Wednesday, September 26, 2007

Spoiler - 10 Strategic Rules

These rules are adapted from the book "10 Rules for Strategic Innovators" by Vijay Govindarajan and Chris Trimble.

These rules apply to CEOs and General Managers when they are faced with or at least working with a division in the company that decides to go off and try to develop the "Next Big Thing". This thing is usually totally new to the business and the unit responsible for the development should be under totally new accountability rules since development is hard, expensive, fraught with uncertainty and most of all different than it's parents model.

The great idea is only the beginning - In order to make any great idea happen, much more work goes into the strategy, forecast, planning, monitoring, measuring and learning. If you do not plan up front then you really have no method of finding your way as go.

Sources of organizational memory are powerful - In a new model or a new venture it is very hard to separate the ideals, culture and organizational methods that have made the parent company great. This culture and these methods really do not apply to a totally new venture finding its way and developing a new product in a new market. Be aware of the pitfalls of applying one formula that works for an established company to a totally different application.

Large established companies can beat start ups - This is true. Smaller companies are more nimble and less bureaucratic. But large companies have many assets that can be borrowed from and possibly much technology (IP) that can be leveraged that would otherwise be a burden to entry for a start-up. Now the trick is how to leverage or borrow from the parent company without burdening the parent, becoming more like the parent of just remaining separate from the parent.

Strategic experiment face critical unknowns - As with anything new it will be hard to forecast schedule, investment and revenue. Not to mention there are many more things you do not know than you do know. This means that it is critical that you have leadership in place to drive the new development that is very adept at learning from their mistakes and monitoring their progress microscopically rather than quarterly/yearly.

The new company must be built from scratch - A new unproven company in the development stages should be free to operate in a physically different location, should be able to build its own culture, should have some autonomy from the parent. This enables the company to operate and focus on their objective without being compared, measured or judged against an already profitable or structured parent.

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