innovation governance etc

7/31/2019 Innovation Governance Etc

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Tacit knowledge is a catch-all term to describe a combination of practical

knowledge, unconscious differences in subjective knowledge, and unarticulated

but highly contextualized objective knowledge--

The key idea is that groups of people who work intensively together develop shared understandings

about the world and create knowledge within the context of those understandings. The key study in the

area was an investigation of Xerox photocopier repair technicians and how they taught each other

about managing the idiosyncrasies of recalcitrant photocopiers. The key thing I want you to take away

from this response is that the aim is not always to eradicate local subjective knowledge.)

1) Capturing artisanal knowledge so that it can be objectified.

2) Capturing and codifying customers practical knowledge so that devices and services can be

designed to complement or substitute for it. (e.g. designing the gear shifters on a bicycle would requireyou to understand how people alter their balance as they ride a bike, and particularly as they go faster

(shifting up) or come up against their physical limits (shifting down). Alternatively, Apple claims that

the operating system for its phones and tablets is more consistent with customers' practical

knowledge.)

From my experience, differences in subjective knowledge is associated with highly emotional

conflict. In this instance, people tend to interpret the actions of the other party in terms of their own

worldview, and so they often find the other party's behavior incomprehensible and/or offensive.

Another form of highly emotional conflict occurs when people share objective knowledge about

differences in material resources. For example, people will go to war over differential access to

drinking water.

It is very hard to strike a balance between effective management and the right amount of bureacratic

processes. Creating things necessarily involves risk and failure and many organisations have been slow

to recognise that this is an essential part of creativity, therefore an inherent part of the culture of many

organisations is creation reducing, by dampening creative efforts and rewarding risk free behaviours.--

>FBC

An explanation that draws on material from this class is that the people in these two types of

organisations have incompatible worldviews. That is one type of organisation recruits and promotes

people who have a strong analytic and control orientation, and therefore see the world through a

'variance reduction' lens. These people find it very difficult to engage in, or think in terms of, variance

creation activities. Going along with these differences in world view will be differences in

organisational systems. For instance, organisations with a strong focus on variance reduction will have

systems that are highly control oriented, which is likely to further squeeze out both emergence

(variance creation) and people who want to work in an organisation that fosters

emergence. (Obviously, you can also make the contra-argument.) A recent paper that looks at this

issue is: Adler, P. S., M. Benner, et al. (2009). "Perspectives on the productivity dilemma." Journal of

operations management 27(2): 99-113.


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while companies that have exciting products often have very wasteful and inefficient processes.)

-didnt reward people on what they did, rewarded on outcomes (ie. Inexperiencecd staff on pathfinder

mission unable to manage although they were promoted to project management levels)

-outsourced technical detail to outside sources

-

Macro Governance

Roles for the board to cooperate

Boards cooperative-trusting, safe to fail, board takes responsibility for failures

o Ensure strategy is enacted as a set of projectso Watch out for and encourage exceptions coming from below that reflect new

strategic opportunities or indicate changes in the environment

o As innovation departs further from existing capabilities, or as the environmentshifts, strategic clarity gets harder, organisational resistance grows etc.

o Delegationo Where the strategy does not results in strategic risk at an aggregate level,

delegate administration of the pipeline

o Where the strategy does not result in strategic risk, make the strategicdecisions and/or govern the pipeline

o Innovation agendao Repeated gameo Information-rich environment (board members have multiple sources)o Variable penalities as trust growso

One player can compensate for anothers deficiencies


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To defect-defect

o Need to manage ongoing operationso Lack of board member expertiseo Unwillingness of board to work as a true team Board defective-dont trust

managers, monitors managers, managers withhold information from the

board

o Corporate governance codes, listing rules, and their underlying assumptionso Corporations laws and their historyo Asymmetric definition of risk

o Blame to the board, credit to the CEOo CEO tenure-less likely to invest in innovation agenda which wont pay

off until after their retire

o Institutionalised norms about board behaviouro Interlocks and homosocial reproduction by boards

How do companies avoid dilemma

Focus on accountability Working out where its safe to trust Develop information systems that allow them to track the impact of their

decisions

Micro-governanceo Aim- optimise ongoing allocation of resourceso Strategic environment is changingo How projects are changingo Periods of emergence punctuated by moments of control (gate

reviews/governance events)

o Hurdle criteria: risk, capabilities, value delivery


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o Reasons for killing or parkingo Fail to meet hurdle criteriao There are better projects in the portfolio, given emerging strategic needso What do we need to know about the gate review process?

Characteristics of typical projects

o Most projects fail, but most organisations minimiseo Planning for failureo Minimising its impacto Planning what resources are needed to avoid failure

Success-the less likely outcome usually receives near complete planning

attention. Why?

o The project must be successfully sold to someone, investors, the board, theboss etc

o Start of project is when least is knowno

Details will emergeo The environment will shifto Typically involves an internal project champion and the external inventoro Highly optimistic view (psychologically wired)o Twice as long and four times the costo Four times as long and twice the cost

Bases for problems

o The inventor syndrome-overly identified with project, emotionally committedo Misaligned objectives: corporate vs project champion/inventor. Company

should be interested in overall portfolio, inventor interested in project-

different goals/ambitions, use different criteria for judgeing project


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o How do we know a project is failing? Can be really hard to tell, inventor willsay its fine the company will have own criteria, should be decided early on?

o Early versus late in the pipeline (early in pipeline, playing poker, finalimplementation, financial value and ROI, should be changing as it moves

down the pipeline)-companies generally don't take this change in strategy into

account or are unaware of it

No agreement on project evaluation criteria

Companies have innovation systems

-Bad economic thinking often drives decisions

o Focus on sunk costso Wrong use of financial tools (NPV with wrong base)o Poor estimates of platform and competence benefits leading to a focus

on the short term

o Slim innovation portfolios are at particular riskBonabeau et al 2008 HBR

o Eli lilly-errorso First managers often ignore evidence challenging their assumptions

that projects will succeed

o 2nd, companies sometimes terminate projects prematurely becausepeople fail to conduct the right expts to reveal products potential

o Solution: segment NPD so the early stage organisation maintains loyalty to theexperiment rather than the product, whereas the late-stage organisation

pursues commercial success.

o


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o Stategy- Grand theory view- can construct a grand theory of innovation, whichshould drive the strategy

o 'empirical view'- drucker- emergent - spot what is emergent- convert it intoyour strategy.

oo Risk- emergence, complexity, epistemically differences, communications

barriers - these sources of risk interact.

o Capability building.o Cooper readings.oo Think about projects as set of inputs into set of outputs and risk , which you

need to manage .

oo Portfolio and pipelines..pipeline management. Stage gate good framework.o Digital chocolate --o Pipeline- a strategic tool.o - recursive enactments of ideation , process and executiono - pipelines device which pass as they accumulate and utilize resources and risk

.

oo -correlated risk - group of similar projectso General portfolio- uncorrealted riskoo -technology and market: develop set of goals and objectives -->aggregate

project plan-useful-->build project plan and manage plan- put it thru an learn

oo What matches budget and capabilitiesoo Longitudinal-->oo Optimal pipeline in steady state will look like funneloo 3 stages- process design and ideation-o Ethnographic approach


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o --most important thing to generate multiple options for the one projecto --ie. Have a good supervisor- come back with 10 topics and choose 1, produce

10 one page discussion how we would do the project and then Whittle down to

3-4- flesh out and choose 1 ..Critically important step-multiple choices within

a given project important in managing project and hence pipeline.

oo Process pipeline -- many ways of managing one projectoo 3rd view - resource transformation system.oo Radical innovation-->incremental innovation--casmetic change

Macro 4 deal projects

-acceleratng costs

-reduce risk early onhighly market focussed

-delivers strategically relevant capabilities and technology platforms to help with

future projects

can you get modular stages??? Break project up discrete dimensions and

phases-unambiguous outputs at the end

Gate reviews (at nasa) emergence and control

-temproal separation-a form of process modularity

early versus late gates (chess vs poker)

roles of gate reviews

-selelect between ideas

-select between approaches for a given idea

redirect a given idea or approach


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-authorise the next stage

-build buy in for the project across the organisation

Failing at the gate

1) fail the criteria2) inferior or budget constraint3) you want more projects than funds

a. option valueb. don't continue losing projects because of sunk costs-no choicec. option cost

4)5) Killing projects-why killing projects and funding the stage by stage is

iimportant-effective governance

Why a probust system is important

-better able to weather criticsims from the market

-protects projects, inventors, inventors sponsors

reduces complexity (essentially a modular process)

creates options and flexibility-it is much easier to over-committ to projects if you

know you will kill some

killing projects on the fly is always disruptive, destructive and inefficient

-makes it easier to deal with emergence that makes the gate criteria irrelevant

-xerox, invented the mouse, Ethernet, etc. got rid of them because didnt

fit with photocopying-could have been apple! Spun out the technologies and gave

them away to apple and adobe,

-what does a robust system look like?

-transparant decision making criteria and process


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-prior agreement when milestones are occurring

-agreed kill criteria essential

-agreement is easiest upfront-much more difficult on the fly

-must remain flexible within the more structured systemanother conundrum

-gates are true review points not just potential kill points

-acknowledge the difficulty of working out whether or not youve actually failed

-leadership gets involved early

-leaders are separate from the project-agile development, people who are

working on the project working on the reviews-better to have independent

reviewers, more inputs

-make decisions on the basis of opportunity cost (expected value), not sunk cost

how to kill projects effecitely

-accept that projects need to be killed

try to always have more projects than budget

-redefine failure

-maintaining projects beyond their actual kill point becomes a failure

-deal gracefully with inventors and champions

-distinguish killing of project from your idea was crap-early

-hierarchical separation of responsibility

-picking up the pieces

-org where failure is acceptable

-norms and routines to monitor and attend to memebers emotions


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-lead so failure is acceptable

manage yourself so failure is manageable

manage learning from failure

6)7) -8)

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innovation governance etc

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