Judy Estrin – The Three Horizons Of Innovation

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he consultancy McKinsey did this interview with Judy in October 2008. In previous posts I was writing about the key characteristics or competencies of a great innovator and why Business innovation is NOT dependent on creative people. After seeing the interview I have to revise my opinion a bit in a way that a great innovator needs to manage the three horizons of innovation, as Judy calls them, simultaneously and seamlessly.

Because the interview requires to have a (free) account with McKinsey, here are some key quotes from the video:

We have an innovation deficit. We are reaping the benefits of seeds that we planted 10, 20, 30 years ago, but we’re not planting the seeds at the same rate we’re used to. There is a lot of incremental innovation that is going on in this country and in the world. But there isn’t the right basis of what I call sustainable innovation going on. Which involves not just development, not just the application of technology, but research / development / application in a way in which they all interact to create ongoing sustainable innovation. [ ] The rapid pace of change has caused people to focus on ‘how do I keep up with that change’ instead of ‘how do I stay ahead of that change’.

Judy does fully support the notion of basic science and research but also sees an (obvious) problem of peer-reviewed research:

If something has to be peer reviewed, you’re not going to get the really kookier ideas, because they often don’t pass that peer review.

I strongly second that: My wife did some lab research about a specific process and effects of the Glutathione Peroxidase (GPX) protein. While I have no idea what that means (and that’s also beside the point), her research started about 2003 and went on through 2005. But just this past week she finally signed the letter of authorship that is require to actually publish this (peer-reviewed) study and results. One of the problems is that public research and corporate research have been institutionalized similar to large corporations. While that might sound quite Randesque, Judy argues that

I like to compare large businesses to factory farms. What they are supposed to do is produce things predictably at scale. And surprises aren’t welcome, you just want to mass produce. The way to manage a factory farm is by techniques to eliminate surprises, eliminate defects, be close to your customer, optimize productivity, and of course efficiency [...] [Innovation] is all about surprises.

udy is coining the term “Active Patience” – while with ‘patience’ you might have the connotation of idle waiting, of nothing happening, ‘active patience’ means to actively question and discuss and challenge innovation, almost with a visionary attitude:

We’re focusing too much on “when is this project going to be done.” Instead of “what are the hard problems, what does the technology mean for the business, where could that take us too, what is the potential”.

How can I FAIL earlier?

An interesting view is to solve the problem “How can I fail earlier?” – because you can learn something from failure, and of you can reduce that time and increase the value of the lesson learned, you can incrementally shorten the development lifecycle. Companies tend to be very comfortable with — and a lot of companies have gotten very good at — the integration and feedback from their sales force to their product marketing to their development organizations in terms of delivering better and better services. But there is a third horizon that is the one that companies struggle with the most, and that’s what Judy calls ‘future growth’, one of the three horizons of innovation a ‘good’ innovator as well as any company needs to master and combine seamlessly:

1/
Incremental Innovation: If you’re doing a good job listening to your customer it’s pretty easy to understand – the hard part is prioritizing – to understand how to drive incremental innovation.

2/
Next Generation products: How are you going to leapfrog your competitor? What is your customer going to need 2-5 years from now? (because most product development cycles are that long!) Some of that can be driven by your customer, but sometimes your customer doesn’t know what they will need 2 to 5 years from now. If Henry Ford had asked his customers what they wanted, it would’ve been a faster horse. It wouldn’t have been a car. […]

3/
Future Growth: It’s in that horizon that actually may have nothing to do with your customers today. And in a culture where we’ve done such a good job getting closer and closer to our customers, what it does is actually do a disservice to that future growth horizon. […] Future growth is not just about technology, but about people who are able to think outside your current business.

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Open Innovation – Who Cares?

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The Advantages of Staying Small

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