Gina Colarelli O’ConnorAssociate Professor

Director, Radical Innovation Research Program

So what is a ‘culture of innovation,’anyway?

2

Radical Innovation Research Program, Phase II

• Objective: To understand how organizations can systematically develop, evolve and sustain their radical innovation competencies.– What firms are doing to develop and support radical innovation, as a

distinctive activity, requiring distinctive management techniques:• Leadership and Culture• Organizational Structure and Interfaces• Governance and Decision Making• Specific Processes and Tools• Skills• Metrics

• Mechanisms to enhance an organization’s RI capability. • Most effective implementation techniques for instituting

those mechanisms.

Corporate Capability Development for the Management of Radical Innovation

Management System

Elements

3

Companies in the Study

IBMGEAir ProductsDuPontAnalog DevicesPolaroidNortel NetworksOtis Elevator (UTC)TIGM

3MAlbany Int’lCorningShell ChemicalsKodakMead-WestvacoSealed AirJ&J Consumer

BoseDow CorningGuidantH-PIntelP&GPPGRohm&HaasXerox

Cohort I1995 to 2000

Cohort II2001-2005

Cohort III2004 to 2005

Phase I Phase II

246 interviews

4

Agenda

• Is a ‘culture of innovation’ enough?

• Cultural differences that really matter.

• Cultural differences that do not really matter.

• A systems approach and cultural challenges.

5

Is a Culture of Innovation Enough?

Clear Strategic Mandate Culture of Innovation

Organizational Approach

Local Approach Whole Systems Approach

RRadicalness

# of Firms

Whole Systems Mandate

CultureLocal Mandate

6

Cultural Differences that Matter

• Orientation to Talent – Only some people can be successful in innovation

space vs. most everyone can be and should be multi-dextrous.

• Network Richness (vs. Network sterility)– Many contacts and ability to tap expertise of internal

and external networks. • Resource Fluidity (vs. Rigidity)

– Flexibility to borrow and trade the right people.• Organizational Fluidity (vs. Rigidity)

– Ability to create new structures to accommodate new businesses that do not fit.

7

RI System Capabilities Emphasis:

4 ApproachesCompetency &

ReadinessModel

Competency &Readiness

Model

Strategy DrivenModel

Strategy DrivenModel

ExecutionDrivenModel

ExecutionDrivenModel

RationalModelRationalModel

Cultural Differences that Do Not Matter

Build Technical Competencies

and Sense Market

Opportunities

Define New Technology

Growth Areas and Commit ResourcesIdentify and Integrate

Growth Platforms in to New Businesses

Aligned with Current Businesses and Other

Structure for Unaligned

8

Discovery Creation, recognition, elaboration, articulation

of opportunities.

IncubationEvolving the

opportunity into a business proposition

AccelerationRamping

up the business to

stand on itsown

Oversee Transitions/Interfaces

•Basic Research•Internal Hunting•External Hunting /License/Purchase /Invest

•Technical•Market Learning•Market Creation•Strategic domains

•Focus•Respond•Invest

Exploration Experimentation Exploitation

DIA Systems Approach

9

Culture and Leadership Challenges

• In every case, Discovery is ‘owned,’ at senior leadership level…– But in most cases, I and A are not, so resource and

organization issues get in the way of success.• More important to remove disincentives than to

give incentives.– Individuals can get burned in this system.

• Incubation is about experimentation and generation of options.– Metrics frequently drive for targeting and financial

results.

10

• Early market participation and early harvesting may violate company culture.

• Aligned opportunities are strategically more comfortable, but tactically more difficult. – GE CEO program the exception.– Bully pulpit????

• Governance/decision making boards sometimes double as coaches….– Conflict of interest.– Different type of talent needed.– Time management troubles.

Culture and Leadership Challenges

11

Processes

Structures

Mandate/Scope

Portfolio Management

Metrics

System Resources

Leadership & Governance

Reward/PunishmentSystems

Skills/TalentDevelopment

Evolution Elements

Sustaining an Innovation Culture