So, welcome back to our course on Strategic Innovation.

Here we're going to continue our work on execution and innovation initiatives.

And remember from the last video,

it explained an overall model where

an dedicated team is split out from the mainstream organization,

and the team works in partnership with

mainstream organization workers nevertheless, right?

And those organizational ones are called the shared staff.

So, what we're going to do in this video is to

focus on how you build that dedicated team,

and how you manage that partnership.

And so really, there's three questions to address.

One is, what's the balance between the two parts?

What's the scope of the dedicated team?

What's the division of labor between the team and the shared staff?

The second one, refers to how you are

actually going to build the dedicated team. Who's going to staff it?

How is it design in terms of culture,

processes, measures, and so on?

And finally, there's this issue of how the partnership is managed.

You as the innovation leader,

what should you be doing to make that partnership work?

So, we're going to start with that first key question.

What's the scope of the dedicated team?

And let's put this in context a little bit relative to what we've talked about before.

One very common model,

and we've just seen this in the heavyweight team's research,

is that dedicated team is the product development team.

It's a cross-functional team.

That team draws extensively on functions in the mainstream organization.

So, that was the shared staff,

and it's time limited because it's oriented towards just the product development,

and when the product is developed,

it's transferred fully into the mainstream organization marketing and sales.

So that's one inventory.

There's still a dedicated team,

this work applies to it,

it's pretty limited, it's pretty small.

We can also think back to the ambidexterity and disruption work.

Where there was a semi-autonomous separated organizational unit.

That was the recommendation.

Do that or you're going to fail.

That's a much more binary image.

It's a one or zero decision,

and what you do is going to determine your success or failure,

and that's going to be for a long time.

It's not going to be something where the product is developed and then turned

over to the mainstream organization. It's a separate unit.

Now, in this other side research that scoped decision, right?

And you see the variance,

those two examples I just talked about,

the heavyweight team versus ambidexterity and disruption,

really are the ends of a continuum.

And in this other side research,

it's a strategic decision.

And it's based on this basic recognition that the performance engine,

the mainstream organization it has its limits,

but it also has powerful capabilities;

customer access for instance,

that are very valuable for new initiatives.

And we need to decide how to split the work up.

Now, this is pretty intuitive, right?

It should be by now.

And it may well be that

your senior executives for example by the concept of separation in general,

Christiansen's work for example is very popular,

but they're going to remain concerned that it's complex expensive difficult to do.

You're going to want to have an answer regarding what to split out,

and what to share within the mainstream organization.

Now, the answer from this research we're considering now is that

it turns very much on judging what that performance engine,

what the mainstream organization can do effectively.

Can it handle technology development for the innovation initiative?

Can it handle customer acquisition, manufacturing, so on?

Each one of these you want to take a look at.

And so, when you start to think about this,

the first thing to know is that there's

a tendency to overestimate what the mainstream organization can do.

This research finds that people tend to

overestimate the capabilities of the mainstream organization,

and so they underscope the dedicated team.

There's plenty of cases they found like this.

They didn't find any situations where the reverse happened,

where people underestimated the capabilities of the mainstream organizations,

and so they over scoped the dedicated team.

Now, why does this happen? Well, the short story

is that people looked at the wrong thing.

They look at the individuals and their talents as a way of judging what capability is.

Who do you have in your organization? What are their skills?

Now. talent is important.

But what this view misses is are hidden by critical limit.

What an organization can do is determined very much by how people work together,

by the relationships between groups, between functions.

It's about communication, power, tempo,

evaluation, organizational processes that critically implement capabilities.

And we've seen this before.

This is ambidexterity and disruption work is all over this idea.

So, the real value of this research here is that it

uses this idea to identify three key identifiable criteria.

Criteria you can take a look at and see how they can limit the performance engine,

and if you see these,

they provide clear signals that the work needs to be split out.

That particular part of the work needs to be split out into a dedicated team.

So, let me talk through these. The first reason.

The first thing to look for is whether you have

the needed work relationships between units and individuals.

Are people talking together and do they have work relationships?

The reason this is important is that typically,

you've got an architecture of your organization that matches

the architecture of the products or services that you're delivering,

and communication occurs in areas where parts of the product or service come together.

So, different groups of engineers will talk talk

together depending on the degree to which

the components of the product is interdependent.

Now, if the project changes that needs to change,

and this becomes limiting because building

new relationships takes a lot of time and effort.

And it isn't immediately productive, right?

So, it gets pressed out by

the efficiency perspective that the mainstream organization has, right?

You've got to justify your time.

So here's an example how this one plays out.

When BMW wanted to develop a hybrid car, okay?

So, is in the Govindarajan and Trimble research.

They were looking at breaking,

and they recognize that they needed to develop a regenerative brake

where the brake feeds into a battery.

As it slows down,

and then that energy can be recovered,

and used in the power train. Very new idea.

And they had a battery group,

and they had a brake group.

These groups did not talk to each other in the normal course of product development,

and so they recognize that since

the two components batteries and braking needed to work together very closely,

it would be best if they split out that part of

the hybrid car development into a dedicated team, okay?

So that those relationships could form in a separate unit.

The second thing to look for is,

does the power structure fit the needs of the innovation initiative?

For example you may have a company where engineering is kind of top of the heap.

And that's fine if the engineering challenges are going to be the most important ones.

But what if they're marketing.

That's where it becomes a problem.

Couple of reasons. One is that power is often hard to

discuss yet it's deeply embedded in relationships and work,

it's in the woodwork.

So, to change it,

you really need to make an effort,

and that's where you need to create an entirely new context,

maybe even bring in new people,

and we'll talk about that later.

This often becomes important when you want to compete in a new way.

For instance, again, in this research Electrolux, right?

The home appliance company,

vacuum cleaners and so on,

they had history of success in the mid range,

and their products were built on reliability and functionality.

Engineering was critical.

The key challenge was to build a reliable and sensible functional product.

Now, they wanted to move to the high end, right?

And what they found is that in the high end aesthetics were going to be very important.

And so, we needed to take more of a marketing focus.

So, what they did is, they split out

customer insight teams to develop those high end markets, right?

And to work in a way where marketing could be kind of in the drivers seat.

Third thing to think about is the tempo.

What's the pace that this innovation is going to proceed at?

Remember back we talked about Deere and the tractors,

we talked about product development efforts being on the model of ideas plus process.

Processes are in place,

processes comes to timelines,

the organization is working at a certain tempo.

This is very difficult to work against.

So, if you realize that you're on an extensive exploration effort,

where it's going to be some time before you work through even the basic issues,

then that's another reason where you're going to want to split this out,

because you're going to need to be able to maintain a different tempo.

So, for example, Timberland.

Timberland brings out shoes to meet the fashion cycle, right?

They have got processes to do that every cycle. It's fairly quick.

They wanted to build a trail shoe,

and they wanted to build the trail shoe in a way that

was quite different than their other products.

And they knew they needed to research new materials,

what trail runners really wanted to see,

and so they recognized the tempo just wasn't going to match the mainstream organization.

So, they split that effort out, okay?

So, to recap, if we're going to decide on a division of labor in the partnership,

we're going to need to assess the performance engine capabilities,

and avoid overestimating them.

And we're going to focus on how people work together,

and how they're embedded in the organization more than their individual skills.

Building the Dedicated Team & Managing the Partnership Part One

Strategic Innovation: Managing Innovation Initiatives

Meet the Instructors