Here is a sequence of events that is familiar to us from our research, and may be familiar to you as well.
A CEO announces that the strategic imperative for the upcoming year is breakthrough growth. Incremental growth from incremental initiatives is no longer enough. To continue to thrive, the company must do new things. It must break all of the rules. It must redefine the industry.
Motivational speakers and experts on innovation are hired to inspire the troops, create the right conversations, and get the creative juices flowing. The company establishes a committee to review preliminary ideas for new growth opportunities. Dozens are submitted. A handful are selected for further research. Business plans are written. There is one plan in particular that looks most promising.
The CEO examines the possibility from every angle. There are many reasonable projects competing for the firm’s capital, but none have the chance to reinvigorate growth like this one. The CEO hires an outside expert, and receives confirmation that the high-growth-potential business looks like winner. It is a done deal. The CEO commits to the plan, assigns the best available general manager to lead the strategic experiment, and asks a member of the senior corporate staff to shepherd it.
And then the CEO makes a big mistake.
The CEO moves on to other matters. The new business, after all, is but a tiny fraction of a multi-billion-dollar organization.
Asked to think about the challenges of innovation, most managers think first of the creative, brilliant, and inspired soul that sees the future in a different way — a rebel on a mission. It is a romance deeply embedded in our business culture.
The CEO’s mistake is buying into the romance. The mistake is assuming that the company has already hurdled the most difficult barriers in the innovation journey — finding a great idea and a great leader. In fact, the biggest challenges are still to come.
Ideas will only get you so far. Consider companies that have struggled when their competitors have redefined the industry. In these cases, companies continued to struggle even after a competitor had entered the market and made the great idea transparent to all. For example, did Xerox stumble because nobody at Xerox noticed that Canon had introduced personal copiers? Did Kodak fall behind because they were blind to the rise of digital photography? Did Sears suffer a decline because they had no awareness of Wal-Mart’s new every-day-low-price discount retailing format?
In every case, the ideas were there. It was the follow-through that was lacking. In fact, we have found that strategic experiments face their stiffest resistance after they are showing hints of success, are starting to grow, are consuming significant resources, and are clashing with the existing organization at multiple levels — that is, long after the idea generation stage.
If the problem at Xerox, Kodak, and Sears was not a lack of good ideas, was it a lack of capable leaders? Perhaps, but before jumping to this conclusion, consider whether leaving a strategic experiment solely in the hands of a single leader is a realistic task for even the most talented executive. Can any one person single-handedly work around all of the inconsistencies between the demands of large established businesses and the needs of startups?
While we trust that there are examples of ingenious, creative, and highly determined souls who can overcome both the long odds that face any strategic experiment and an organization that fights them at every turn, we think they are extremely rare. Organizations are almost always more powerful than people. Corporations serious about building a capacity for strategic innovation cannot simply hope that they have a few intrapreneurs somewhere inside that can save the day on their own inspired initiative. They must reexamine how their organizations are constructed. Only through careful redesign can organizations excel at both efficiency and entrepreneurship.
Much has also been made in past research of the need for leaders of strategic experiments to have a senior executive “champion” — a constant aide, always actively finding support for NewCo and helping to break down barriers. No doubt such a champion can help, but even with effective champions, odds of success are still low.
Simply put, relying solely on the heroic leadership of a hyper-talented intrapreneur, even one with a great idea, even one backed by a motivated and capable senior executive champion, is a recipe for failure.
Adapted by permission of Harvard Business School Press. Ten Rules for Strategic Innovators – From Idea to Execution, by Vijay Govindarajan and Chris Trimble. Copyright © 2005 Vijay Govindarajan and Chris Trimble. All Rights Reserved.