Culture is Key to Succesful Innovation

Booz & Company has an excellent set of accessible PDFs on culture and innovation.  Culture is a critical element of our Stanford Advanced Project Management program (seats still available for delivery on campus at Stanford in March) and these results reinforce its importance for innovative strategy execution.

...Booz's annual Global Innovation 1000 study looked at two particular qualities — strategic alignment and a culture that supports innovation — that truly innovative companies have put in place that allow them to outperform the competition.

Every company among the Innovation 1000 follows one of three innovation strategies — need seeker, market reader, or technology driver. While no one or another of these strategies offers superior results, companies within each strategic category perform at very different levels. And, no matter a firm's innovation strategy — culture is key to innovation success, and its impact on performance is measurable. Specifically, the 44 percent of companies who reported that their innovation strategies are clearly aligned with their business goals —and that their cultures strongly support those innovation goals — delivered 33 percent higher enterprise value growth and 17 percent higher profit growth on five-year measures than those lacking such tight alignment.

... In a comparison of the firms voted the 10 most innovative versus the top 10 global R&D spenders, Booz & Company found that the most innovative firms outperformed the top 10 R&D spenders across three key financial metrics over a 5-year period — revenue growth, EBITDA as a percentage of revenue and market cap growth.

Changing Meetings At Google

Buisness Insider  brings some insights from Google CEO Larry Page on running meetings.

• Every meeting must have one clear decision maker. If there's no decision maker -- or no decision to be made -- the meeting shouldn't happen.

• No more than 10 people should attend.

• Every person should give input, otherwise they shouldn't be there.

• No decision should ever wait for a meeting. If a meeting absolutely has to happen before a decision should be made, then the meeting should be scheduled immediately.

Jim Collins Meets Michael Porter

Joan Magretta has an insightful post on Jim Collins and Michael Porter--interested in strategy...read this and her new book, Understanding Michael Porter: The Essential Guide to Competition and Strategy.

... Porter's five tests of good strategy can help you to tell the difference between good choices and bad.So what are good choices?
First, you must choose a distinctive value proposition. Which needs will you serve, which customers, at what relative price? Have you staked out a positioning that's different from rivals?
Second, and far less intuitive, you must choose to tailor your activities to that value proposition. Competitive advantage lies in the activities, in choosing to perform activities differently or to perform different activities than rivals. These ultimately are the choices that result in a company's ability to charge premium prices or to operate at lower cost. (Remember, we're talking about quantifiable performance.)
The third test of strategy, making trade-offs, may well be the hardest. It means accepting limits — saying no to some customers, for example, so that you can better serve others. Porter explains why trade-offs are an important source of profitability differences among rivals, and why trade-offs make it difficult for rivals to copy what you do without compromising their own strategies. The essence of strategy, says Porter, is choosing what not to do.
Fit is the fourth test. Great strategies are like complex systems in which all of the parts fit together seamlessly. Each thing you've chosen to do amplifies the value of the other things you do. That's how fit improves the bottom line. It also enhances sustainability. Says Porter, "Fit locks out imitators by creating a chain that is as strong as its strongest link."
Continuity is strategy's fifth test. While managers are often berated for changing too slowly and too little, it is also possible to change too much, and in the wrong ways. Faced with the latest New Thing, managers must choose whether to embrace it or not. Continuity of strategy helps companies to make good choices about whether and how to change in the face of turbulence. Good choices will strengthen tailoring, sharpen trade-offs, and enhance fit.

Avoid These Strategy Mistakes

Joan Magretta is a senior associate at the Institute for Strategy and Competitiveness at Harvard Business School. She is the author Understanding Michael Porter: The Essential Guide to Competition and Strategy--an excellent introduction to Porter's work.  If you make or execute strategy this book is worth your time--very readable and useful.  Critical mistakes include:

Mistake #1. Confusing marketing with strategy. Correction: A value proposition isn't the same thing as a strategy. To establish a competitive advantage, a company must deliver its distinctive value through a distinctive value chain.

Mistake #2. Confusing competitive advantage with "what you're good at." Correction: Building on strength is a good thing, but when it comes to strategy, companies are too often inward looking and therefore likely to overestimate their strengths.
Mistake #3: Pursuing size above all else, because if you're the biggest, you'll be more profitable. Correction: There is at least a grain of truth in this thinking, which is precisely what makes it so dangerous. But before you assume that bigger is always better, it is critical to run the numbers for your business
Mistake #4. Thinking that "growth" or "reaching $1 billion in revenue" is a strategy. Correction: Don't confuse strategy with actions (grow, acquire, divest, etc.) or with goals (reach X billion in sales, Y share of market). Porter's definition: the set of integrated choices that define how you will achieve superior performance in the face of competition. It's not the goal (e.g., be number one or reach $1 billion in top-line revenue), nor is it a specific action (e.g., make acquisitions). It's the positioning you choose that will result in achieving the goal; the actions are the path you take to realize the positioning. Moreover, when Porter defines strategy, he is really talking about what constitutes a good strategy — one that will result in a higher ROIC than the industry average. The real problem here is that you will think you have a strategy when you don't.

Mistake #5. Focusing on high-growth markets, because that's where the money is. Correction: Managers often mistakenly assume that a high-growth industry will be an attractive one. Wrong. Growth is no guarantee that the industry will be profitable.

When to Make Critical Decisions

David Allen's (GTD) recent newsletter provides excellent insights from research on artful decision making.  This is David's summary.  He provides additional insights in his fantastic books and seminars.  Any leader of complex projects and programs will benefit.

1. Don't force your team (or youtself) to make decisions in the same meeting that presents all the data and perspectives. Purely conscious decision-making is quite constrained in its capacity to absorb and weigh complexities and more likely to employ limiting stereotypes and prejudices in its judgments.

2. Another validation of the power of the GTD Weekly Review. We have to make a lot of choices on the run, in the helter-skelter of our daily existence. You don't have time to think and ponder and consider all the factors. Putting all the potentially relevant data into your psyche every seven days (doing a thorough Weekly Review of your commitments, areas of focus, someday maybe's, time-based commitments, etc.) hard-wires your intuitive intelligence, which allows you trust (vs. hope) in your quick judgment calls.

3. Positive outcome focus as a way to create what you want is not just a hope-it-works belief—it's verifiable as a tool to put your unconscious thinking to work. The reticular activating system in the brain—the part of our neurology that gets programmed to recognize patterns, based upon our focus and identifications with images and outcomes—gets us to see and think things otherwise inaccessible. Now we have good data to prove that this not only impacts our conscious perceptions, but also (and perhaps more importantly) our unconscious integrative processes.

When To Make Critical Decisions

David Allen's (GTD) recent newsletter provides excellent insights from research on artful decision making.  This is David's summary.  He provides additional insights in his fantastic books and seminars.  Any leader of complex projects and programs will benefit.

1. Don't force your team (or youtself) to make decisions in the same meeting that presents all the data and perspectives. Purely conscious decision-making is quite constrained in its capacity to absorb and weigh complexities and more likely to employ limiting stereotypes and prejudices in its judgments.

2. Another validation of the power of the GTD Weekly Review. We have to make a lot of choices on the run, in the helter-skelter of our daily existence. You don't have time to think and ponder and consider all the factors. Putting all the potentially relevant data into your psyche every seven days (doing a thorough Weekly Review of your commitments, areas of focus, someday maybe's, time-based commitments, etc.) hard-wires your intuitive intelligence, which allows you trust (vs. hope) in your quick judgment calls.
3. Positive outcome focus as a way to create what you want is not just a hope-it-works belief—it's verifiable as a tool to put your unconscious thinking to work. The reticular activating system in the brain—the part of our neurology that gets programmed to recognize patterns, based upon our focus and identifications with images and outcomes—gets us to see and think things otherwise inaccessible. Now we have good data to prove that this not only impacts our conscious perceptions, but also (and perhaps more importantly) our unconscious integrative processes.

Innovation Requires Project-Based Work: Creativity Needs Constraints

This is an insightful video from the Swedish magazine/web site Innovation Management.

In product development, Google’s Marissa Mayer, Vice President of Search Products & User Experience, believes that a small amount of constraint – whether in file size, pixels, or speed – fosters a lot of innovation. The lesson she shares? Too much creative freedom can make creativity unfocused. A solution with a strict set of barriers yields more concrete solutions.