INNOVATION@WORK WHAT IT TAKES TO SUCCEED WITH INNOVATION www.thinkers50.com INNOVATION@WORK What it takes to succeed with innovation www.thinkers50.com [email protected] Thinkers50 Limited The Studio, Highfield Lane Wargrave RG10 8PZ United Kingdom First published in Great Britain 2018 Copyright © Thinkers50 Limited 2018 Design by www.jebensdesign.co.uk All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the Publishers. This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the publishers. ISBN: PDF Edition 9781999873431 ePub Edition 9781999873448 Kindle Edition 9781999873455 Innovation@Work: What it takes to succeed with innovation CONTENTS 5 Foreword Ikujiro Nonaka 7 Introduction Stuart Crainer & Des Dearlove 10 Five keys to innovation Jeanne M. Liedtka & Randy Salzman 14 Codifying innovation Stuart Crainer & Des Dearlove 18 Conquering uncertainty with dual transformation Scott Anthony 22 How companies strangle innovation – and how you can get it right Steve Blank 29 Failure Inc. Gabriella Cacciotti & James Hayton 36 Down-to-earth innovation Stuart Crainer & Des Dearlove 42 On undersolving and oversolving problems Alf Rehn 48 Innovating to make the world a better place Deepa Prahalad 52 Beyond the sticky note: bringing start-up culture into established companies Tendayi Viki 58 Opening up innovation Stuart Crainer & Des Dearlove 64 Letter to the CEO Henry Chesbrough 68 In conversation Clay Christensen 2 CONTENTS INNOVATION@WORK 75 The real lessons of disruption Alf Rehn 80 Embracing the second era of the internet Don Tapscott 84 Preparing for the rise of the robots Maja Korica 90 The difference that makes a difference Alison Reynolds & David Lewis 97 In conversation Henry Chesbrough 104 Open innovation Chinese-style Paul Nunes & Larry Downes 109 Letter to the CEO Alex Osterwalder & Yves Pigneur 114 In conversation Linda Hill 120 Collaboration at work Alessandro di Fiore & Jonas Vetter 127 Putting a name to innovation Hu Yong & Hao Yazhou 130 In 50 seconds Kate Darling 133 In conversation Vijay Govindarajan 139 Architects of innovation Sangeet Paul Choudary 143 The real facts of innovation life Stuart Crainer & Des Dearlove 148 Innovation: now is the time for emergent change Deborah Rowland THINKERS50 / INNOVATION@WORK 3 152 Today’s real agenda Ricardo Viana Vargas 155 The new art of Japanese innovation Stuart Crainer & Des Dearlove 160 Are you a smart or wise innovator? Navi Radjou 164 In conversation Jeanne Liedtka 170 Forge your future with the avant-garde Anders Indset 175 Why is innovation so hard? Edward D. Hess 179 Innovative ways of organizing in the East Mark Greeven & Wei Wei 183 The end of the world as we know it Marta García Aller 188 Building a WEIRD culture Charles Towers-Clark 192 How can leaders promote innovation? David De Cremer & Jack McGuire 197 Innovation challenges Stuart Crainer & Des Dearlove 200 About Thinkers50 201 About the Open Innovation Gateway powered by Fujitsu 4 FORWARD INNOVATION@WORK Ikujiro Nonaka FOREWORD turning point in my career came in 1984 when I attended a Harvard ABusiness School colloquium on productivity and technology. After that I left the information processing paradigm and began the knowledge creating paradigm. In 1986 Hirotaka Takeuchi and I published a paper, “The New Product Development Game” in the Harvard Business Review. This was based on our research on new product development in Japanese firms. It was the turning point in my focus – from information to knowledge. This paper later influenced the software development industry and became the foundation of the agile and scrum development method. With continued research I became confident that innovation processes cannot be explained solely by the information process involved. Innovation needs to be proactive rather than merely responding to environmental changes. I also started exploring human factors such as personal commitment, emotion and strong belief. We wrote “The Knowledge-Creating Company” article in 1991. It later became a book. We observed that where the only certainty is uncertainty the one sure source of lasting competitive advantage is knowledge. We distinguished between explicit knowledge and tacit knowledge. Explicit knowledge can be captured in codes, symbols, statements and so on. Tacit knowledge is tied to the body, senses, movement, intuition. Since then I have continued to try to explain company activities from the knowledge-creating point of view. Along the way, my interest has expanded from organizational behaviour to strategy. At UC Berkeley I taught a course on innovation with David Teece and hosted a knowledge forum for five years where we met many great thinkers and CEOs. In our continued research we observed that organizations need to continually synthesize knowledge exploration and exploitation. Such organizations build and utilize a relationship with knowledge that integrates and synthesizes explicit knowledge and tacit knowledge. The knowledge spiral is promoted by a third kind of knowledge: practical wisdom. This was originally identified by Aristotle as phronesis, the ability to THINKERS50 / INNOVATION@WORK 5 determine the best action in a specific situation to serve the common good. Such actions, guided by values and ethics, are important aspects of wise leadership. The wise leaders of knowledge-creating companies need practical wisdom because management is not only a science but an art and a craft. I believe it is more of an art. The essence of business is not about bettering competence to maximize profit, it is about the relentless pursuit of a firm’s own standard of excellence. Now I see management as a way of life. Instead of simply chasing numbers, wise leaders focus on shaping the future together with others, shaping the context for the common good. This belief lies at the heart of Innovation@Work. It is a book about knowledge creation and one that will enable you to explore and expand your own knowledge, and to synthesize it for the common good. It can be the start of your own journey to shape the future together with others. Ikujiro Nonaka April 2018 Ikujiro Nonaka is Professor Emeritus of the Graduate School of International Corporate Strategy of the Hitotsubashi University. He is a recipient of the Thinkers50 Lifetime Achievement Award. His books include The Knowledge-Creating Company (with Hirotaka Takeuchi, 1995). 6 INTRODUCTION INNOVATION@WORK Stuart Crainer & Des Dearlove INTRODUCTION nnovation is where the worlds of business and creativity meet to create new value. IIt really is as simple as that. Indeed, one definition of innovation is “the creation of new value.” The word innovate first appears in the mid-sixteenth century. It comes from the Latin innovatus, meaning “renewed, altered,” from the verb innovare, which comes from in (“into”) and novare (“make new”). In other words, innovation is all about finding new ways to change things. What makes this all the more relevant today is that we live in a world where we are constantly demanding new value from the products and services we consume. Think about it. When did you last buy a new phone that boasted “the same old tried and tested technology,” or a car that proclaimed itself “just as good as before”? Our ancestors might have been persuaded by claims of constancy and old-fashioned consistency, but today we demand more. Blame it on fickle consumers, if you will. Or blame it on progress. But there is a continuous ramping up of our expectations, and this includes a heightening of our expectations of innovation. Companies are in the front line. And it isn’t just that the competition might add a new feature or button to an existing product. Commercial life can be positively Hobbesian: nasty, brutish, and, increasingly, short. Entire product categories can disappear overnight. Remember the VHS player? Remember the cassette recorder? Remember buying film for your camera? One of the biggest challenges is dealing with discontinuous innovation. When technologies shift, new markets emerge, the regulatory rules of the game change, or someone introduces a new business model, many formerly successful organizations suddenly become vulnerable, and some of them are soon consigned to history. Discontinuity requires a very different set of capabilities from what we are used to. Organizing and managing discontinuous innovation requires searching in unlikely places, building links to new partners, allocating resources to high-risk ventures, and exploring new ways of looking at the business. These are very different from the conventional and traditional approach to innovation. Historically, a company simply hired some very smart people, put them in an R&D lab, and let them get on with it. That approach is no longer sufficient. THINKERS50 / INNOVATION@WORK 7 The reason is simple: the world is moving ever faster. One by-product of this is that competitive advantage is increasingly fleeting. In today’s turbulent and complex business environment, smart firms know that if they fail to innovate – both in terms of their products and services and in terms of their systems and processes – they will lose out to competitors. That’s why they invest time and effort in creating systems, structures, and processes to ensure a sustained flow of innovation. At the same time, the way we think about, understand, and execute innovation is being shaped by new ideas and fresh points of view from leading researchers, practitioners, academics, and management thinkers. Together with new innovation practices, the latest ideas and thinking about innovation are dramatically changing the innovation landscape. It should come as no surprise that the way we understand innovation itself is continuously being innovated! “The problems of the world will never go away.