get it completely out of the building. "Skunkworks" refers to a team that has been deliberately isolated from the company's core and told to "do all the new things we can't do" or "start with a blank sheet of paper." Figure 1.2 shows how isolated they are from their peers in the business.
They're usually located in a remote building or an independent space rather than sitting with their Engineering and Marketing peers. Some innovation authors write as if this idea is a new discovery, but that's where storied innovation engines like PARC, HP Labs, and Bell Labs came from.
There's a reason why these entities have become shadows of their former selves: they were not very effective at delivering innovations that their sponsoring companies could implement, and therefore they became targets for funding cuts. PARC's best inventions, the mouse and the touchscreen, were exploited by Apple, not Xerox. Bell Labs spun out a few successful companies when the parent company was willing to support them, but the breakup of AT&T also broke up their funding for such wide-ranging research. HP Labs incubated a lot of ideas throughout the decades while the founders were still alive and able to keep the teams focused. After they retired, funding evaporated as a series of downsizings and management missteps led to the need to shore up shareholder results.
Even the more recent examples are just as likely to show spin-offs or killed ideas rather than new initiatives that truly create value for the companies that sponsored them.
It turns out that companies, especially the large, well-funded companies that can afford skunkworks teams, have powerful immune systems. Since the people in such efforts are cut off from the rest of the organization in every way but funding and a tenuous connection to leadership, there is no home for the innovations when they come back into the company.
Either these teams develop into standalone entities that are ripe for being cancelled, sold off, or spun off, or they might as well. They have nothing in common with the parent company. At some point, the investment stops making sense. All their management sponsors have to do is change the strategy or leave the company, and all that investment gets put to waste.
Specialist Innovation Teams
Even worse are the proponents of assigning responsibility for innovation to a specialist team, mainly consisting of people brought in from outside the company. At least most companies staff skunkworks teams with experienced people. The Innovation Specialist approach is fun for the people on the innovation teams because they are freed from much accountability or need to learn about their new company, and encouraged to do things that are dramatically different than the corporate norms. But it doesn't ensure that the teams will get better results and the track record backs that up.
This approach seems to be especially popular with those who study innovation practices academically, who base their hypotheses on the observed externalities of innovation programs. Like skunkworks, these programs don't have a good empirical record of success. In fact, such teams can become deaf to valid constructive criticism from the company's experienced personnel, who may have good points even though they appear to be resistant to change. Figure 1.3 shows that the information flow from such teams to the current business tends to be a one-way push.
On the other side, it sends the wrong message to everyone else: "You're part of the past but not the future, and as such, you have no responsibility to be innovative." Some people will love the freedom to pursue an undemanding status quo and others will chafe at the restrictions; either way, the company is not getting the best from its most deeply knowledgeable people.
Startup Innovation for Corporate R&D
Finally, many innovation team leads like the idea of "going back to the garage" and embracing the methods that allow startups to become multi-billion-dollar businesses. But a corporate innovation team, even in a small established company, has both strengths and weaknesses that a startup doesn't have.
In Chapter 3, you'll read about some aspects of Lean Startup that translate well into corporate innovation programs, but these tools are not dependent upon building a startup culture. Today, people who want to work in startups have ample opportunities to work for one or even start one. Even there, the heavy workload is not sustainable and burns people out.
The people who work in a corporate environment have chosen to work in a place with more constraints and stability but fewer sacrifices, but that doesn't mean they lack good ideas. Such an approach almost ensures that people with families, especially but not exclusively women, will be locked out of innovation programs and the career advancement they can foster because the demands will be even heavier.
All of that might be worth it if it delivered better results. Here, the evidence again shows scant progress toward improving the velocity of innovation. Figure 1.4 shows that such a model combines the worst aspects of the skunkworks model and the dedicated innovation team model: the group is "protected" from the current business and exempted from much of the rules, yet they are expected to push ideas onto the rest of the company.
I witnessed this firsthand when I was part of the short-lived E-Services Inside Factory at HP Labs. This was an attempt to go "back to the garage" to reinvent how services talked to each other over the Internet, an early form of the API frameworks that drive tools like Zapier. At the time, e-services were a core part of HP's strategy, and the assignment seemed like it would be a lot of fun.
Yet strong executive support led to lack of accountability and the freedom to do anything, which made it hard to get anything meaningful done, and there was no place to commercialize the interesting stuff we did manage to build. I was relieved when I moved back to the core printer business, which needed innovation and knew how to deliver it.
Tesla demonstrates these perils, because delivering a new mass market car is very different from delivering a new service, or even a limited-edition sports car. Tesla's development process, still grounded in the founder-centric worldview of the startup, inadequately met the challenges that this mainstream car presented about how to scale up production volumes and lower cost.
Wrong Methods for Innovation
All of these methods share three faulty assumptions about innovation, and none of them address the real reasons why innovation programs take too long and deliver disappointing results. These assumptions are compelling because they are all partially true. But remedies that address them only attack the symptoms of slow innovation — not the root causes — and ultimately do more harm than good.
Faulty Assumption #1
The normal corporate culture and many employees get in the way of innovation.
This is the driving assumption that says innovation teams need protection, and it's salient because it's partly true. Most corporate environments don't support innovation, and most people in any given company don't have the burning desire to be innovative. But the solution isn't found when companies build walls around small teams of outsiders, which takes away accountability for meeting corporate norms, and then expect magic to happen.
But it is easier than admitting that the real cause is lack of leadership pull for innovation. When the need for innovation becomes obvious because the company is falling behind, it's easier for leaders to seek solutions outside the company than rekindle the spirit of innovation inside the company. But that accelerates the decline of the core business with no guarantees that outside innovation can be successfully integrated back inside.
The truth behind the myth is that your teams won't think of themselves as innovators if they don't believe they can innovate or don't think it's part of the jobs. If you complain, "We're not innovative" or "We're not creative" within hearing distance of your teams, you just created a self-fulfilling prophesy.
A subset of your employee base is less comfortable with change and uncertainty. You don't want these people to be assigned to work on innovation all the time. But it is reasonable to expect that they contribute to innovation within their areas of expertise, and that when they do, they will be recognized and rewarded.
Companies that achieve High Velocity Innovation seek to rekindle the spark of entrepreneurship inside everyone, at least to some degree. They generate pull for innovation with a corporate strategy and cascading objectives that place responsibility for innovation within every team. Then they build a culture of high accountability to ensure that innovation remains a top priority even when leaders' instincts tell them the current business takes precedence.
Faulty Assumption #2
Leaders have to build walls around innovators to protect them (from their leaders).
Another reason why these ineffective methods are so intuitive is because leaders following corporate norms will kill innovations to protect the current business, through neglect if not through sabotage. This is a real concern and a pattern that I've seen over and over again.
When a production line goes down for the company's cash cow, everyone jumps in to fix it. When a major customer has a need, the company will do its utmost to fulfill that need, or else a competitor will. This means that innovation programs are repeatedly starved for resources as people and money get redeployed to shore up the current business.
Innovation programs need to be protected from this, but not with walls. Instead, high accountability for delivering innovation needs to be built into the organizational design with strategy, team structures, metrics, performance goals, and budgets that provide resources for innovation.
These elements generate a greater ability to stay the course on innovations even when the current business is screaming for resources. Unless the company's survival is at stake, the innovation programs continue. Even then, innovative thinking can make the difference between prosperity and bankruptcy.
Innovations, or at least the ones worth more than just a "go do it" decision, operate on a longer time line than incremental product development or continuous improvement. It takes time for an innovation to prove itself and the corporate incentives system must account for that.
Companies achieve high velocity by aligning leadership on the need for innovation, and ensuring that intrinsic and extrinsic incentives line up with the need to deliver innovations. Executives need to be held accountable for delivering innovation in a way that's appropriate for their responsibilities, and anything that rewards sabotage or neglect must be removed.
Faulty Assumption #3
Teams need to run innovation programs differently.
It is true that innovation programs, especially those that require new business models or scientific breakthroughs, can take a long time to mature, and some of this timing is unpredictable. It's much easier to predict how long it will take to do something and what the results will be if only one or two elements are new to the company. The management methods used for innovation programs need to accommodate such uncertainty.(Continues…)
Excerpted from "High Velocity Innovation"
Copyright © 2019 Katherine Radeka.
Excerpted by permission of Red Wheel/Weiser, LLC.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
Part 1 Why Your Company Needs High Velocity Innovation
Chapter 1 Why Innovation Programs Take Too Long 9
Chapter 2 Innovation Achieves Velocity Through Pull 25
Chapter 3 The High Velocity Innovation System 39
Part 2 The Elements of High Velocity Innovation
Chapter 4 Strategy that Accelerates Innovation 59
Chapter 5 The Rapid Innovation Team 77
Chapter 6 Rapid Learning Cycles 89
Chapter 7 Innovation Program Management 105
Chapter 8 Platforms and Extensible Knowledge 119
Chapter 9 How to Measure High Velocity Innovation 139
Part 3 How to Build High Velocity Innovation
Chapter 10 Experiments with High Velocity Innovation 159
Chapter 12 The Pilot Program 175
Chapter 13 High Velocity Innovation at Scale 187
Conclusion: The Right Idea at the Right Time 203
Appendix A Book Study Guide 209
Appendix B Systems and Tools that Support High Velocity Innovation 213
Appendix C Pilot Program Guide 223
Further Reading 229