Innovation Machines

Vijay Govindarajan and Chris Trimble think that 3M and Google have it all wrong when it comes to innovation, reports the Economist (8/28/10). Vijay and Chris are Tuck School professors and co-authors of The Other Side of Innovation: Solving The Execution Challenge. They think 3M and Google, among others, make a mistake by expecting their workers to spend a certain percentage of their time on innovation. At 3M it’s 15 percent and at Google it’s 20 percent. They argue that this "let-them-loose approach spreads resources thinly and indiscriminately."

The result, they say, is "a thousand small initiatives rather than focusing on a few big problems." What’s more, managers must "spend weeks sorting through the chaff to find a few grains of wheat." The authors also say it’s a mistake to offer employees bonuses for fixing inefficiencies, arguing that the results are typically incremental, and seldom breakthrough. And they are against the independent "skunkworks" approach because "it ignores the basic reason for working for a big company in the first place — to use its superior resources to supercharge what you are doing."

Their solution is to build what they call "innovation machines" that are integrated with the rest of the company and are "held accountable for their ability to learn from mistakes rather than for their ability to hit their budgets." They cite BMW for having thrown together its battery and brakes specialists to design brakes for hybrids. Allstate Insurance, meanwhile, had its marketers and risk-adjusters collaborate to create "industry-changing ideas such as accident forgiveness." In short, "students of innovation must pay more attention to big companies" because "they have the muscle to chase big prizes" and the capacity "to conquer new territories while continuing to cultivate old ones."