HBR Inspiring and Executing Innovation : Book Review.

Cover image of Harvard Business Review book Inspiring and Executing Innovation

“Fresh ideas can mean big profits - but only if they make it to market and sell.” So runs the cover blurb of the Harvard Business Review (HBR) book Inspiring and Executing Innovation. Ah! The tantalizing pleasure and torturous pain of innovation neatly summed up! But wait! There’s more  - a  promise of the best practices to enable us to create and deliver new products and services. So how well does the book itself deliver?

This collection of articles previously published in HBR, are, with two exceptions, less than five years old. As you would expect of that esteemed publication, the authors are experts and many of them were long ago inducted into the “innovation writing hall of fame”-  Clayton Christensen, Peter Drucker, CK Prahalad and Rosabeth Moss Kanter to name a few.

Putting these articles together creates real value. I don’t know how many articles HBR published on innovation during this period in total. However, the editor has chosen excellent ones and ordered them well. The topics progress through areas that could broadly be described as innovation strategy, customer insight, idea generation, selection, and planning and financial analysis for innovation projects. There is value in each article in terms of the expert comment and also from the tools and frameworks offered. What’s more, the value of the ten articles together is more than the sum of the individual parts. The articles complement one another well and set the reader up for innovation action.

Tools and Frameworks.

Notable examples include:-.

The Innovation Value Chain. This presents innovation as a three phase process which in turn includes six linking tasks. In order to succeed in innovation a company has to be accomplished in all six task areas. The authors remind us that each firm faces different innovation challenges. It is important to audit your own performance (and this framework helps you do just that) - rather than just rushing to implement the latest innovation fad idea. “Your capacity to innovate is only as good as the weakest link in your innovation value chain,” we are warned.

The Customer-Centred Innovation Map. Products are often described as ‘solving a problem’. In this article the authors reframe that idea as products ‘doing a job’. By mapping the job that a product does the innovator is able to look at a very broad context and potentially identify a greater number of innovation opportunities.

This approach of looking across a broad time period to identify innovation opportunities has similarities with the space/time continuum analysis tool found in TRIZ. However, as its name suggests the Customer-Centred Innovation Map focuses specifically on the customer interaction. As such it is a useful framework to complement a customer insight process.

The Need for Different Planning and Metrics.

In the article "Discovery Driven Planning", Gunther Mcgrath and Macmillan acknowledge how innovation teams in some companies learn to tweak the assumptions in their innovation plans to get their project through the next phase of the stage- gate process. The authors suggest this is bad practice both because it is risky and also it ignores the critical importance of the assumptions in planning for innovation. Rather than continue this charade of manipulating the assumptions, the authors propose the Reverse Income Statement. 

In the Reverse Income Statement, innovation teams look to determine the profit required to make a venture worthwhile even before detailed market size and share estimates are put together. 

Also, in developing the Reverse Income statement, managing the assumptions and revising them as more information comes available becomes an explicit task to be managed by the ‘Keeper of the Assumptions’.

NPV Calculations Challenged.

In the final chapter Clayton Christensen along with Stephen Kaufman and Willy Shih slaughter some of the sacred cows that lurk among financial measures of innovation. The team give a robust explanation as to why such measures are unsuited to innovation.

One tool under attack is discounted cash flow and NPV calculations (I have long had my doubts) . The authors believe that when these measures are used, companies generally assume that if the innovation is not brought to market, then the status quo will prevail. In fact, it is more likely that under such circumstances company performance will deteriorate due to competitor launches and disruptive investments. NPV does not take this into consideration, and therefore NPV calculations often underestimate the benefit of introducing the new product.

The Changing Innovation Landscape.

The book also has some interesting insights on the innovation challenges faced by large global corporations who for the last twenty years might have pursued a strategy of “glocalisation” – strategy and product developed at a corporate centre which is probably in the West, and then the new products distributed across the world with minimum customization to local needs.

The chapter entitled “How GE Is Disrupting Itself" warns about the missed opportunity of companies ignoring the needs of the masses in emerging large economies like China and India, and also about the need to deliver “Reverse Innovation” and bring low cost products developed in emerging markets back to the West.

GE developed their blueprint for this process in their medical scanning division. Until recently GE only offered top end, high quality fixed scanning machines which they sold into hospitals. However, in China such machines were deemed both unaffordable and not portable enough to benefit the huge rural population who only ever visited rural healthcare centres.

In a triumph of initiative, creative thinking and innovation leadership a new lower cost portable version was developed by a local team and successfully brought to market. Subsequently, new markets for more ‘portable scanners’ have opened up in the West for GE and include segments such as the emergency services.

Western companies ignore the masses in emerging economies at their peril. If they don’t serve these markets, local companies will. What’s more these same companies may go on to disrupt Western markets with their reverse innovations.

The GE Healthcare example is just one of a wide range of b2b and b2c case studies that bring to life the insights and strategies in the text.

HBR’s Inspiring and Executing innovation really does deliver on the promise of its title. I can’t imagine a single corporate innovator who would not find something of value here.

AnatellÔ score as a tool to assist with innovation and growth  4.5/5

Harvard Business Reviews Inspiring and Executing Innovation 258p is published by Harvard Business Review Press 2011.

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