10 rules for Strategic Innovators

Started reading this book titled “10 Rules for Strategic Innovators: From Idea to Execution”, by Vijay Govindarajan and Chris Trimble of Center for Global Leadership at Darmouth Univ and is published by HBS press. Within reading few pages understood that its highly relevant to my immediate work, where we are trying to create a new BU within the established organization. The book talks about NewCo – which is a breakaway group from the parent CoreCo and is created to achieve breakthrough growth. Here are some highlights (verbatim)

1. Our research shows that strategic experiments face their stiffest resistance once they are showing signs of success, consuming more resources and clashing with CoreCo at multiple levels.
2. Research has called for appointment of a senior executive as a champion – someone who actively musters support for NewCo and breaks down barriers in CoreCo.
3. The leaders of any ground breaking new business must (apart from identifying the idea(s)):

· Attract funding

· Learn quickly from success and failure

· Rally people around a fuzzy view of the future

· Re-organize to leverage the lessons learned and

· Manage the expectations of the performance amid chaos

4. Tendencies within the established organization also present additional barriers, apart from the 5 challenges just mentioned, the leader must also:

· Protect funding of NewCo regardless of the performance of CoreCo

· Establish new organizational norms and policies that make sense for NewCo

· Overcome tensions between NewCo and CoreCo when those norms and policies conflict

· Effect changes in the existing power structure required to support NewCo

· Engage CoreCo employees in supporting NewCo and

· Recruit talented managers from CoreCo to work within NewCo

5. [Authors talk of two cultures Code A (efficiency) and Code B (creativity) and tells that CoreCo wants to embrace Code A and NewCo Code B and argues that the NewCo has to undergo transition from creativity to efficiency over time and talks of Code X, that happens in the transition phase] – my paraphrasing to avoid typing the entire book.
6. Code X must address the three unique challenges that arise from the unnatural coexistence of a new and a mature business within the same corporation:

· The Forgetting challenge (forget some of what made CoreCo successful) – a. Forget CoreCo’s business definition, b. Different business model require different competencies and c. forget Coreco’s exploitation of a proven business model and shift to exploration of new possibilities

· The Borrowing challenge (borrow CoreCo’s assets) – NewCo can complete effectively against start-ups only by borrowing CoreCo’s assets: existing customer relationships, distribution channels, brands, expertise in a variety of technologies etc.,

· The Learning challenge (the most important one being prediction of its business performance)

7. Note the important difference between forgetting and borrowing. NewCo must forget assumptions, mind-sets and biases and must borrow assets. That is, forgetting is about what goes on in your head. Borrowing is gaining access to resources with concrete value.
8. All the four elements of NewCo’s DNA must differ from CoreCo’s

· Staff - from Operational expert’s (CoreCo) to Creators, Inspireres

· Structure – from Hierarchy to Flat

· System – from focus on accountability and fixed compensation to focus on learning and variable compensation

· Culture – from risk averse to risk tolerant

The above was from the first chapter “Why strategic innovators need a different approach for execution”. The rest of the book covers in great detail each of the above points with real examples.