Transcript Lecture Notes 10

Managing when the
Outcome is Highly
Uncertain
Innovation
Workout
(practice
Planning
to learn when uncertainty is high
Assessing
Future
for your Innovation Project)
your project as it unfolds
Fruit (Real Options Practicum)
Innovation Workout
Preparation 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


Leading indicators are the hardest to find


Why? Because they are easy to collect
 Just get them from the existing accounting systems
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, resegmented 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 discoverydriven business plan
Entrepreneurial
Activity
Drives
Performance
(customers, investors,
etc.)
Strategy Drivers Help Specify Deliverables
and vice versa

1.
Translate broad strategy
 Into daily operating activities
 StrategyTacticsOperations
Everybody understands operations
No one understands strategy
2.
3.
4.
Create a focus for competence creation
The most dangerous assumptions reside in the
operations
The more integrated your deliverables
The 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 Teamwork
with evidence

Myth 1: Effective teams work together a lot, face-toface


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


Independence + confidence is best; face-time = loafing
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