Translating Innovation into Reality - part #2

THEME: Spring 2010 From Vision to Action Roundtable Report

FOCUS: Translating Innovation into Reality - part #2

Monday morning: May 10, 2010

Dear friends,

In an effort to translate innovation into reality, we need to remember that there are three levels happening within a company on a day to day basis. The first is the cash generating part of the business which is reliable and lucrative. The second is the R&D level which is inspirational and critical to long term strategic success. The third level is the most difficult because it competes for resources from the other two.

First, we need to understand that it is normal for new innovations to compete for company resources with the cash generating part of the business during any fiscal cycle. Company resources, e.g. time, talent and management attention, etc., along with the company’s budget, reporting and management processes are all focused on the current fiscal year. Even compensation and incentives systems are focused on accountability to the current fiscal year’s goals which are mostly attuned to the cash generating part of the business. Furthermore, if people look ahead during the current fiscal year, they look to R&D and their long range strategic options. By reviewing research, data and trends, they hope to create a better way for future profitability.

Nevertheless, if an idea moves out of R&D and toward the cash generating part of the business, it often ends up in the the Bermuda Triangle of projects that are strategic but not yet fully implementable. In this unique no man’s land, we need to understand that these “new projects” often struggle because they can not deliver like cash generating parts of the business. Furthermore, these new projects take resources, i.e. time, money and people, from cash generating improvements without generating ROI as regular products and services. The upshot on these “new projects,” given they are not fully operational is that they become “demo bait” for selling more of the cash generating projects and services.

With this in mind, first we need to generate a realistic timeline which includes exceptions to standard operating practices if we want these new projects to be successful and not die in the Bermuda Triangle. Second, we need to deploy an experienced, make-it-happen leader to new projects rather than to high revenue projects. This way they are positioned for sustainable growth. Third, we need to insulate these new projects from cash generating performance expectations. This may include the development of customized metrics and performance targets rather than use the current cash generating metrics and targets. Finally, we need all involved to understand that for innovation to become a reality “new projects” are not really projects but the development of a new business model. For more information on this subject, I encourage you to read the following article: “To Succeed in the Long Term, Focus on the Middle Term” by Geoffrey A. Moore, July-August 2007 issue of the Harvard Business Review.

This week, help your team understand the normal challenges of new projects and how to overcome them. As William Gibson reminds us, “The future is here. It’s just not widely distributed yet.”

Have a wonderful week,

Geery

Geery Howe, M.A.Consultant, Executive Coach, Trainer inLeadership, Strategic Planning and Organizational ChangeMorning Star Associates319 - 643 - 2257

Translating Innovation into Reality - part #1

THEME: Spring 2010 From Vision to Action Roundtable Report

FOCUS: Translating Innovation into Reality - part #1

Monday morning: May 3, 2010

Dear friends,

If we seek to translate innovation into a profitable reality, then we need to examine what is happening within our organizations on a deeper level.

First, every day the sales force within your company is focused on serving your existing customer base. Furthermore, your supply chain is focused on supporting your sales force and delivering your product or service in a timely manner. In essence, the majority of your day to day operations is attempting to be an efficient, cash generating business.

However, every day your organization runs into a problem, namely your customer. While most businesses are focused on their current customers within their current markets, they, at times, forget that each customer enters into a relationship with the company to fulfill an existing need. The goal of many executives is to change employee behaviors related to production and service delivery so as to meet this specific customer need. This may translate into the development of better skills, structure, goals, and systems in order to improve how to serve existing customers within existing markets.

And here is where the problem surfaces. Customers change over time. The need they have today as a customer may or may not be the need they have tomorrow or the next day. The key is for the company to meet the customer’s existing needs as well as their new needs. But, most cash generating parts of the business are not focused on meeting new needs. Their systems are only focused on fulfilling existing needs.

Therefore, companies invest in research and development divisions. Here, they try to figure out what are the customers current needs and what will be their new or emerging needs. These divisions are also looking into how to serve new customers in new markets. In essence, these divisions are attempting to position their organizations for future business.

With one level of the company focused on cash generation and another level focused on generating a sustainable future, we come to the most complex level of any company, namely how to prepare the organization for the market of tomorrow. At this level, we are on-boarding the next generation of high growth opportunities that are coming from the R&D pipeline. By commercializing the innovations and innovative systems generated from the R&D level of the company, we hope to position the company for future cash generating business.

However, we do run in to one simple but difficult hurdle when we do this, namely how to close the gap between the current competitive strengths and tomorrow’s competitive requirements. When confronted with cash generation, R&D, and ramping up new ideas, the first two will always take precedence over the last one. Therefore, the major question before executives this spring is how to build new core competencies into the company when it is so focused cash generation and R&D?

This week, remind your team that there are three levels to every successful company and each one is different and challenging to manage.

Have a good week,

Geery

P.S. I recently found some very good articles in the May 2010 issue of the Harvard Business Review. I enjoyed the very short article by Jocelyn R. Davis and Tom Atkinson called “Need Speed? Slow Down” about the differences between strategically fast companies and strategically slow companies. It is delightful to find an article that shows how firms that slowed down to speed up improved their top and bottom lines, “averaging 40% higher sales and 52% higher operating profits over a three year period.” I have been advocating for people to differentiate between operational speed and strategic speed for quite some time. Nice to see a study that proves it.

Next, in the same issue, I enjoyed Rosabeth Moss Kanter’s short column called “Block-by-Blockbuster Innovation” which points out that “blockbuster products don’t spring to life or work in the marketplace without incremental change.” Delightfully thought-provoking and a good place to start a discussion on change with a senior team.

I was very happy to see an article in this issue called “How to Keep Your Top Talent” by Jean Martin and Conrad Schmidt. As they explain, “One-quarter of the highest-potential people in your company intend to jump ship within the year.” We explored this topic at the Spring 2010 From Vision to Action Executive Roundtable and it is great to see an article on this topic. These authors explain that one should not assume that high potential people are engaged and not to mistake current high performance for future potential. They also advocate for not delegating down talent development to line managers. Given the current economy and the need to retain top talent, this is one article I would put on the spring reading list.

Finally, I was pleased to see another article by Tamara J. Erickson in this issue called “The Leaders We Need Now.” Here, she focuses on how Generation X will produce executives who will “bring a distinctive sense of realism to the modern corporation.” I liked how this article explained how Xers view Boomers and how Xers currently view their place in corporate life. For those who are managing and/or coaching Xers, this will be an article that could provide some interesting perspective. For those who want to retain excellent Gen Xers managers, then this is a must for spring reading.

As always, if you discover something good in your adventures and travels, please do not hesitate to share it with me. Thanks and Happy Reading!

Geery Howe, M.A.Consultant, Executive Coach, Trainer inLeadership, Strategic Planning and Organizational ChangeMorning Star Associates319 - 643 - 2257