Friday, August 9, 2013

Willow Creek Global Leadership Summit--Vijay Govindarajan

The Innovation Challenge:  Getting It Right--

Interview with Jim Mellado--

Jim:  You have a belief that says ongoing operations are at odds with innovations.  Why?

Vijay:  Strategy is not about celebrating the past or present but about the future.  If you want to be a leader in the future you have to adapt to change (innovation)  So strategy is innovation.  Put the projects in 3 boxes

Box 1-- Manage the present  (competition for the present is efficiency)
Box 2--Selectively forget the past  (competition for #2 and #3 is innovation)
Box 3--Create the future

Look at innovations in the high jump since 1900--
1) scissors (at that time jumped 4.2 feet and there was only so high you could go)
2) western roll
3) straddle
4) Fosbury flop (complete innovation)

Jim:  Let's talk about the conflict between ongoing operations and thinking of the future

Vijay:  When you're outstanding at "scissors" you are bound by dominant logic which left unchecked causes self-imposed boundaries.  The central leadership challenge is how to preserve dominant logic while moving ahead.

Jim:  You think innovation is more than ideas.

Vijay:  People mistake innovation for creativity but innovation is executing creativity--commercializing the idea.  "Innovation is 1% inspiration and 99% perspiration."

Jim:  What's the equation for implementing innovation?

Vijay:  Ideas + Execution  Unless you can get to this the idea is just an idea.  Innovation execution take a team and a plan which is different than the team for Box 1.

Jim:  What kind of leader is an innovation leader:

Vijay:  Innovation is not just the responsibility of the leader.  It's not just about breaking rules.  Innovation leaders need to be humble and to harness the capabilities of the performers.

Jim:  What are innovation killers?

Vijay:  First, assuming innovation can happen inside the performance engine (built to promote efficiency);  Second, not constituting the team and the plan correctly

Jim:  Why can't you have the existing model constantly improved?

Vijay:  The "scissors" can improve "scissors" but they can't make it into a "Fosbury Flop";  You need a new model and team for innovation.

Jim:  What kind of team do you need for innovation and can it be tied to Box 1?

Vijay:  You need to create a distinct team that is separate from the performance engine.  They have different capabilities.  That dedicated team has to be linked to the performance engine because there are assets there.  This can create all kinds of conflict.  You're asking the new logic to interact with the dominant logic.

Jim:  Who's paying for the cost of the innovation?

Vijay:  Cash is coming from the performance engine and so dominant logic is needed.  The Box 3 experiment, even though it is losing money today, is necessary for planting seeds that will hopefully give you fruit five years from now.

Jim:  Leaders often make a mistake in selecting people for the innovative team. How are they selected?

Vijay:  Be courageous to recruit people from the outside.  Do not simply transfer people from the performance engine team to the innovative team.

Jim:  Talk about organizational memory.

Vijay:  The team is not isolated so it has to interact with organizational memory but it can cause conflicts that need to be productively managed.

Jim:  You say you need to think differently about organizing and planning.  Talk to us about zero-base planning.

Vijay:  Box 1 is your current business.  You are there responding to clear signals and linear changes.  Box 3 (the future) always deals in weak signals and unknowns so the job in Box 3 is to learn to resolve assumptions and unknowns so the whole planning process is about testing assumptions.  This means spend a little, learn a lot.

Jim:  How do you track and judge whether to keep investing in innovation?

Vijay:  Box 3 is an experiment and cannot be evaluated the same way.  It's really a bet for the future.  They can still be strongly evaluated on their ability to learn.  They need to set up low-cost experiments to test assumptions and continuously learn.

Jim:  You talk about reverse innovation.  What is this?

Vijay:  This is the single biggest opportunity for the next several decades.  Reverse innovation means innovating in a poor country and selling the products in a rich country.  It's hard to see how a rich man would want a poor man's product.  In America health care is based on high cost and we can't guarantee universal access.  In poor countries, they are experimenting with low cost health care and universal access.  When you think of value for many you have to do more with a lot less.  In India open heart surgey can be done for $2000.  We have to think about innovation as doing a lot more with a lot less for a lot of people.  The number one problem today is income inequality.  This has reached alarming proportions.

Jim:  Why did you decide to be a teacher?

Vijay:  I grew up in a poor family in India.  India has so many problems and so few resources so innovation is the only way to solve their problems.  In this country I dedicated my life to study innovation and teaching gives me the highest leverage.  The US as a country has the secret for Box 3 thinking.  This country is built on innovation.  I came to the US in the late 70s with $11 in my pocket.  The US is based on humility and we have to keep humility and accept ideas from around the world to stay a great country.

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