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 Write a 750 to 1000 word essay that summarizes what you think are the most valuable lessons or takeaways from the On Innovation book. Please be specific and cite the book and other relevant resources appropriately. Also, include a section that focuses on the key takeaways that you think would most impact the client you chose at the beginning of the semester.   

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HBR’s 10 Must Reads series is the definitive collection of ideas and best practices for

aspiring and experienced leaders alike. These books offer essential reading selected from

the pages of Harvard Business Review on topics critical to the success of every manager.

Titles include:

HBR’s 10 Must Reads on Change Management

HBR’s 10 Must Reads on Collaboration

HBR’s 10 Must Reads on Communication

HBR’s 10 Must Reads on Innovation

HBR’s 10 Must Reads on Leadership

HBR’s 10 Must Reads on Making Smart Decisions

HBR’s 10 Must Reads on Managing People

HBR’s 10 Must Reads on Managing Yourself

HBR’s 10 Must Reads on Strategic Marketing

HBR’s 10 Must Reads on Strategy

HBR’s 10 Must Reads on Teams

HBR’s 10 Must Reads: The Essentials

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On Innovation

HARVARD BUSINESS REVIEW PRESS Boston, Massachusetts

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Copyright 2013 Harvard Business School Publishing Corporation All rights reserved

No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the publisher. Requests for permission should be directed to [email protected], or mailed to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.

The web addresses referenced in this book were live and correct at the time of book’s publication but may be subject to change.

Library of Congress Cataloging-in-Publication Data

HBR’s 10 must reads on innovation. pages cm

Includes index. ISBN 978-1-4221-8985-6 (alk. paper)

1. Creative ability in business. 2. Creative thinking. 3. Diffusion of innovations— Management. 4. Technological innovations—Management. 5. New products. I. Harvard business review II. Title: HBR’s ten must reads on innovation.

HD53.H394 2013 658.4'063—dc23

2012045970

Find more digital content or join the discussion on www.hbr.org.

eISBN: 978-1-4221-9150-7

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Contents

The Innovation Catalysts by Roger L. Martin

Stop the Innovation Wars by Vijay Govindarajan and Chris Trimble

How GE Is Disrupting Itself by Jeffrey R. Immelt, Vijay Govindarajan, and Chris Trimble

The Customer-Centered Innovation Map by Lance A. Bettencourt and Anthony W. Ulwick

Is It Real? Can We Win? Is It Worth Doing? by George S. Day

Six Myths of Product Development by Stefan Thomke and Donald Reinertsen

Innovation: The Classic Traps by Rosabeth Moss Kanter

Discovery-Driven Planning by Rita Gunther McGrath and Ian C. MacMillan

The Discipline of Innovation by Peter F. Drucker

Innovation Killers 5

by Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih

About the Contributors Index

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The Innovation Catalysts by Roger L. Martin

ONE DAY IN 2007, midway through a five-hour PowerPoint presentation, Scott Cook

realized that he wasn’t another Steve Jobs. At first it was a bitter disappointment. Like

many entrepreneurs, Cook wanted the company he had cofounded to be like Apple—design

driven, innovation intensive, wowing consumers year in and year out with fantastic

offerings. But that kind of success always seemed to need a powerful visionary at the top.

This article is about how Cook and his colleagues at the software development company

Intuit found an alternative to the Steve Jobs model: one that has enabled Intuit to become a

design-driven innovation machine. Any corporation—no matter how small or prosaic its

business—can make the same grassroots transformation if it really wants to.

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The Birth of the Idea Intuit’s transformation arguably began in 2004, with its adoption of the famous Net

Promoter Score. Developed by Fred Reichheld, of Bain & Company, NPS depends on one

simple question for customers: How likely are you, on a scale of 0 (not at all likely) to 10

(extremely likely), to recommend this product or service to a colleague or friend?

“Detractors” answer from 0 to 6, “passives” answer 7 or 8, and “promoters” answer 9 or

10. A company’s Net Promoter Score is the percentage of promoters less the percentage of

detractors.

For the first couple of years, Intuit saw its NPS rise significantly, owing to a number of

marketing initiatives. But by 2007 NPS growth had stalled. It was not hard to see why.

Although Intuit had lowered its detractor percentage substantially, it had made little

headway with promoters. Customer recommendations of new products were especially

disappointing.

Clearly, Intuit needed to figure out how to galvanize its customers. Cook, a member of

Procter & Gamble’s board of directors, approached Claudia Kotchka, then P&G’s vice

president of design innovation and strategy, for advice. Following their discussions, Cook

and Steve Bennett, then Intuit’s CEO, decided to focus on the role of design in innovation at

a two-day off-site for the company’s top 300 managers. Cook created a one-day program on

what he called Design for Delight (D4D)—an event aimed at launching Intuit’s reinvention

as a design-driven company.

The centerpiece of the day was that five-hour PowerPoint presentation, in which Cook

laid out the wonders of design and how it could entice Intuit’s customers. The managers

listened dutifully and clapped appreciatively at the end, as they were supposed to; Cook

was, after all, a company founder. Nevertheless, he was disappointed by his reception.

Despite some interest in the ideas presented, there was little energy in the room.

But although the main event fell flat, the one that followed did not. Cook had met a young

consulting associate professor at Stanford named Alex Kazaks, whom he’d invited to

present for an hour at the off-site. Like Cook, Kazaks began with a PowerPoint

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presentation, but he ended his after 10 minutes and used the rest of the time for a

participatory exercise: The managers worked through a design challenge, creating

prototypes, getting feedback, iterating, and refining.

The group was mesmerized. Afterward Cook informally polled the participants, asking

what takeaways they’d gotten from the daylong session. Two-thirds of the lessons they

reported came from the hands-on exercise. This reaction made Cook think: He might not be

the next Steve Jobs, but perhaps his company didn’t need one. Given a few tools, coaching,

and practice, could the grass roots of the company drive success in innovation and customer

delight?

Idea in Brief A few years ago the software development company Intuit realized that it needed a new approach to galvanizing customers. The company’s Net Promoter Score was faltering, and customer recommendations of new products were especially disappointing. Intuit decided to hold a two-day, off-site meeting for the company’s top 300 managers with a focus on the role of design in innovation. One of the days was dedicated to a program called Design for Delight. The centerpiece of the day was a PowerPoint presentation by Intuit founder Scott Cook, who realized midway through that he was no Steve Jobs: The managers listened dutifully, but there was little energy in the room. By contrast, a subsequent exercise in which the participants worked through a design challenge by creating prototypes, getting feedback, iterating, and refining, had them mesmerized. The eventual result was the creation of a team of nine design-thinking coaches—“innovation catalysts”—from across Intuit who were made available to help any work group create prototypes, run experiments, and learn from customers. The process includes a “painstorm” (to determine the customer’s greatest pain point), a “sol-jam” (to generate and then winnow possible solutions), and a “code-jam” (to write code “good enough” to take to customers within two weeks). Design for Delight has enabled employees throughout Intuit to move from satisfying customers to delighting them.

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From Idea to Initiative Like most Silicon Valley tech companies, Intuit had user-interface designers, graphic

designers, and others buried relatively deep in the organization. Cook turned to a

particularly talented young design director, Kaaren Hanson, and asked her what she would

do to promote design at Intuit.

Hanson realized that the company needed an organized program for moving from talking

about D4D to doing it. She persuaded Cook to let her create a team of design-thinking

coaches—“innovation catalysts”—who could help Intuit managers work on initiatives

throughout the organization. Hanson selected nine colleagues to join her in this role. Their

training and deployment was her central agenda for FY 2009.

In selecting the nine, Hanson looked first for people with a broad perspective on what it

meant to be a designer: Beyond creating a graphic user interface that was both appealing

and intuitive, it included thinking about whether the software solved the user’s problem in a

delightful way. She wanted her coaches to be interested in talking to users and solving

problems with colleagues rather than depending solely on their own genius. If they were to

successfully coach others in design thinking, they’d need an outgoing personality and good

people skills.

She invited two direct reports from her own business unit and seven people from other

units across the company. The group included six women and four men. They came from a

variety of fields within Intuit—design, research, product management—and had titles such

as user-interface architect, principal researcher, staff designer, and product manager.

Hanson chose people who were influential even though they were all one or two levels

below director, meaning closer to the bottom of the organization than the top. All nine

signed up enthusiastically.

To begin building design thinking into the DNA of the company, Cook and Hanson

organized a series of Design for Delight forums. These were typically attended by more

than 1,000 employees and featured a speaker who’d had exemplary success in creating

customer delight. Half the featured speakers came from inside Intuit; the other half included

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the founding CEO of Flip Video, Facebook’s top data scientist, and the head of Apple

Stores. The forums also showcased D4D successes to date and shared best practices.

People who worked together were encouraged to attend together and were asked as a team

to identify the one thing they would do differently after the forum.

To ensure that managers who were thinking design didn’t become too intimidated to

begin the process, or frustrated trying to do something with which they had little

experience, or delayed by needing to hire an outside design consultant, Hanson’s innovation

catalysts were available to help any work group create prototypes, run experiments, and

learn from customers. Of course, there was a risk that this would stretch the catalysts too

thin, so Hanson placed some constraints on their availability. They were expected to spend

25% of their time on big-payoff projects for Intuit overall. Hanson kept in close contact

with general managers who had catalysts working with them to make sure that the catalysts

were addressing the managers’ biggest problems. She realized that if design momentum was

to be maintained, her coaches had to be seen as responsible for three or four visible and

high-impact wins a year.

Some enabling came from the very bottom of the organization. In 2008 two employees

who had been at Intuit only four months designed an online social network for the D4D

initiative, which they rolled out the following year with management’s consent but without

its direct support. In its first year the new platform, named Brainstorm, generated 32 ideas

that made it to market.

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From Presentations to Experiments Traditionally, decisions at Intuit had been made on the basis of PowerPoint presentations.

Managers would work to produce both (what they saw as) a great product and a great

presentation for selling the concept to their bosses. Under this system Intuit managers voted

on ideas and then tried to sell them to customers. A key component of D4D, therefore, was

shifting the focus away from managerial presentations. It would be far better, Hanson and

Cook realized, to learn directly from customers through experiments.

Today D4D innovations begin with what Intuit calls the painstorm—a process developed

by two innovation catalysts, Rachel Evans and Kim McNealy. It is aimed at figuring out

customers’ greatest pain point for which Intuit can provide relief. In a painstorm, team

members talk to and observe customers in their offices or homes rather than sit in Intuit

offices and imagine what they want. This exercise often shatters preconceptions. Going into

one painstorm for a sales-oriented product, the team was convinced that the product

concept should be “Grow your business.” But the painstorm showed that “Grow your

business” sounded very ambiguous to customers—it could refer to growing revenues from

their existing customers (not a pain point for them) or to acquiring similar small businesses

(also not a pain point, but expensive). The true pain point was acquiring entirely new

customers through organic sales efforts. “Get customers” was a winning concept that

focused laserlike on that.

Recruiting the Innovation Catalysts IN 2008 KAAREN HANSON sent this e-mail to some Intuit colleagues:

Subject: Phase II of Design for Delight—we need YOU You have been nominated (and your participation has been approved by your manager) to help us drive Phase II of Design for Delight at Intuit. You are a critical leader who can enable Intuit to become one of the principal design-thinking cultures. We have a number of levers at our disposal but we need your help to develop even better ideas to drive design thinking deeper into the organization.

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Here’s what you’ll be committing to:

• Actively participate in a one-day brainstorm/workshop in early August to work through what we (as a force of design thinking and as a larger company) might do to take Design for Delight to its next level. Scott will come by and respond to our ideas/plan towards the end of the day • Commit to the execution of initiatives generated through the August workshop • Become a more visible Design for Delight leader across Intuit (e.g., help teach a Design for Delight 101 session/workshop to FastPath or some other such leadership session, contribute to the D4D body of knowledge through existing and future contribution systems, be a sounding board for Intuit execs) • Be a D4D coach/facilitator that the larger company can draw upon (e.g., coach key teams across Intuit in brainstorming, design reviews, etc.)

In total, your commitment will be about 2 days/month—and we’ll be able to work around your schedule.

Let me know if you are in for FY09—and I’ll get the August date on everyone’s calendars. Right now, we’re looking at an in-person workshop on August 4th, 5th, or 6th in Mountain View.

Next, within two weeks, the group holds a “sol-jam,” in which people generate concepts

for as many product or service solutions as possible to address the pain points they’ve

identified and then weed the concepts down to a short list for prototyping and testing. In the

early days of prototyping, these high-potential solutions were integrated into Intuit’s

software development process. But the innovation catalysts realized that the best way to

maintain momentum would be to get code into users’ hands as quickly as possible. This

would help determine whether the solution had potential and, if so, what needed to be done

to enhance it. So the third step became moving immediately to “code-jam,” with the goal of

writing code that wasn’t airtight but was good enough to take to customers within two

weeks of the sol-jam. Thus, proceeding from the painstorm to the first user feedback on a

new product usually takes only four weeks.

Let’s look at a couple of examples. When Intuit’s tax group began to think about mobile

apps, Carol Howe, a project manager and innovation catalyst, started with the customer.

Her five-person team went “out in the wild,” she says, to observe dozens of smart-phone 13

users. It quickly narrowed in on millennials, whose income range made them likely

candidates for the simplest tax experience. The team created multiple concepts and iterated

with customers on a weekly basis. They brought customers in each Friday, distilled what

they’d learned on Monday, brainstormed concepts on Tuesday, designed them on

Wednesday, and coded them on Thursday, before bringing the customers in again. Through

these iterations the team uncovered multiple “delighters.” They launched a pilot in

California in January 2010 and expanded nationwide in January 2011. The resulting

application, SnapTax, has 4.5 stars in both the Apple and Android stores and a Net

Promoter Score in the high 80s.

An even better example comes from India. In 2008 members of the India team came up

with an idea remote from tax preparation and other core Intuit North America products,

none of which were likely to succeed in India. The idea, a service for poor Indian farmers,

was interesting enough for Intuit to give Deepa Bachu, a longtime development manager, the

green light to explore it. Bachu and an engineer spent weeks following subsistence farmers

through their daily lives—in the fields, in their villages, and at the markets where they sold

their produce. The two came to appreciate the farmers’ greatest pain point—perishable

inventory that either went unsold or got a suboptimal price. If Intuit could enable the

farmers to consistently sell their produce before spoilage and at a decent price, their pain

would be reduced or eliminated.

After the painstorm and the sol-jam, the team went into rapid experimentation. Within

seven weeks it was running a test of what was eventually launched as Mobile Bazaar, a

simple text-messaging-based marketplace connecting buyers and sellers. To get there so

fast, the team had cleverly faked parts of the product that would have been costly and slow

to code and build. These came to be known as “fako backends.” What the user saw looked

real, but behind the user interface was a human being—like the Wizard of Oz behind the

curtain—rather than thousands of lines of code that would have taken months to write.

The initial trials showed that half the farmers were able to increase their prices by more

than 10%; some of them earned as much as 50% more. Within a year of launch, Mobile

Bazaar had 180,000 subscribing farmers, most of them acquired by word of mouth. They 14

report that, on average, the service boosts their prices by 16%.

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From Breakthroughs to Culture Hanson was pleased with the progress of the 10 original innovation catalysts in their first

year and with the organization’s receptivity, but she knew that Intuit would have to scale up

to make the transformation complete. Brad Smith, the new CEO, was raising innovation

expectations for the whole company, focusing particularly on new arenas that he described

as “mobile, social, and global.” Hanson set a goal for FY 2010 to select, train, and deploy

another 65 catalysts. This meant sourcing from a broader pool of talent—going deeper into

product management and engineering—and creating a small dedicated team to support the

catalysts and increase D4D pull from midlevel managers.

She appointed Suzanne Pellican, one of the original 10, to expand the catalysts’ number

and capabilities. Hanson had learned from the initial work that the strongest design thinkers

didn’t necessarily make the best catalysts. She says, “We not only needed people who were

design thinkers—we also needed people with passion to give D4D away and help others to

do great work, versus coming up with a great idea and bringing it to others.”

The catalysts also needed mutual support. Hanson’s team had found that they did their

best work when they worked together. They learned new ideas and techniques from one

another and provided moral support in tough situations. So as Pellican scaled up the

catalyst corps, she made sure that each catalyst was part of an organized “posse” that

typically extended across business units, allowing new methods to travel quickly from one

end of the organization to the other.

To increase the catalysts’ effectiveness, Hanson established a second small team—led by

Joseph O’Sullivan, another of the original 10—to help middle management embrace both

design thinking as a concept and the innovation catalysts as enablers. For example, after

several catalysts reported encountering resistance at the director level, Hanson and

O’Sullivan worked to integrate design thinking into Intuit’s leadership training programs,

applying it directly to problems that leaders faced. In one training program an IT director

was challenged to lead a team tasked with reducing company spending on employees’

mobile devices by $500,000. O’Sullivan’s group held a one-day session on painstorming

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and sol-jamming for the team. The IT director achieved the desired saving and won much

appreciation from the members of her team for having made their task so much easier than

expected. She and the other participants in that leadership training program became fervent

D4D advocates.

_____________________

Encouraging experimentation rather than PowerPoint has enabled employees throughout Intuit to move from satisfying customers to delighting them. Design for Delight

has stuck because people see that it is an obviously better and more enjoyable way of

innovating.

Innovation activity has increased dramatically in the organization. Take TurboTax,

Intuit’s single biggest product. In the 2006 tax year the TurboTax unit ran just one customer

experiment. In 2010 it ran 600. Experiments in the QuickBooks unit went from a few each

year to 40 last year. Intuit now seizes new opportunities more quickly. Brad Smith pushed

for D4D-led innovation in the fast-growing arena of mobile apps, and within 24 months the

company went from zero to 18, with a number of them, including SnapTax, off to a very

successful start. Net Promoter Scores are up across the company, and growth in revenue

and income has increased over the past three years.

Scott Cook may not have been another Steve Jobs, but it turned out that Intuit didn’t need

one.

Originally published in June 2011. Reprint R1106E

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Stop the Innovation Wars by Vijay Govindarajan and Chris Trimble

IT WAS JUST AN INNOCENT COMMENT. While working with a client at a Fortune 500 company, we proposed the formation of a special group to execute a new growth strategy.

“For now, let’s just refer to the group as the innovation team,” we suggested.

The client rolled his eyes. “Let’s call it anything but that,” he said. “What is this so-

called innovation team going to do? Brainstorm? Sit around being creative all day? Talk

condescendingly about a superior organizational culture? All of this while operating with

neither discipline nor accountability? All of this while the rest of us get the real work

done?”

Wow. All it took was two words: innovation team. In our experience, innovation teams feel a hostility toward the people responsible for

day-to-day operations that is just as biting. The rich vocabulary of disdain includes

bureaucratic, robotic, rigid, ossified, staid, dull, decaying, controlling, patronizing . . . and just plain old. Such animosity explains why most executives believe that any significant innovation initiative requires a team that is separate and isolated from the rest of the

company.

But that conventional wisdom is worse than simpleminded. It is flat wrong. Isolation may

neutralize infighting, but it also neuters innovation.

The reality is that an innovation initiative must be executed by a partnership that

somehow bridges the hostilities—a partnership between a dedicated team and what we call

the performance engine, the unit responsible for sustaining excellence in ongoing

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operations. Granted, such an arrangement seems, at first glance, improbable. But to give up

on it is to give up on innovation itself. Almost all innovation initiatives build directly upon

a company’s existing resources and know-how—brands, customer relationships,

manufacturing capabilities, technical expertise, and so forth. So when a large corporation

asks a group to innovate in isolation, it not only ends up duplicating things it already has but

also forfeits its primary advantage over smaller, nimbler rivals—its mammoth asset base.

Over the past decade, we have examined dozens of innovation initiatives and identified

some best practices. In the process we built upon foundational management theories such as

Jim March’s ideas about balancing exploration with exploitation, and Paul Lawrence and

Jay Lorsch’s argument that firms need to both integrate and differentiate corporate units. We

came to the conclusion that the organizational model we prescribe—a partnership between

a dedicated team and the performance engine—is surprisingly versatile. It can be adapted

to initiatives that span many innovation categories—sustaining and disruptive; incremental

and radical; competence enhancing and competence destroying; new processes, new

products, new businesses, and high-risk new ventures.

This article will show how to make the unlikeliest partnership work. There are three

steps. First, decide which tasks the performance engine can handle and which you’ll need

to hand off to a dedicated team. Second, assemble the right dedicated team. Third,

anticipate and mitigate strains in the partnership. Once you have taken these steps, you’ll be

in a good position to actually execute on your great ideas.

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How One Company Organized for Growth In most law offices, even in the internet era, you’ll find libraries full of weighty