The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation [Hardcover]

 

 

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"For behold, I create new heavens and a new earth;
And the former shall not be remembered or come to mind." -- Isaiah 65:17 (NKJV)

How you react to The Game-Changer will be largely determined by what your experience with innovation has been. Most larger organizations employ one of two methods:

1. Technologists come up with new "cool" characteristics and then the rest of the organization tries to figure out how to make some money from the breakthroughs.

2. Marketers develop new offering concepts and ask the rest of the organization to help find ways to deliver the benefits at the heart of the concepts.

By contrast, in start-ups and smaller companies, there is more likely to be a balance between finding opportunities, using technology in new ways, and creating new business models (improved ways to deliver value to customers, users, and other stakeholders).

If you have experience with the first method, you'll love this book. If you use instead the second method, you'll be less excited. If you in the start-up and smaller company group, you may be wondering what all the fuss is about.

This book works best as a combination of case histories looking at how to make large companies accomplish more through innovation (especially business-model innovation) and change management.

The key elements are described by former P&G CEO, A.G. Lafley, and Ram Charan (ubiquitous chronicler of large company practices with celebrity CEOs) are:

Putting in customer-centric innovation as a core process for driving forward the organization's top- and bottom-line performance by employing

1. Motivating purposes and values
2. Stretch goals
3. More engaged decision making about innovation strategies and projects
4. Taking advantage of what you do best
5. Establishing missing organizational capabilities and structures
6. Adding support systems
7. Creating a better communicating and risk-taking culture
8. Inspiring and encouraging leadership

Most people will find the P&G example to be the most useful and best developed one in the book. There are also much less developed examples from Nokia, GE, Honeywell, DuPont, LEGO, that are mostly used to highlight one aspect of company innovation.

The stories mostly repeat common problems of those who don't succeed in innovation: creating products that managers, rather than customers and end users, like; getting people from different functions to work together; focusing on a short list of good opportunities rather than a laundry list from which few results emerge; and sharing information that's already known by someone else.

As I compare this book to studies done in the early 1970s of how innovation could be more productive I think the biggest differences come in seeking more ideas from outside the organization (something P&G has done well in the last decade) and making breakthrough innovations related to existing businesses a major corporate focus. If those subjects are of particular interest, this book will be very valuable to you.

Innovative thinking is required to change the rules of a well-established "game" as well as to change how to play that game. In the business world, change initiatives are certain to encounter all manner of barriers, many of them the result of what James O'Toole so aptly characterizes as "the ideology of comfort and the tyranny of custom." Winners are those organizations whose innovative thinkers who come up with breakthrough ideas, not only about products and services but also in terms of how those products and services are designed, produced, marketed, and distributed. A.G, Lafley and Ram Charan call them "game-changers." In this book, they focus on P&G (of which Lafley now serves as chairman & CEO as well as on DuPont, GE, Honeywell, Lego Group, SAMSUNG, Target, and 3M. These and other "game-changers" demonstrate how to "drive revenue and profit growth with innovation."

This is a seamless collaboration, with Lafley's "voice" generally dominant and Charan's perspectives suggesting the broader implications and applications of lessons to be learned from P&G. (The same is true of Execution that Charan co-authored with Larry Bossidy, former CEO of AlliedSignal/Honeywell.) Together, Lafley and Charan explain

How and why innovation at P&G changed its game (Lafley)
The significance of P&G's transformation (Charan)
Why the customer is (almost always) the foundation of successful innovation
How goals and strategies help to achieve game-changing innovation
How to revitalize core strengths with innovation
How to build "enabling structures"
How to generate innovative ideas and then get them to market
The risks of innovation and how to manage them
Why innovation is a team sport
What is needed to lead innovation and growth
How Jeff Immelt "made innovation a way of life" at GE

According to Lafley, his thoughts about "the fundamentals" of driving profitable growth with innovation developed over a period of many years prior to being appointed CEO by P&G's board, at a time when it as stock had fallen by 50% and it had lost more than $50-billion in market capitalization. However, "the reality is their sequencing and actually execution evolved by `muddling through.'" The development of his ideas required a process of experimentation and discovery and the same is true of anyone who attempts to apply any of those ideas. A few "simple but powerful things" enabled Lafley and his associates to "turn this ship around":

1. "We put the consumer at the center of everything we do...Our goal at P&G is to delight our consumers at two `moments of truth': first, when they buy a product, and second, when they use it. To achieve this, we live with our consumer and see the world and opportunities for new-product initiatives through their eyes."

2. "We opened up...Innovation is all about connections so we got everyone we can involved: P&Gers past and present; consumers and customers; suppliers; a wide range of `connect and develop' partners; even competitors."

3. "We made sustainable organic growth a priority [rather than acquired growth]. Innovation enables expansion into new categories, allows us to reframe businesses mature and transform them into platforms for profitable growth."

4. "We organized around innovation to drive sustained organic growth...By running a disciplined development, qualification, and commercialization process, we have proved we can manage a large portfolio of innovations in various stages of development."

5. "We began thinking about innovation in new ways...We started from the premise that it is possible to run an innovation program in much the same way we run a factory. There are inputs; these go through a series of transformative processes, creating out puts...[Also] we broadened the way we thought about innovation to include not just products, technologies, and services, but also business models, supply chains, and conceptual and cost innovations."

Of special interest to me is the material that Lafley and Charan provide in Part Two, Making Innovation Happen, as they provide tools for creating organization structures that develop the ability to seek outside ideas and then channel them effectively inside the operations of the organization. They also describe in detail the practical framework for operational innovation - from generating ideas to going to marketing. "This process can help you bust the silos of the organization and make the flow of ideas seamless." At least that's the objective, although my own extensive experience with innovation initiatives suggests that the process of experimentation and discovery is seldom "seamless." On the contrary, it works best when it is continuous, unrestricted, free-flowing, inclusive, often confrontational, and almost always messy.

Lafley and Charan fully realize that a different kind of leadership is needed if an organization is to develop a new mindset and management process for driving sustainable organic growth. Hence the importance of the eleven lessons to be learned from Jeff Immelt's leadership as CEO of GE. Each is examined in detail in the final chapter. I should add that these are lessons that anyone can apply at any level and in any area of her or his own organization, what its size and nature may be. For example, here's #1: "Consider how innovation could breathe new life into your existing business, segment, or product area and achieve higher goals. Become the source inspiration for others who don't see it yet. Make it part of your personal leadership agenda. Communicate it clearly and repeatedly, but don't stop at inspirational words and positive thoughts. Be prepared to make innovation happen." In other words, be ready to get some dirt under your nails.

Those who share my high regard for this book are urged to check out Henry Chesbrough's Open Innovation: The New Imperative for Creating And Profiting from Technology and his more recent Open Business Models: How to Thrive in the New Innovation Landscape as well as two books by Thomas Kelley, The Art of Innovation: Lessons in Creativity from IDEO, America's Leading Design Firm and his more recent The Ten Faces of Innovation: IDEO's Strategies for Defeating the Devil's Advocate and Driving Creativity Throughout Your Organization with Jonathan Littman. Also James Champy's Outsmart!: How to Do What Your Competitors Can't, John E. Ettlie's Managing Innovation, (Second Edition): New Technology, New Products, and New Services in a Global Economy, Dean Spitzer's Transforming Performance Measurement: Rethinking the Way We Measure and Drive Organizational Success, and Enterprise Architecture as Strategy: Creating a Foundation for Business Execution co-authored by Jeanne W. Ross, Peter Weill, and David Robertson.

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