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Successful innovation goes beyond great ideas

April 26, 2010

About three weeks ago, I sat next to Robert Wolcott on a long flight, and we had a great conversation. Robert’s a professor at Kellogg and a thought leader in corporate innovation, which is a topic I’ve thought a lot about over the years, but never in the systematic way his framework provided. He’s got a new book out (Grow from Within, co-authored with Michael Lippitz), which I highly recommend.

There were many useful take-aways from this book for me, but the most important was the fact that the success of bringing an innovation to market has as much to with how the innovation is brought to market as with the nature of the innovation itself.

The example used in the book (pp. 51-52) gets the point across nicely: In 1999, Tellabs introduced the Titan 6500, which was an innovative product that combined IP-based networking strategies with existing switched networked ones. However, Tellabs tried to market and sell this innovation through existing channels—or as Wolcott and Lippitz express it, using their existing business system. The result was that, even after three years of supporting the product, Tellabs had to scrap the product and write it off for a loss.

Within months of Tellabs’ decision, however, Cisco released the CS-1—virtually identical to the Titan 6500—and had a smashing success with it. The difference (according to Wolcott and Lippitz): business system design. Cisco understood that the buyers for the CS-1 would be different than for their circuit switched products (strategic planning teams rather than operations groups) because its ROI was longer than ops groups were willing to work with; strategic planning teams, in contrast, were more than willing to wait out the longer ROI. So, based on this key difference in buyers, Cisco designed a different business system to deliver the CS-1, and succeeded where Tellabs failed—not because they had a more innovative product (it was a copycat), but because they changed the context in which the CS-1 was delivered.

Wolcott and Lippitz present a wealth of information and analysis on the subject of business system design, including a good overview of an exercise that organizations can use to identify the areas where they need to adapt their business system to support an innovative product or service. In upcoming posts, I’ll turn to examine some of these aspects in greater detail. And in the meantime, I’d love to hear what others thought of the book as well as other suggestions of good resources on innovation.

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