Managing when the Outcome is Highly

Uncertain

Innovation Workout (practice for your Innovation Project)

Planning to learn when uncertainty is high

Assessing your project as it unfolds

Future Fruit (Real Options Practicum) 

Innovation WorkoutPreparation for your Innovation Presentation

Assessing the Potential of an Innovation

Quiz, Consumption Chain Analyze and Feature Map an Innovation

Pharmaceutical Innovation

The Blockbuster drugs ($1 billion or more in annual sales) of the past 15 years have all been “lifestyle” drugs

Mood adjusters (Prozac)

Performance enhancers (like Viagra)

Recreational (MDMA, a.k.a. Ecstasy)

Your Task Design (i.e., identify the major features of) a new Blockbuster

Drug by

Quizzing your teammates

Use a Mind Map to find the main feature sets of a hypothetical blockbuster drug

Constructing your consumers (a.k.a. teammates’) Consumption Chain

Identifying the discriminators and energizers

(Feature-Attribute Map) for the significant steps of the Consumption Chain

What to Present Mind Map of Feature Sets for the Drug

Consumption Chain with key steps containing discriminators and energizers

Tell how you will manage each discriminator or energizer to encourage consumers to move to the next step of the Consumption Chain

Identify existing ‘substitutes’ for your new drug

Identify other potential barriers to entry for the drug

Managing Under Uncertainty

Adaptive Execution

Information Elicitation

Scenario Planning

Management’s Challenge

Capitalize on new opportunities Guide the group so they can:

Discover new Competences Discover new Customer Solutions

Avoid forcing staff into the conceptual straightjackets that conventional project management can create.

The Problem It’s a Metrics Problem It is (devilishly) difficult to find good measures of progress

For projects With a high assumption-to-knowledge ratio

Options: Lagging indicators: actions already taken Current indicators: where things are going today Leading indicators: where you are going

Lagging Indicators Current Indicators Leading Indicators

Current Assets Market share Trend extrapolations (profit, market share)

Past profits Operating ratios Micro-microeconomic forecasts of firm statistics

Other accouting numbers Current profit Backlog, advanced orders

What Companies Really Do

Most companies choose lagging indicators Why? Because they are easy to collect

Just get them from the existing accounting systems

Leading indicators are the hardest to find Nobody tells you the future

Leading indicators arise from two sources: Future commitments of firm and customers (e.g., order

backlog) Forecasts of accounting statistics

The Bottom Line

No. It’s not Profits. The bottom line in innovation is to end up

with a new business model capable of giving you competitive advantage i.e., new product / innovation, new model, re-

segmented market, etc.

Adaptive Execution allows you to monitor obstacles, and progress in the right strategic direction

Strategy (Business) Drivers

What’s your Strategy Driver? What makes your proposed business perform? What makes your proposed innovation a commercial success?

These are spelled out explicitly in your discovery-driven business plan

E n tr ep r en eu r ia lAc tiv ity

P er f o r m an c e( c u s to m er s , in v es to r s ,

e tc . )D r iv es

Strategy Drivers Help Specify Deliverablesand vice versa

Translate broad strategy Into daily operating activities StrategyTacticsOperations

1. Everybody understands operationsNo one understands strategy

2. Create a focus for competence creation

3. The most dangerous assumptions reside in the operations

4. The more integrated your deliverablesThe harder it is for a competitor to copy them

The Best Strategy Cannot Stop Technological Disruption

of the Industry

Diagnosing your Progress

Emphasis on Communication with all people involved The ‘Team’ (What’s this mean)

The ‘Team’ may be your best source of Leading indicators, and Strategy Drivers

E.g., see Figure 11-2 (276)

What is the problem with “we have no idea” responses?

Myths about Teamworkwith evidence Myth 1: Effective teams work together a lot, face-to-

face Independence + confidence is best; face-time = loafing

Myth 2: Conflict between group members is bad In the extreme it is dangerous (when members start

behaving at a more primitive level) but there is an optimal level of conflict that avoids groupthink and apathy

Myth 3: Teams are better off when members like each other Mutual respect is more important

Myth 4: Team satisfaction produces performance There is no correlation

Team Deftness

Deftness = =Facility + skill | confidence

Alternative term: ‘Cool’ Interpersonal confidence Confidence that others are

willing to do what is needed Information flows are

adequate and timely Feedback is adequate and

timely Figure 11-3 (p.282)

Distinctively Competent There should be a continual team monitoring of whether or not

The project will yield Distinctive competence

… more customer value added … market differentiation … competitive advantage … you get the picture

The point is to collect all of the information you can From all of the interested parties in the project At every point in time that you can

The questionnaires in Figures 11-3 to 11-10 are useful But a good project manager will be gathering this informally all

along the project Through informal discussions, meetings, and after-hours

gatherings

Future Fruit

Scenario Planning