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HBR’s 10 Must Reads on Innovation Book Summary preview
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Synopsis

Innovation is more than creativity; it is a process that is structured, with rules and best practices. This summary of HBR’s 10 Must Reads on Innovation gives you some of the key takeaways from experts who take the mystery out of creating new products and services. Here are just a few of the key points you will learn:

  • Innovative ideas are not just something new, they provide value and solve problems.
  • It takes "buy-in" from an organization to support innovation.
  • Understanding customer's needs are critical to design new products.
  • Change requires analysis and testing just like any other experimental effort.
  • Minimizing risks is possible with the right approach.

Summary

Innovation's holy grail

Most innovation efforts focus on creating the most profitable results or appealing to affluent markets. However, there is a large market for inexpensive products driven by customers who are looking for more value for their money. The real opportunities in innovation are the ones that create affordability and fill a need for the masses.

Questions and answers

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Companies can use innovation to create a balance between profitability and affordability by developing products or services that offer high value at a lower cost. This can be achieved by improving operational efficiency, utilizing cost-effective materials or technologies, and optimizing the product design for mass production. Additionally, companies can explore innovative business models that allow for lower pricing, such as subscription services or shared economy models.

Focusing too much on profitability in innovation efforts can lead to several pitfalls. It can lead to neglecting the needs of a larger, less affluent market that is looking for value for money. It can also result in a lack of affordability in products, which can alienate potential customers. Furthermore, it can stifle creativity and risk-taking, as the focus is primarily on safe, profitable outcomes rather than groundbreaking ideas.

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Tata Motors of India is an example of how collaboration created an affordable innovation that fills a real need. The car company worked with other countries like Germany, Italy, Japan, and the United States to create a $2,000 Nano car. Each country contributed cost-effective components that reflected their particular area of expertise. The result of this collaborative effort is a quality-built, more affordable car.

Questions and answers

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Affordable innovations can have several potential impacts on the economy. They can stimulate economic growth by making products and services more accessible to a larger portion of the population. This can lead to increased consumption, which can boost economic activity. Additionally, affordable innovations can foster competition, leading to further innovations and improvements. They can also potentially create new markets and industries, leading to job creation and further economic growth.

Some of the trends in affordable innovations in the automotive industry include collaboration and cost-effective component sourcing. Companies are working together across borders to create affordable vehicles. For example, Tata Motors of India collaborated with Germany, Italy, Japan, and the United States to create a $2,000 Nano car. Each country contributed cost-effective components that reflected their particular area of expertise. This resulted in a quality-built, more affordable car.

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Stop the innovation wars

Innovating requires a partnership between a dedicated team, people focused on creating something new, and the performance engine, teams responsible for established operations. These two groups compete for the same resources while their processes are very different. Friction between these two groups is inevitable, but there are three steps for reducing that friction.

Questions and answers

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The principles of innovation can be applied to the relationship between the dedicated team and the performance engine by fostering a partnership between the two. This involves understanding that while these two groups compete for the same resources, their processes are different. Steps can be taken to reduce the friction between these two groups, such as clear communication, mutual respect, and understanding each other's roles and responsibilities.

Some potential pitfalls in the relationship between the dedicated team and the performance engine could include competition for resources, differences in processes, and inevitable friction. These issues can lead to conflicts and inefficiencies if not properly managed.

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  1. Decide which responsibilities fall to the performance engine and which ones will be handled by the dedicated team.
  2. Assemble the dedicated team. While bringing in outside team members can provide a "fresh set of eyes," team members from inside the company can help bring the innovation team and the existing teams together.
  3. Anticipate inevitable conflicts and be prepared to smooth things over with persuasion and positive feedback.

How GE is disrupting itself

GE achieved much of their success by offering high-end products across the globe. But the demand for more affordable products forced GE to change its focus. The company had to learn reverse innovation, the process of creating products in an emerging market and distributing them in developed markets.

An unexpected opportunity and management that was committed to reverse innovation helped jump-start GE's efforts. Rural clinics in China were unable to afford GE's ultrasound machines, so a local team built an inexpensive, portable ultrasound unit using a laptop with external hardware and specialized software. The new product created demand across China and helped GE get their reverse innovation efforts up and running.

Questions and answers

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Potential obstacles companies might face when applying the concepts from HBR’s 10 Must Reads on Innovation could include resistance to change, lack of resources, and lack of a clear innovation strategy. To overcome these obstacles, companies could foster a culture of innovation, allocate sufficient resources to innovation projects, and develop a clear innovation strategy that aligns with their overall business goals.

HBR's 10 Must Reads on Innovation has influenced corporate strategies and business models by providing insights and best practices on innovation. It has helped companies understand that innovation is more than just creativity, but a structured process. For instance, it has inspired companies to leverage unexpected opportunities and commit to reverse innovation, as exemplified by GE's development of an inexpensive, portable ultrasound unit for rural clinics in China. This not only created demand across China but also jump-started GE's reverse innovation efforts.

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The customer-centered innovation map

Consumers buy products to solve problems and perform tasks. Colleges buy software programs to streamline admissions. Electricians buy meters to test electrical work. Maybe these insights are obvious, but most companies do not look for opportunities from this perspective. Most companies are on the look out for the "next big thing" while plenty of opportunities are right in front of them. Companies can identify those opportunities by using "job mapping."

Questions and answers

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The ideas from HBR’s 10 Must Reads on Innovation can be implemented in real-world scenarios by first understanding that innovation is more than just creativity. It involves a structured process with rules and best practices. One of the key takeaways is the concept of 'job mapping'. This involves identifying opportunities by understanding the problems and tasks that consumers or businesses are trying to solve or perform. For instance, a company can innovate by developing a product that streamlines a specific process or solves a particular problem. This approach can help companies to identify and seize opportunities that are right in front of them, rather than constantly searching for the 'next big thing'.

Potential obstacles companies might face when applying job mapping could include resistance to change, lack of understanding of the concept, and difficulty in identifying the right jobs to map. Overcoming these obstacles could involve providing adequate training and education about job mapping, ensuring top management support, and using a systematic approach to identify the jobs that are critical to the organization's success.

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Job mapping means looking at all the steps involved in a task. By breaking down each step of a task from beginning to end, a company can find areas of the process that can be improved. This focus on the individual parts reveals areas of opportunity that could be missed when looking at the task as a whole. Using the job map, a company can analyze the shortcomings of a product or service, and begin to create solutions.

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Job mapping is highly relevant to contemporary issues and debates in the field of innovation. It allows companies to break down tasks into individual steps, thereby revealing areas of opportunity that might be overlooked when viewing the task as a whole. This detailed analysis can highlight inefficiencies or shortcomings in a product or service, providing a basis for innovative solutions. In the context of ongoing debates about the best ways to foster innovation, job mapping offers a structured, systematic approach that can complement more creative, free-form thinking.

The key takeaways from the concept of job mapping that are actionable for entrepreneurs or managers include: understanding the entire process of a task, identifying areas of improvement, and creating solutions to address these areas. By breaking down each step of a task, one can gain a comprehensive view of the process and identify potential bottlenecks or inefficiencies. This detailed view can reveal opportunities for improvement that may not be apparent when looking at the task as a whole. Once these areas are identified, solutions can be developed to enhance the product or service.

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The innovation value chain

The innovation value chain means looking at new ventures from beginning to end to identify obstacles and opportunities. Most companies do not have a proper process for testing a product's worth or an understanding of adequate funding. By using the innovation value chain, companies can take practical steps to get a product to market.

Questions and answers

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A manufacturing company can apply the innovative approaches discussed in HBR’s 10 Must Reads on Innovation by implementing the innovation value chain. This involves looking at new ventures from beginning to end to identify obstacles and opportunities. The company should establish a proper process for testing a product's worth and understanding of adequate funding. By using the innovation value chain, the company can take practical steps to get a product to market.

Yes, there are several companies that have successfully implemented the practices outlined in the innovation value chain. Companies like Apple, Google, and Amazon are known for their innovative practices and have a structured process for bringing new products and services to market. They identify obstacles and opportunities from the beginning to the end of a new venture, test the product's worth, and understand the need for adequate funding.

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  • Idea generation — Find the existing strengths and weaknesses of the organization and understand how they will affect a new idea. If there is a weakness that could cause obstacles, then get rid of those obstacles is now a part of bringing an idea into development.
  • Idea development — Does a company have existing resources that can handle producing a particular product? If new equipment is needed for manufacturing, then the cost may prevent the product from moving forward.
  • Diffusion of developed concepts — This means understanding how an organization's current way of doing things can stifle innovation. If the rest of the company does not see the value in a new idea, then they will not support it.

Is it real? can we win? is it worth doing?

Companies know they should innovate, but they are afraid of the risks. That said, much uncertainty can be eliminated by a screening process.

  • Is it real? — Is There A Market For A Product And Can The Product Be Made? The Answers Come From Researching The Demand. Does The Product Solve A Problem Better Than Something Already Out There? If There Is A Demand, Can The Product Be Manufactured At A Reasonable Cost? The Answers Will Determine If A Product Is "Real" Or Not.
  • Can we win? — A company has to determine if they can get and maintain enough market-share. If the company comes up with a new idea, they can be sure the competition is close behind. In established markets, existing companies could just copy or piggyback on the idea with minor changes.
  • Is it worth doing? — Analyze the financial costs and determine how the product fits with current strategies. Will the product be profitable? How long will it take to see a return? Does the product reflect the current culture of the company? The answers will determine if it is worth doing.

Innovation: the classic traps

Hurdles too high, scope too narrow

Companies tend to seek out new ideas that will result in premium prices and excellent margins. Innovations that don't project high revenues over a short time are screened out of contention. This focus on significant returns while trying to limit risk means many companies miss the smaller opportunities. Companies must solicit ideas, both big and small, from people inside and outside the organization. The result will be more ideas, increasing the likelihood of finding the ones that will work.

Questions and answers

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Focusing on significant returns while limiting risk in the innovation process can lead to a narrow view of potential opportunities. Companies may overlook smaller, yet potentially profitable ideas, as they may not project high revenues over a short time. This approach can limit the diversity of ideas and stifle innovation. It's important for companies to consider both big and small ideas from various sources, as this increases the likelihood of finding successful innovations. However, this approach also requires a balance to manage risk effectively.

Companies seeking out new ideas for innovation might face several challenges. One of the main challenges is the tendency to focus on ideas that project high revenues over a short time, which often leads to missing out on smaller opportunities. This risk-averse approach can limit the scope of innovation. Another challenge is the lack of diverse input, as companies often fail to solicit ideas from a wide range of sources, both inside and outside the organization. To overcome these challenges, companies need to broaden their perspective and be open to ideas that might not promise immediate high returns but have the potential for long-term success. They should also encourage a culture of innovation where everyone feels empowered to contribute ideas.

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Controls too tight

The tight controls of an established organization restrict innovation. Innovative teams need the flexibility to react to unexpected results. The "standard operating procedures" of most companies just get in the way. Companies must redesign processes, from how funds are allocated to how performance is measured, to give innovative teams room to breathe. New ideas require new rules.

Questions and answers

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The themes of HBR’s 10 Must Reads on Innovation are highly relevant to contemporary issues and debates in business. The book discusses the importance of innovation in business, which is a hot topic in today's rapidly changing business environment. It emphasizes that innovation is not just about creativity, but also about structured processes, rules, and best practices. This aligns with current debates on the need for businesses to be innovative to stay competitive. The book also addresses the challenges that established organizations face in fostering innovation, which is a key issue in many contemporary businesses.

A startup can use the key topics covered in HBR’s 10 Must Reads on Innovation to grow by implementing the best practices and rules of innovation. This includes creating a flexible environment that allows for unexpected results and encourages innovative thinking. The startup should also consider redesigning its processes, such as fund allocation and performance measurement, to give innovative teams room to breathe. New ideas require new rules, and by embracing these principles, a startup can foster a culture of innovation that drives growth.

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Connections too loose, separations too sharp

Creating a new product requires support from the whole company. Innovative teams can feel isolated and end up feeling less valuable because of the lack of support. The rest of the company could feel "out of the loop" or even resentful. The solution is to create connections between the innovators and the rest of the organization. The new venture will have more visibility and gain acceptance by encouraging the innovators to report on their efforts regularly.

Questions and answers

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A startup can use the key topics covered in HBR’s 10 Must Reads on Innovation to grow by implementing the structured process of innovation discussed in the book. This includes creating a supportive environment for innovative teams, ensuring they don't feel isolated or undervalued. The startup should also foster connections between innovators and the rest of the organization, increasing visibility and acceptance of new ventures. Regular reporting on innovation efforts can also help in gaining acceptance and support.

The ideas from HBR’s 10 Must Reads on Innovation can be implemented in real-world scenarios by creating a supportive environment for innovation within the organization. This involves fostering connections between innovative teams and the rest of the organization. Regular reporting of the innovators' efforts can increase visibility and acceptance of new ventures. Additionally, the process of innovation should be structured with clear rules and best practices, as suggested by the experts. This can help demystify the process of creating new products and services.

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Discovery-driven planning

Discovery-driven planning must replace conventional business planning when it comes to innovation. Where conventional planning would tend to see assumptions as facts, discovery-driven planning sees them as guesses that must be tested and questioned. The "discoveries" that result from testing assumptions are critical to creating something new. These discoveries are used to determine the direction and focus of an evolving plan.

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The key takeaways from HBR’s 10 Must Reads on Innovation that are actionable for entrepreneurs or managers include the concept of discovery-driven planning. This approach encourages questioning and testing assumptions instead of accepting them as facts, which is common in conventional business planning. The discoveries made from this process are crucial for creating new products and services. This approach allows for a more flexible and evolving plan that can adapt to new findings and changes in the business environment. Another takeaway is that innovation is not just about creativity, but it's a structured process with rules and best practices.

Discovery-driven planning challenges the conventional business planning by treating assumptions as hypotheses to be tested rather than facts. This approach encourages continuous learning and adaptation, which is crucial for innovation. It allows for the plan to evolve based on the discoveries made during the process, thus making it more flexible and responsive to changes.

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Conventional business planning cannot handle the uncertainty of results or the need for flexibility that are natural parts of innovation. Discovery-driven planning focuses on activity and learning rather than results. The real potential of a new venture is discovered as it develops, a potential that would remain undiscovered by conventional business planning.

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Discovery-driven planning can be effectively implemented in real-world scenarios where there is a high degree of uncertainty and a need for flexibility. This could include launching a new product or service in a market that is not well understood, entering a new geographical market with different consumer behaviors, or implementing a new business model. In these scenarios, the outcomes are uncertain and the business needs to learn and adapt as it progresses. Therefore, discovery-driven planning, which focuses on learning and adapting rather than on fixed results, can be very effective.

Discovery-driven planning has significantly influenced corporate strategies and business models by shifting the focus from results to activity and learning. This approach allows businesses to navigate the uncertainties and need for flexibility inherent in innovation. It enables the discovery of the real potential of a new venture as it develops, a potential that might remain undiscovered with conventional business planning.

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The discipline of innovation

Learning where to look for new opportunities and understanding their potential is an essential step in innovation. With practice, it is possible to spot which opportunities are too risky and the ones that have real potential. Most opportunities come from seven sources:

  • Unexpected occurrences — Be on the lookout for products that are trending better than expected and capitalize on that growth.
  • Incongruities — Find the gaps between what is and what should be to find opportunities for improvements.
  • Process needs — Focus on customer's problems and find ways to make their experience better, faster, or easier.
  • Industry and market changes — From deregulation to new technology, external forces and their impacts must be monitored for changes that provide opportunities.
  • Demographic changes — Demographics are always in flux. Keeping up with the constant changes can reveal new markets and give more insight into existing markets.
  • Changes in perception — The "cutting-edge" product of yesterday can become obsolete quickly as consumer's attitudes change. These changes in perception can diminish or create demand, providing an opportunity to respond to those changes.
  • New knowledge — Keeping abreast of advancements in technology and changes in business methods give companies the new knowledge they need to stay ahead of trends.

Innovation killers: how financial tools destroy your capacity to do new things

Most companies want to innovate, but existing financial policies are a difficult hurdle. Companies decide where to invest their funds based on a projected return. They use facts, statistics, and other data to determine if an investment will create profit. However, with innovation, those facts and other data are not available because innovating deals with assumptions. Companies tend to view new ventures using the same criteria as traditional business efforts, so they often find that there is insufficient "evidence" to warrant an investment.

Questions and answers

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The lessons from HBR’s 10 Must Reads on Innovation can be applied to overcome financial hurdles in today's business environment by changing the way companies view and evaluate innovation. Instead of using traditional criteria for investment decisions, companies need to understand that innovation involves dealing with assumptions and uncertainties. Therefore, they should be willing to invest in new ventures even when there is insufficient evidence to warrant an investment. This requires a shift in mindset and a willingness to take calculated risks. Additionally, companies can use the structured process of innovation, with its rules and best practices, to guide their investment decisions and mitigate risks.

The book challenges the traditional paradigm of using facts and statistics for investment decisions by highlighting the limitations of this approach in the context of innovation. It points out that innovation often deals with assumptions and unknowns, and therefore, the traditional data-driven approach may not be applicable. Companies often evaluate new ventures using the same criteria as traditional business efforts, which may lead to insufficient evidence to warrant an investment. The book suggests that a different approach may be needed when it comes to investing in innovation.

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Without any evidence to support predictable outcomes, many companies choose to do nothing. They assume that the current offerings of their business will continue to produce sufficient profits, so it is easier just to say "no" rather than take the risk. However, by avoiding the risk, companies are also avoiding any potential rewards that can be extracted by innovating. Companies need to develop a better understanding of the innovation process so they can create new rules for how these ventures are funded. These companies must understand that while innovating is unpredictable, it is also something that can be measured, limiting the risk.

Questions and answers

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A company in a traditional sector like manufacturing can apply the innovative approaches discussed in HBR’s 10 Must Reads on Innovation by first understanding that innovation is more than just creativity, it's a structured process with rules and best practices. They can start by not avoiding risks associated with innovation, as avoiding risks also means avoiding potential rewards. They should develop a better understanding of the innovation process and create new rules for how these ventures are funded. While innovation is unpredictable, it can be measured, which can limit the risk. This approach can help them to innovate and potentially increase their profits.

The book "HBR’s 10 Must Reads on Innovation" is a compilation of articles from various experts in the field of innovation. It does not provide specific case studies or examples, but rather, it offers insights and strategies on how to foster innovation in a business setting. The broader implications of these strategies suggest that innovation is not just about creating new products or services, but also about creating a culture that encourages risk-taking and embraces change. It also emphasizes the importance of understanding the innovation process to effectively manage risks and measure outcomes.

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