Where Research, Best Practices, and Real-World, Real-Time Know-How Meet
Wharton@Work met with Wharton marketing professor George Day to talk about his new book, Innovation Prowess: Leadership Strategies for Accelerating Growth (Wharton Digital Press, 2013), and what he has learned from some of the world’s most innovative companies. As faculty director of Innovation for Growth: Strategies for Creating Value, he shares those insights with executives twice each year on the Wharton campus.
Wharton@Work: Organic growth is a top priority for most companies, but most of them struggle with it. You have been studying growth achievers and what you call growth laggards for over 25 years. What have you discovered? Why is growth so hard to achieve?
George Day: Innovation, and in particular the notion of organic growth, is at the top of the CEO agenda in 4 out of 5 public companies. What I have seen is that many of them set very high goals for growth without having a realistic strategy for achieving it. Those who make it work have what I call in my new book an “Innovation Prowess” that combines discipline in growth-seeking activities with an organizational ability to innovate. The companies that continue to grow organically have the capabilities, the culture, and the right structures in place. But you can have those abilities without a process for finding the right kinds of growth opportunities — that is where discipline comes in. You need discipline and ability to continuously drive growth.
W@W: Are you teaching both in Innovation for Growth: Strategies for Creating Value?
GD: Yes — the book grew out of the program which has been running for the past six years. We have faculty who are doing the cutting-edge research, who understand best practices, and who are consulting and working with some of the most innovative companies. But also in the classroom are highly experienced executives from companies like Intel, Nike, and Verizon. As they share what has worked and what hasn’t, it brings even more real-world challenges to light. It has been a very dynamic learning environment for the faculty and the participants.
W@W: What do you tell companies who have the ability to innovate but who don’t have a steady stream of good opportunities?
GD: You have to look at a lot of different kinds of innovation. The title of the program suggests we have to think expansively about it. Look broadly for opportunities and select the best ones. That is the discipline part: building the business case, finding new market spaces. We teach tools that can help them get more disciplined about how they approach it, and explore the strategies of companies that do it well.
W@W: Such as?
GD: Open innovation — which is the real key for getting the best ideas and managing the risks of innovation — started with Proctor & Gamble. The architect of the company’s Connect + Develop program was Larry Huston, its former VP of Innovation. Larry left to start the consulting firm 4Inno, and he has been teaching in Innovation for Growth since its inception. Very few people have as much experience in making open innovation work as Larry.
Karl Ulrich, Wharton’s Vice Dean for Innovation, takes a process view. He is the co-author of Innovation Tournaments, which describes a disciplined method for locating the right opportunities. Karl takes the participants through a tournament to see how to apply it. David Robertson [author of the new book Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry] describes how LEGO went from near-extinction to one of the world’s most innovative companies.
W@W: Do you also address risk assessment? Many companies aren’t sure what to invest in because of the cost. Isn’t risk a major stumbling block?
GD: Innovation is inherently risky. The companies that do it well, consistently, understand uncertainty and work to contain the risk. They don’t ignore the uncertainty — they build it into their agenda, using things like real options, acquisitions, insights into their market, and partnerships.
Open innovation is another way to deal with uncertainty. Our research at the Mack Institute for Innovation Management [where Day is co-director] has historically focused on open innovation, and we talk a lot about it in the program. It is a key capability and a way to manage the risks of uncertainty while getting access to more knowledge and ideas. But we also give participants a lot of tools for risk assessment. Roch Parayre takes them through a major tool for thinking about uncertainty and how to profit from it. His sessions on scenario planning give them hands-on help in learning how to do this.
W@W: The program has been running twice a year for the past six years. Have there been any changes?
GD: Yes, it has evolved and improved. We discover new best practices and we learn from leading companies and each other. We apply research from the Mack Institute. Over the years [the program] has become a mechanism for guiding the best companies to grow faster than their rivals. It’s not about innovation for the sake of innovation. The program is focused on innovation as a means to organic growth.