InnoTac/Innovation

Tactics

Tom Peters/InnoTac.0621.06

Premises I

“A focus on cost-cutting and efficiency has helped many organizations weather the

downturn, but this approach will ultimately

render them obsolete. Only the constant pursuit of

innovation can ensure long-term

success.” —Daniel Muzyka, Dean, Sauder School of Business,

Univ of British Columbia (FT/09.17.04)

“Forbes100” from 1917 to 1987: 39 members of the Class of ’17 were

alive in ’87; 18 in ’87 F100; 18 F100 “survivors” underperformed the

market by 20%; just 2 (2%), GE &

Kodak, outperformed the market 1917 to 1987.

S&P 500 from 1957 to 1997: 74 members of the Class of ’57 were alive in ’97; 12 (2.4%) of 500 outperformed the market from

1957 to 1997.

Source: Dick Foster & Sarah Kaplan, Creative Destruction: Why Companies That Are Built to Last Underperform the Market

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The

answer seems obvious: Buy a very large one and just wait.”

—Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

More than $$$$

#1 R&D spending,

last 25 years?

GM

“I am often asked by would-be entrepreneurs seeking escape from life within huge corporate structures, ‘How do I build a small firm for myself?’ The

answer seems obvious: Buy a very large one and just wait.”

—Paul Ormerod, Why Most Things Fail: Evolution, Extinction and Economics

Premises II

What “We” Know “For Sure” About Innovation

Big mergers [by & large] don’t workScale is over-rated

Strategic planning is the last refuge of scoundrelsFocus groups are counter-productive“Built to last” is a chimera (stupid)

Success kills“Forgetting” is impossible

Re-imagine is a charming idea“Orderly innovation process” is an oxymoronic phrase

(= Believed only by morons with ox-like brains)“Tipping points” are easy to identify … long after they will do you any good

“Facts” aren’tAll information making it to the top is filtered

to the point of danger and hilarity“Success stories” are the illusions of egomaniacs (and “gurus”)

If you believe the memoirs of CEOs you should be institutionalized“Herd behavior” (XYZ is “hot”) is ubiquitous

… and amusing“Top teams” are “Dittoheads”

CEOs have little effect on performance“Expert” prediction is rarely better than rolling the dice

Try It

“This is so simple it sounds stupid, but it is amazing how few oil people really

understand that you only find oil if you drill wells. You may

think you’re finding it when you’re drawing maps and

studying logs, but you have to drill.”

Source: The Hunters, by John Masters, Canadian O & G wildcatter (80%)

“While many people big oil finds with big companies, over the years

about 80 percent of the oil found in the United States has been

brought in by wildcatters such as Mr Findley, says Larry Nation,

spokesman for the American Association of Petroleum

Geologists.” —WSJ, “Wildcat Producer Sparks Oil

Boom in Montana,” 0405.2006

“We made mistakes. Most of them were omissions we didn’t think of when we initially wrote the software. We fixed them by doing it

over and over, again and again. We do the same today: While our competitors are still

sucking their thumbs trying to make the design perfect, we’re already on prototype

version No. 5. By the time our rivals are ready with wires and screws, we are on

version No. 10. It gets back to planning versus acting: We

act from day one; others plan how to plan—for months.”

—Bloomberg by Bloomberg

“The secret of fast progress is

inefficiency, fast and furious and

numerous failures.”

—Kevin Kelly

Culture of Prototyping

“Effective prototyping may

be the most valuable core competence an

innovative organization can hope to have.”

Michael Schrage

Think about It!?

Innovation = Reaction to the Prototype

Michael Schrage

“We are in a brawl with

no rules.” —Paul Allaire

S.A.V.

Screw Around Vigorously

Screw It Up

“Fail faster. Succeed sooner.”

David Kelley/IDEO

Fail. Forward.

Fast.

–High-tech Exec/PA

“FAIL, FAIL AGAIN. FAIL BETTER.”

—Samuel Beckett

“Reward excellent failures.

Punish mediocre

successes.”Phil Daniels, Sydney exec

Read This!

Richard Farson & Ralph Keyes:

Whoever Makes the Most Mistakes Wins: The Paradox

of Innovation

Sam’s Secret

#1!

“Tom, very simple. Sam was

not afraid to fail.” —David Glass to TP, on the occasion of

Sam’s induction into The Sales & Marketing Hall of Fame

Plan B

"I think it is very important for you to do two things: act on your temporary conviction as if it was a

real conviction; and when you realize that you are

wrong, correct course very quickly.” —Andy Grove

“The most successful

people are those who

are good at plan B.”

—James Yorke, mathematician, on chaos theory in The New Scientist

Parallel Universe

Build a “School on top of a school” (The Parallel

Universe Strategy)

B.School Innovation Strategies: Exec Ed/Continuing Ed (fewer restraints).

Web (fewer restraints). “Parallel Universe” approach (JKC/Bob S)!

Recruit “weird” (in places you can get away with it—eg, students,

continuing ed faculty lesser admin jobs)!

Message: LOOK FOR/EXPLOIT THE “WEAK” (Unregulated) SPOTS!

JKC

JKC/Smith

1. Scour for renegades; wine & dine.

2. Go outside for funds.

Change? Ha! Try: End Run! Build Your Own! Period!

“We’re never going to persuade the

conservatives to accept [our view]. We

need to build our own institutions.” —anon.

Parallel Universe/

Venture Fund

“Venture” fund (E.g. Gerstner/Amex,

Dow/Marriott, Grove/Intel, Bedbury/Starbucks)

2/50**Scott Bedbury/Starbucks/<1%/<4 of 400/ grabbed best/all wanted to be there/2%-50%

Shell

“Game Changer”

10% of technical budget “set aside and used to fund

promising but nontraditional ideas through a staged

funding process similar to that used by venture capitalists”

Source: Financial Times/08.2003

We Are What

We Eat

We become who we hang

out with!

Measure “Strangeness”/Portfolio Quality

StaffConsultants

VendorsOut-sourcing Partners (#, Quality)

Innovation Alliance PartnersCustomers

Competitors (who we “benchmark” against)

Strategic Initiatives Product Portfolio (LineEx v. Leap)

IS/IT ProjectsHQ LocationLunch Mates

LanguageBoard

Requirement: Discomfort

“I’m not comfortable unless I’m

uncomfortable.”—Jay Chiat

Find ’em

“Some people look for things that went wrong and try to fix

them. I look for things that went right, and try to

build off them.” —Bob Stone

(Mr ReGo)

“Somewhere in your organization, groups of

people are already doing things differently and

better. To create lasting change, find these areas of positive deviance and fan the flames.” —Richard Tanner

Pascale & Jerry Sternin, “Your Company’s Secret Change Agents,” HBR

Sing Them

Demos! Heroes! Stories!

REAL Org Change: Demos & Models (“Model

Installations,” “ReGo Labs”)/ Heroes (mostly extant: “burned to

reinvent gov’t”)/ Stories & Storytellers (Props!)/

Chroniclers (Writers, Videographers, Pamphleteers, Etc.)/

Cheerleaders & Recognition (Pos>>Neg, Volume)/

New Language (Hot/Emotional/WOW)/ Seekers

(networking mania)/ Protectors/ Support Groups/

End Runs—“Pull Strategy” (weird alliances, weird

customers, weird suppliers, weird alumnae-JKC)/ Field “Real People” Focus (3 COs) (long way away)/

Speed (O.O.D.A. Loops—act before the “bad guys” can react)

C.f., Bob Stone, Lessons from an Uncivil Servant

Stories … Paint me a picture … Story

“infrastructure” … Demos … Quick prototypes …

Experiments … Heroes … Renegades … Skunkworks … Demo Funds … V.C. … G.M. … Roster … Portfolio … Stone’s

Rules … JKC’s Rules

“My mission is that of a mole—

my existence only to be known by upheavals.” —Jan

Morris, Fisher’s Face, Or, Getting to Know the Admiral

Org Structure

Core Mechanism:“Game-changing Solutions”

PSF (Professional Service Firm “model”/The Organizing Principle)

+

Brand You(“Distinct” or “Extinct”/The Talent)

+

Wow! Projects (“Different” vs “Better”/The Work)

Band of Brothers

(& Sisters!)

“Never doubt that a small group of

committed people can change the

world. Indeed it is the only thing that

ever has.” —Margaret Mead

Hard is soft.Soft is hard.

First-level Scientific Success

The smartest guy in the room wins”

Or …

First-level Scientific Success

FanaticismPersistence-Dogged Tenacity

Patience (long haul/decades)-Impatience (in a hurry/”do it yesterday”)

PassionEnergy

Relentlessness (Grant-ian)

EnthusiasmDriven (nuts!)

(Brutal?) CompetitivenessEntrepreneurialPragmatic (R.F!A.)

Scrounge (“gets” the logistics-infrastructure bit)

Master of Politics (internal-external)Tactical Genius

Pursuit of (Oceanic) Excellence!High EQ/Skillful in Attracting + Keeping Talent/Magnetic

Prolific (“ground up more pig brains”)

Egocentric

Sense of History-DestinyFuturistic-In the Moment

Mono-dimensional (“Work-life balance”? Ha!)

Exceptionally IntelligentExceptionally Clever (methodological shortcuts/methodological genius)

Luck

Hard is soft.Soft is hard.

“Most important,

he upped the energy level at Motorola.” —Fortune on Ed

Zander/08.05

4/40

4/40

De-cent-ral-iz-a-tion!

Ex-e-cu-

tion!

Ac-count-a-bil-ity!

6:15A.M.

Inno64: Innovation Strategies & Tactics

Parallel universe /Exec Ed v res MBAEnd run regnant powers/JKCFind done deals-practicing mavericks/Stone-ReGoBell curves2016 in 2006Non-industry benchmarkingEverything = PortfolioV.C.s all!Hot language/Wow-Astonish me-Insanely great-immortal-Make something greatLead customers/PW-EmbraerLead suppliers /Top decile R&DWeird alliancesMottos/Paul Arden (“Whatever You Think Think the Opposite”)Hire freaks/Enough weird people?Weird Boards!!!

CEO track record of Innovation (nobody starts at 45!)System/GE-Immelt“Strategic thrust overlay”CalendarBig Delta easier than SmallMBWA with freaks-weirdos/JKCMBWA/Boonies’ labsV.C.-formal/IntelAcquire weirdChildren’s crusadeOld farts crusadeGo Global at any sizeStop listening to customers Talent!/Unusual sources-Hire innovators-V.C.sEschew giant mergers

Remember: scale economies max out earlyAssisted suicide! (“Built to last” = Chimera-snare-delusion)Burn your press clippings“Forgetting” “strategy”Fire all strategic plannersTempo!Final product bears little relation to starting notionDesign! Design! Design! (“culture,” not program)All innovation: Pissed-off peopleGut feel rules!Focus groups suckWeird focus groups okayBe-Do philosophy

CelebrationsCulture-little as well as big Inno (“everyone-an-innovator”)Life = Wow ProjectsAcknowledge messiness-pursue serendipity (Blitzkrieg-Containers-Science-Jim Utterback)R.F.A.Culture of execution4/40: decentralization, execution, accountability, 615AMEVP (S.O.U.B.)/Systems-process “un-design”Diversity for diversity’s sakeWomen-Women-Women/customers (they “are the market,” not a “segment”)-leadersBoomers-Geezers (“all the money”)

CRO (Chief Revenue Officer) “culture”/top-line obsessedCIO (Chief INNOVATION Officer)LaughterFacility-space configurationExperiments-prototypes“Reward excellent failures. Punish mediocre successes.”Bizarrely high incentives (& penalties)We are what we eat/We are who we hang out with (E.g.: Staff-Consultants-Vendors-Out-sourcing Partners/#, Quality-Innovation Alliance Partners-Customers-Competitors/who we “benchmark” against -Strategic Initiatives -Product Portfolio/LineEx v. Leap-IS/IT Projects-HQ Location-Lunch Mates-Language-Board)